The Signals vs Noise blog recently cited [via Carly Bishop Cheney] — aside: Carly's home page is dozens of megabytes so you might want to skip the link on your iPhone — the following tweet:
If I get one more inquiry from someone having a huge wedding at an expensive venue asking for ‘recession pricing’ I am going to explode!
Many comments support the logic that because the expenses haven't changed, there is no reason to consider changing the prices. This is, of course, missing half of the equation. A market has a supply curve (this is your expenses) and a demand curve. You are pricing at a markup over your cost, so, indeed, you do have some room to readjust prices.
Certainly, recessions can change the demand curve so it is worth considering whether this has any effect on the elasticity of demand at your current price. If you can increase your profit by lowering prices (thus selling more of your goods or services), you should certainly consider it, but, of course, one must consider the longer terms effects of this strategy. On the other hand, you might also consider raising your prices and selling less, but at a higher price. Elasticity will determine which strategy maximises profit.
I'm surprised that there are so many comments by those who things lowering their price during a recession is such a ridiculous proposition, mainly on the basis that their expenses haven't changed.
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