The Real Estate, Hotels, and Rentals is bad in Sosua, Dominican Republic, worst than the USA in many ways, but they raise prices and doom themselves.
There is an interesting way of thinking in the Dominican Republic, the way they price things is a typical third world phenomenon. (When I am done writing this, I will check where they rank on the HDI: Human Development Index.)
Strange as this may seem to a person from the USA who is surrounded by competition and companies fighting for sales. In the underdeveloped countries like the Dominican Republic, they price their products differently.
1. The owner wants to make 100 dollars per day, so he rents his four rental units for 25 USD per day.
2. The properties will go vacant from a weak market for a couple of months, and in desperation he ----(No, he does not lower the prices.)
3. He still wants to make 100 USD per day, so he could raise his prices to 35 per day.
The thinking goes like this,
"I need to make more money, therefore I raise the prices."
He is happy if somebody rents the a unit for 35, and never Tally's up the totals and realizes over the course of a year he made much less.
It is counter intuitive to believe for a person from the USA who is used to competitions. But in many ways, this is how a King worked in days of old, they would increase the taxes by their need, not by what was possible.
Solution: The governments of nations need to promote becoming competitive with other nations.
Hmmm, maybe the USA auto companies should think on this one as they slowly go out business by failing to make cars that sell worldwide.
--- Ranked 98th out 198 on the Human Development Index
Same thing happens when governments (local, state and federal)raise taxes. Sadly, when taxes are raised on corporations they just raise the cost of their services and products, and pass it on to the customer. Let's see now. Lower corporate and personal taxes, lower prices, more people can afford to buy, more people have to be hired to make products, more people work, more taxes are collected. Rich people have money, they buy crap, people sell crap and make money,people make crap and make money. And more taxes are collected. That's what I call income / wealth redistribution.
Good insight Dwighthz, the passing on of their need for more money is understandable, but not an efficient, effective, and problem solving solution. In a way it is dysfunctional, it does not function, it does not work: by passing on the cost, they do not accept responsibility for their part in the problem. I wish people and organizations would sit around dwelling on how to offer more benefits, instead of just believing they deserve more money. I do have to admit, buying products in the USA is great, the competition inside the USA is growing, the Internet is making an efficient market for the consumer.
I don't agree that it's wrong to price stuff based on income needs... it was basically how the whole world worked until a few decades ago. In the last 20-30 years, the "developed" countries economy has switched in a negative way. Up to the 70s, the goal of any company was to deliver a product/service in a way and at a price to cover their costs and make a reasonable profit. Customer service was a priority and yes, considered as a necessary cost. In the last decades, we saw a major shift towards the mission of the companies... now companies are only cash machines, not caring about what product/service they're produce. Their main produce is profit for their stockholders and not a product/service for their customers, who are now seen just as lemons to squeeze as much as possible... that's what led to the transformation of customer service from a cost center to a profit center. I think one of the reasons for that transition is the arrival on the stock market of the mass population who wants to have an immediate and tangible return for their little investment. When the stock market was mostly driven by millionaires and institutions, they were investing huge amounts of money and their return was then higher and were measuring their success based on the additional income, not the of profit they extracted.