It is a well-known strategy in a recession, that if the business lowers its prices and goes for volume it can survive while the companies surrounding it and its competitors will fail. Of course, many business owners do not like the idea of dropping prices on their goods and services and so they hold out and hope that their brand name, and reputation over the years will suffice and continue to bring in the customers thru the turbulent times.
A long-standing business of 20 years can get by with this for a little while as long as the recession does not get too deep. After a while however, consumers have no choice but to go and get the best deal possible on the things that they buy. At this point the business that held their prices high for so long suffers a huge decrease in volume of sales.
They can no longer discount their prices for less than it costs to run their business and instead of redesigning their business for low-cost high-volume strategies, they raise the prices figuring that they must sell each item for more to make up the difference in their fixed cost for the items that they did not sail.
Some companies realize that if they don't raise prices and make more money for each unit that they sell that they will go at a business anyway and since they did not look into low-cost high-volume strategies in the very beginning of the recession they will be the ones that fail just prior to the return of the economy if they do not get huge inflows of capital to stave off their creditors and pay their fixed monthly costs.
In hindsight it would have been best for these businesses to do what was prudent and lower prices.
But old habits die hard and now for them it may be too late. If you are looking to buy into a business it's best to find a business that has survived most of the recession but now at the last minute is filing bankruptcy because it just cannot hold out any more.This is where you can get a very good deal on the remaining inventory, bring in a little capital, and then ride the swell of the economic recovery. This is where the vultures do the best if you're going to invest in a used business you might start wanting to look around right now for just such a deal. Please consider all this.
The Vultures Are Watching - Don't Let Your Small Business Become Road Kill!