When do Price Increases Become Price Gouging?

June 1st, 2020

Whether it is price gouging or not, price increases are an unwelcome trend right now.



Today’s post is by Dave Wenig, Senior Vice President of Sales and Services at SafeSourcing.

At this point in time, we’re well into the pandemic. States are reopening and business are working hard to get back to normal, including deciding what normal means now. Clearly, the COVID-19 pandemic has had, and will continue to have, wide-reaching effects on the economy. Which brings me to price gouging. Rather than looking at this from a legal perspective which will vary, I would like to pose a question from a more personal perspective. At what point do you feel a price increase has become price gouging.

Just for reference, SafeSourcing’s own Wiki defines price gouging as follows. “Price gouging occurs when a business increases the cost of their offering by an unreasonable amount. While price increases can occur at any time without being considered price gouging, these should generally not exceed around 20%. State laws may dictate the amount of the increase and other considerations in determining whether a price increase constitutes price gouging. Excessive price increases aimed at taking advantage of an emergency situation during times of emergency may be deemed to be price gouging, especially if competitive prices are significantly lower.”

Recently, many of our customers are being handed price increases for mission critical supplies that they need to operate, especially during the current pandemic. Supplies like gloves and other safety supplies are prime targets for these price increases. Some price increases have been observed at nearly 400%. Do you think that is price gouging? I do.

If we use competitors’ prices as a test of whether price gouging has occurred, then it certainly has. Fortunately, SafeSourcing is able to do what many companies simply cannot do on their own. SafeSourcing can challenge price increases in real time via our online RFQ tools and our vast global supplier database. That means that if one of our customers receives a price increase that they suspect is unfair, we can leverage our tools and process to attempt to achieve cost avoidance and to put a stop to price gouging as it happens.

Price increases aren’t always price gouging. We need to be more diligent than ever in managing price increases to avoid being taken advantage of. Now is not the time for our supplier partners to reap enormous margins while so many businesses are struggling to stay open.

Have you seen large price increases, let’s talk about it. If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

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