Charge What the Market Will Bear (Long-Term)

For a manufacturer with a long-term perspective, the philosophy of "charging what the market will bear" should be equivalent to pricing based on the sustainable, long-term value to the customer.

It should not be interpreted as opportunistic price gouging during short-term market perversions like a supply shortage.

The Danger of Short-Term Opportunism:

• Destroys Customer Loyalty: Customers have extremely long memories when they feel they have been treated unfairly. Taking advantage of a short-term shortage to charge excessive prices will alienate and lose customers permanently.
• Invites Retribution: Those customers will take great pleasure in punishing past price gougers when the market loosens up. They will be the first to have their orders canceled and will actively seek to design you out of their future products.
• Cedes the Moral High Ground: It damages the company's reputation and brand image.

The Long-Term View:

A manufacturer must take the long view. The price must be seen as fair and reasonable over the long term if you want to maintain customer loyalty. You cannot take advantage of customers in the short term and still expect to maintain their business.

This is a key difference between a manufacturer, who must build long-term relationships, and a broker, whose business is explicitly to play the spot market.