LB- “Why wouldn’t a store with more baseline expenses, such as higher rent and employee salaries (and employees), not charge more per hat to account for their greater profit needs?
Then again what about other motivators for pricing? Some people, regardless of the cost to maintain their business, may need more profits to support their families.
Or sometimes stores add more to their prices to account for expected losses due to various factors, including damaged hats.”
Because all these things would cause demand to go down, in which case they would have to lower their prices if they want people to step in the door.
Bottom line is: people don’t really care why you’re charging more unless you’re doing it to directly benefit them (e.g. better return policy, better customer service). And if you are actually doing something extra to benefit the customer, demand goes up, justifying the increase in price.
It’s all supply and demand.