Why do small businesses charge so much more than big businesses and still expect people to shop with them?

Bela 08/12/2018. 12 answers
Business & Finance Small Business

It just seems counter intuitive that they charge more, when they need to attract more customers, wouldn't charging less get them more customers?

12 Answers

Bela 08/19/2018.

It doesn't matter if you get more customers if what you're charging doesn't cover all your costs. Larger stores can often charge less because their fixed costs are divided over more goods thus reducing how much they need to charge to cover all their costs.

Why do some people still shop at the smaller stores? One reason is more personalized service. Another reason may be that the smaller store sells things they can't find at the big store. A third reason is a smaller store might sell something similar to the big store for more, but by being different, they've bought something unique, something different than what everyone else has and people often like not being cookie-cutter. A fourth reason, and this is a big one, is if the smaller, more expensive store is locally owned and the big store is some giant chain that isn't. If that's the case, then there's a strong tendency in the community to buy from them because it keeps the money in the community. Giant chain stores drain money out of communities. Local stores keep money in communities. And that money circulates rather than goes away. That practice actually makes everyone in the community richer. Think about it. If you are selling stuff and your brother is selling stuff, then if you buy from your brother and your brother buys from you, you've both still got all that money. But if you both instead go out and buy that stuff from someone other than each other, like Walmart, then you and your brother have no money afterwards and have to try and figure out how to bring more money into the house before you can buy anything else while you've got the stuff that you were both trying to sell sitting on your shelves unsold because your customer chose to go save a little money and go to Walmart instead. But had you both chosen to pay a little more, you both would still have a lot more. That's an overly-simplified example, but it's the best way I can explain how people spending a little more to buy from a small locally owned store instead of a giant outside chain actually keeps money circulating in the community and means there being more money for everybody.

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Raymond L. 08/19/2018.

The large business gets s lot better buying power than the small business does

Elaine M 08/19/2018.

Because big businesses have the ability to pay less for the items due to purchases in massive amounts and small businesses don't. To make a profit the small business still needs to do a markup on the items that allows them to take in more money than is spent on those items.

Elaine 08/19/2018.

business like etsy is a place that has UNIQUE finds that is why people buy there

ibu guru 08/19/2018.

They typically offer exclusive lines not available elsewhere, or more personalized service, or free alterations, or something customers want & are willing to pay for. Otherwise, they won't remain in business. They have higher costs & must charge more, so they have to do something to compete instead of trying to under-price the competition.

Boney Boy Bailey 08/19/2018.

Big companies have warehouses, buy in bulk, can afford to sell at a loss to drive other business away. The small man has to rely on convenience, quality or doing something different, opening at times other businesses are closed and such, but they must charge more as they only have their back room to store stock, can't buy in bulk thus can't command discounts that they can pass on to you.

babyboomer1001 08/19/2018.

Charging less might get them a bit more business but they know they do not have nearly the same inventory/selection and so people would only go there occasionally for convenience and one item anyway so, either way, they are not going to get the majority of business. They can't possibly charge less enough to attract customers. There is a crappy Ace Hardware near us - tiny store, not much help, not great help when there is help. I go farther to a Lowes or Home Depot because I have a much better chance of finding what I need. Yet, those are crappy stores too. I was told by the Home Depot manager that their store is the smallest in the district. Their prices are better than at Ace but, many times, I have to order it online and pick it up or have it shipped to me. I don't think the smaller stores try to compete. They know they can't. If they can stay in business and make enough money to make a living, I suppose they are satisfied. I suppose that is how they think.

Judy 08/19/2018.

They most likely have to pay a lot more for the items they sell, can't get the same discounts.

NONAME 08/19/2018.

Because they can't afford to get large consignment

Uncle Pennybags 08/19/2018.

Small business can prosper if they can provide great service or expertise in a niche area. Or some other benefit.

For instance, there's a local gaming shop that sells games like Pokemon, Magic, etc.. But they also run gaming sessions where people can come and play there. Target or Walmart doesn't offer that. So people go there, game some, and pick up a few packs of cards while there hoping to improve their gaming decks.

not 08/19/2018.

Once the big store puts the little store out of business they raise their prices and expect you to shop with them.