I help companies to improve their prices. That makes me a bad person, right?
We’re all consumers, after all. When we go shopping, we usually look for a bargain. No one likes spending more than they have to. We’re surrounded by messages from companies such as the big retailers or the new low-cost challengers like Aldi and Liddle which say ‘we’ve got the lowest prices’.
So helping companies push prices up must be a bad thing.
Well, I would agree, there are examples where I disapprove of high prices. For example, did you see this headline in The Times:
£5,000 PlayStation 5 takes price-gouging to the next level
Apparently supply is lower than demand, and bots are buying up consoles as soon as they are available and before humans can get their order in, only for the person running the bot to then sell at an inflated price on places like eBay. If you check eBay it looks like the story is being slightly ‘improved’, there are PS5s at high prices but it’s hard to find them as high as £5,000.
One thing that drives price is supply and demand, and in times of scarcity prices would normally go up. But there is a difference between a reasonable higher price and price gouging, which is what charging £5,000 would be.
Ok, so it’s possible to overcharge or price gouge. In that case what is the moral justification for helping organisations charge more?
For me it’s all about a fair exchange of value. If you are providing more value, it’s reasonable to charge more for it.
When you do, you have a healthier business. You can invest in your staff development, you can create more jobs, those jobs are more secure during challenging times.
Look at it the opposite way round. Before Covid-19 hit the UK I worked with a wholesaler that used to make 10% operating profit in the past. They had doubled in size, but in doing so had got into a discounting habit, and now they were bigger but only made 1% operating profit.
What do you think Covid-19 meant to them? A slower economy meant less demand for their products. With wafer thin margins they immediately started to lose money. They could take out one of the Covid business loans, but let’s say that got them through until the crisis was past - now it needs to be repaid, how easy is it to do that when you make so little profit? How long will it take?
I think it is wrong to price gouge, but I strongly believe companies should be paid a commensurate amount for the value they deliver; they should be able to make enough money to be stable and secure; and they should be profitable enough to create great working environments, to invest in innovation, to develop their teams and more.
I think that’s worth paying for.