The annual running of Grandma's Marathon in Duluth, Minnesota, is considered one of the best managed marathons in the country, and many runners love to participate to see the beautiful shoreline of Lake Superior, where runners and viewers can see the majestic lake as they run in or watch the event.
Possibly the only negative feedback endured by the organizers is concerning the cost of rooms during the duration of the time spent there.
This year it's no different, as hotel rooms are going for as high a $500-a-night, with the stipulation you must spend a minimum of two nights in the rooms.
Many consumers and even those running businesses misunderstand why something like this must happen. It's because of demand; nothing more or less.
Raising prices isn't solely based on making a profit, it's based on managing the resources you have available. Think of holiday weekends when gas prices are raised in order to ensure there's enough supply to meet the demand. While consumers and misled people think it's underhanded tactics, in reality the stations could possibly run out of gas if the prices weren't raised.
The reason why is if something isn't priced higher, people will overconsume it because of the lower prices.
This is the same with a special event like Grandma's Marathon. Even with the higher prices, every room in the city was taken. What that shows is the prices weren't too high, and the demand so large that they could have even been higher.
Oil prices have been going through the same experience over the last couple years, as demand forces the prices higher, or the amount of oil needed would skyrocket even more. What pricing is, is a tool to control and manage resources, no matter what product or service is offered.
So when people use the term "gouge" in an attempt to manipulate the minds of people concerning business, now you know that it's rhetoric and ignorance, rather than a reality. Prices reflect demand, and if they aren't raised in accordance with demand, that's when shortages occur.
Don't be afraid to raise prices to reflect demand, or you'll soon find yourself out of the product you're selling. That will make people more angry than what the item is priced for.
This is why those selling commodity items struggle so much, as you can get them anywhere, and so pricing is the sole criteria made by people to buy the product. The exception to this would be businesses like convenience stores which people are willing to pay more in order to save time and effort.
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