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That sounds odd. Why don't roofers increase their fees until supply matches demand?
by MarkMc 9y ago
That sounds odd. Why don't roofers increase their fees until supply matches demand?
- Harvey-Specter 9y agoI would guess that roofing services have inelastic demand, meaning that a change in price doesn't affect demand much. A home owner often doesn't have much choice about whether or not to repair their roof, if it needs to be done then it needs to be done.
- scott00 9y agoIf that were true, it would mean that a roofer would need to raise prices a great deal in order to reduce demand a small amount. In such circumstances, it would probably be very profitable for a roofer to increase prices. The opposite (roofing has very elastic demand) is probably more likely. Under elastic demand, a small increase in prices would lead to a large decrease in demand. Under those circumstances, a roofer may prefer the certainty of 100% utilization at a slightly below market rate to having to struggle for contracts at the market rate.
- srtjstjsj 9y agoThat's only true if the supply side of the market is non competitive.
- zanny 9y agoThey are, in most regards. In most places in the US the cost of reroofing a house has doubled or tripled in the last decade.
- alistairSH 9y agoDepending on circumstance, they may also be tied to whatever home insurers deem proper for a roof. I'd guess roughly a third of my peers have had their roofs replaced and paid for by their home insurance (storm damage - tree limbs, hail, etc).