NEW YORK ( MainStreet) -- When times get tough, businesses generally have two options to improve their balance sheets: raise prices or cut costs.Throughout the recession and since, companies have tended toward the latter by trimming payrolls, freezing pay and making their operations as lean as possible, while staying away from significant price increases for fear of alienating customers. More recently, though, many businesses -- including some big-name retailers -- have resorted to hiking prices as well.
|Businesses big and small have resorted to price hikes to boost their profits this year, hitting you where it hurts: the wallet.|
Costco ( COST) announced it would raise the cost of its membership by 10% starting next month, meaning customers will be asked to fork over $5 to $10 extra this coming year depending on which plan they have. This might seem like the kiss of death for a company that has built its success on affordability, but Baumohl expects it won't affect business too much. "I don't think that raising fees at Costco will result in declines in membership simply because there is a perception that Costco is a place you go to purchase a broad array of goods at a discounted price," he says. Raising the price might frustrate some, but it won't change their perception that the store has some of the best deals.