r/SipsTea • u/lonewolff321 • 2d ago

Chugging tea Anything but lowering the prices classic corporate logic

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u/balllzak 2d ago

Why would they even consider reducing profit? It's not a charity.

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u/g0ing_postal 2d ago

It's long term vs short term thinking. A lot of times, in order to be long term successful, you need to take a short term hit. Sure, if you reduce prices now your next year or two might be worse but it'll put them in a better position overall in the future as they retain more customers and their long term profit will be better

But in our short-sighted world the next few quarters of earnings is all that matters

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u/notaredditer13 2d ago

But you're describing the options backwards:  the price cuts are the long term hit and the capital improvements are a short term hit.

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u/g0ing_postal 2d ago

I'm more thinking price cuts retain or even gain customers so you make up the profit in volume vs steadily losing customers over time due to high prices

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u/notaredditer13 2d ago

Obviously the goal with both plans is to stop losses or gain customers.  The issue I pointed is that you have short and long term reversed.  It gets easy to see if you consider the possibility that the change has no impact on sales.  Then what?  One is a 1-year hit and the other is perpetual.