se possible revenues.
Regardless of the overall pricing strategy that the company employs, it must ensure that its costs--at least its fixed costs are covered by its prices. If a company cannot cover its fixed costs--overhead, nonvariable labor and long-term leases it loses money with each sale. Although some companies will absorb losses in the short-term in order to build a market for the long-term (or force a competitor out of business), companies eventually must make a profit.
Since costs go up as productivity goes down, prices are also likely to increase as productivity goes down simply because companies are forced to cover their higher costs. As productivity increases, prices can be decreased so that the company can gain greater market share by capturing additional demand. This does not mean, however, that all companies lower prices as productiv
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