Are Lower Prices Good for the Economy?

"How low can you go" is a popular phrase in the lyrics of a trance dance track in the late 1980's.  The phrase is also apropos to describe how business owners are fighting for tight consumers dollars.  Just about every industry is trying to compete based on lowering prices.

Restaurants, wireless companies, hair salons, plumbing and A/C heating crews and many others are rushing to lower prices to stay in business.  But is this good for the American economy?  It depends on who you ask and what your role is in the movement of products, goods and services.

Workers who lost their jobs and the potential of higher unemployment cause people to change their consumer shopping habits.  Consumers facing lower to no income make choices according to what household budgets can afford.  Just the potential loss of income has conditioned consumers to shop less at high end retail and luxury personal care establishments.

So what does this mean for business owners?  It's a double-edge sword for many business owners.  On one hand, businesses must price their products, goods and services for a decent profit while watching the competition and unrelated industries drop prices.  On the other hand, dropping prices shrink margins to a point where it's tough to stay in business.

In addition to falling prices and slimmer margins, consider the psychological impact discounting prices has on the workforce.  Owners who lower prices must either layoff workers or hire at lower hourly wages.  As readers may see, this cycle of events reduces consumers purchasing power.  What's most tragic is workers are becoming forced and humiliated to race to the bottom of our economic society.  Recent mass job fairs show city streets lined with workers seeking minimum wage jobs.  I guess it's better to make some money than no money.

Readers may ask what's the point to writing this blog.  If small business owners succumb to downward pricing pressures, then small business services are at the isk of extinction.  When is the profit margin too low to make operating your business a good return on investment?  As profit margins fall, so does customer service and quality, and ultimately, the business!

Now is the time to separate yourself and business from other business who will become fodder to falling prices and decaying economic conditions.

Now is the time to develop a strong marketing plan to identify people and businesses who can afford and will appreciate your services.

Give us a call at (530) FIND-BIZ to learn how we can promote your business to the community on a regular basis at very affordable prices.

Thanks for reading this blog.