Stupid question: why is there inflation at all?

This isn't an answer, but you've inspired me, brought a memory from long ago back to mind.

Many years ago I used a service provided by another company as part of my job. When we first started using this service it was $10 per month. Then $20, then $50, then $150, then $550, then $2000 before we finally said no and moved on to an alternate solution. Had there been many competitors, perhaps we would have moved on sooner, but there were only a few providing similar services and they all tended to move in lockstep. To escape, we had to make large changes to our own company's operations.

Anyhow, near the end of that relationship I finally got the ear of someone higher up in the company who was somewhat sympathetic to the burden they were causing, but simultaneously rationalized away their rapid price hikes. They told me something I've never forgotten about businesses. First, keep in mind, the #1 objective for a business is to make a profit.

So, what this company had discovered was that LOTS of clients cost them lots of resources, and lots of time. It was expensive and difficult to service a lot of clients. Fewer clients paying higher prices cost them significantly less for several reasons, and having fewer customers made their jobs so much easier. Their highest paying customers had very rigid unwavering requirements, and deep pockets. They very much preferred to have 1 customer paying $2000 instead of 100 customers paying $20. He even jokingly noted, "If we could find one customer to pay $10,000,000 per year, we'd charge that and eliminate all of our other customers"

Perhaps, a number of businesses have started favoring this approach. Consider a business as common as a sandwich shop. If the owners find that they can have a single employee make a single sandwich and it will sell to one wealthy regular custom for $200 per day, then why would they want to the burden of managing 10 workers making 20 sandwiches per day for 20 customers?

/r/economy Thread