Do businesses tend to lose out when they do this..

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Redfrost
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I’m not well up on the topic of businesss so I might seem like a basic question but when company’s put their prices up to they tend to gain from it or lose out? As less people will buy from them..

For example at the hospital I work at the canteen have put their prices up a lot and now I just can’t afford buying lunch there everyday. The canteen said they have had to do this as a last resort, that they have had to pay some staff off for financial reasons. So myself and my collegue are not going to buy anymore

Do you think they will lose out or will putting prices up work for them?
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Dupe Hunter
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They will lose out if they are in a competitive market, people don't like paying more for the same thing especially not when the price rise seems to be from incompetence.
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Napp
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Depends on the situation.. do they have any competition and do they have a legitimate reason for raising prices, that is to say, are their prices still in the ball park for what theyre selling or have they put them through the roof?

Given its a hospital though, they can usually get away with it as theres few alternatives available nearby so its their market. Just like with parking there.
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HansLuben
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You can save a lot of money by just bringing a packed lunch anyways, also healthier most of the time.

Highly recommend listening to this, should answer almost any economic question you have:

https://www.youtube.com/watch?v=dQiBD-crrvA
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hotpud
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(Original post by Redfrost)
I’m not well up on the topic of businesss so I might seem like a basic question but when company’s put their prices up to they tend to gain from it or lose out? As less people will buy from them..

For example at the hospital I work at the canteen have put their prices up a lot and now I just can’t afford buying lunch there everyday. The canteen said they have had to do this as a last resort, that they have had to pay some staff off for financial reasons. So myself and my collegue are not going to buy anymore

Do you think they will lose out or will putting prices up work for them?
There are whole books, PhD papers and more besides written on pricing. In a nutshell, something is only worth what people will pay for it. Take something like a £1 million Ferrari - is a car that gets you from A to B like my 17 year-old £250 Mazda really worth £1 million? Of course it is because there is a queue of suckers who are prepared to write that cheque for something they deem to be worth £1 million.

Back to your canteen. Sure, they have priced you out, but perhaps there are still lots of doctors and higher paid nurses who are happy to pay slightly more. The result is the canteen is making more profit per item sold than before an likely doesn't need to do the same amount of work and in that manner pay costs for as many staff or ingredients.

To go back to the car analogy. Ford probably have to sell 1000 cars to make the same profit Ferrari make on 1 car. With that, Ford are doing much much more work.
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