Well of course they're going to raise prices. They're a business. This isn't happy fairy land; their cost of doing business went up, so their prices will have to go up. If businesses didn't increase their prices to match an increase in cost of goods sold, they'd quickly go out of business.
I mean if raising the prices made them more money they would have done it earlier. Usually prices in recessions are raised in response to supply issues, resulting in less quantity supplied to such an extent that there is less profit overall.
That's at least what a microeconomist would say. But it's clear that in this recession there's less startups, and thus less Slack customers, and so Slack's operating costs need to be distributed among fewer companies, resulting in higher per-unit costs.
What’s stopping anyone, anywhere from raising their prices by some arbitrary amount? There are lots of examples of inelastic goods that most people would continue to buy if the prices went up. Why aren’t the prices on those things higher? Generally the answer is competition, and there is still competition among landlords even if everyone suddenly has more disposable income.
Businesses that just raise their prices would be leaving money on the table: namely the poor people that were outside of their total addressable market. Whereas before those folks would never have been able to provide revenue, with more cash in their pockets, they are now potential consumers. Increasing prices just maintains the same TAM for no real reason — you can make more revenue by serving the newly minted consumers.
This is probably not true in this case, but in markets with lots of competition, raising the costs raises prices because companies are already providing services close to cost.
Even in less competitive markets, raising the cost of providing a service will shift the supply curve, which can result in increased prices.
If one company unilaterally increase their prices in a stable environment they will probably lose market share to their competitors.
I guess that when prices are rising sharply anyway, it's easier to raise them and it won't be noticed so much. And their competitors probably make the same calculation.
Prices increase when a seller increases them. That could be because their costs went up, but it also could just be because they felt like people would pay more.
Why couldn’t this happen before? Competition. If you raised your prices, your competitors would see an opportunity and you’d lose market share
Now competition has been consolidated away.
With the pandemic, corporations have accidentally entered into an experiment leading to new price discovery. Without competitors, all that’s in the way of increasing prices is consumers’ willingness to buy.
Also, this has nothing to do with operating at scale
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