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Seller's Market

Enterprise -- Trends: Currents

Seller's Market

Most companies have no room to raise prices, but small business may be bucking the trend. A recent study of 350 companies by Duke University's Fuqua School of Business finds that companies with annual revenues under $24 million are planning to raise prices 2.2%, compared with 0.4% for Goliaths with sales in the $1 billion to $5 billion range. A 2.2% hike also beats the current 1.5% inflation rate. What's behind this pricing power? John Graham, the study's author, says many entrepreneurs operate in niches and face less price-busting global competition than corporate giants. How will this gap in pricing power affect the bottom line? Corporate giants expect earnings to rise 6% this year; the smallest firms expect a 20% rise.

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