Most of the time proponents of price-elasticity make me laugh. And, I do say this with respect. I used to be one of these proponents. I inhaled business book after business book once done with engineering school. And, I played the game. And I got my ass handed to me.

In the real world price elasticity works within a very narrow range that is industry and product specific and can --and usually is-- highly dependent on a huge number of external factors.

Discounts are one of my favorite. Believe me when I say that I've played that game multiple times. I used to own an electronics manufacturing business that made products for industrial and professional applications. I had to face the reality of product from Korea and China entering the market at half my price and offering 60% of my value. The result, no matter what I did, was the huge sucking sound of sales leaving for the competition.

Lower your prices you say? Did that. Multiple times. In multiple creative ways. Eventually matching their prices and accepting lower profits. "We'll make it up in volume". Bullshit! Maybe I sold 1% more product. That's it.

OK, how about more value. Did that. Multiple times. Added features. Added mind-numbing technology. No-go.

We are talking about products costing thousands of dollars per unit here. The fact was that people, particularly as the economy got worst, wanted Walmart, not Gucci. And so the business went to what they perceived to be the cheapest they could get.

Don't get me started on Asian companies dumping to kill-off competition. Nasty.

OK, well, how about the high end. I had very high end product as well. $50K per unit and above. High performance. The best of the best. Volume, just like the taylor in the article, sucked. We could make these "Ferrari's" but it was sheer pain and suffering, financially speaking. The general theory was that we'd sell a high-end unit and also sell a lot more lower-end units along with them. Nice dream.

So, raise prices? Sure. Why not? The problem is that people are only willing to pay so much for what they are buying. The "how much" is a multivariable problem that is nearly impossible to solve. This is certainly true for a taylor who only makes a few dozen suits per year. He can't experiment with pricing too much as word of mouth would destroy his business. If customer B learns that he paid more for the suit that his friend, customer A bought all hell breaks loose.

I know I sound very negative about this. I am just looking at it from the perspective of having experienced failure in price elasticity due to the product I was pushing existing in a very narrow trading margin. Volume couldn't really scale at the bottom or at the top due to different factors and price at the top was limited by what people were willing to pay for the product category.

Perhaps he can charge more for additional services that he might not be monetizing. One example might be to extend the delivery time on his standard $4,000 suit and charge a $1,000 fee for faster delivery. In effect he would be raising his actual per-unit price, but it would be in the context of easily communicable value. In the prior example, customers A and B would have on issue with what each paid because the conversation would quickly identify that B got his expedited, which costs money.

He could also take in an apprentice and see about offloading some of the work. My family owned several clothing manufacturing plants and so I am also familiar with aspects of this business. There's a lot that can be done by less skilled workers if one is smart enough to setup systems to make this happen.

Finally, he might be very well served taking his problem to a local business school to see about getting help from one of their various programs. His business could very easily become the subject of a class and he could have a small army of consultants helping him move it out of the garage.