ASSOCIATIONINSIGHT
Portable Sanitation Association International News
BIWEEKLY EDITION APRIL 1, 2020
Page 2
Others use language that is more open to interpretation. For example, Iowa prohibits "excessive prices"
defined as "one that is not justified by the seller's actual costs of acquiring, producing, selling, transporting,
and delivering the actual product sold, plus a reasonable profit."
The PSAI has created a resource to help you determine what constitutes
price gouging in each state. Find it here in the PSAI's COVID-19
Resource Center.
How High Can I Raise My Prices If My Costs Go Up?
It may be that you need to raise prices because your costs have gone
up. At what level can someone credibly accuse you of gouging?
Because there is no "one size fits all" definition of price gouging, there
is also no simple answer to this question. In general, here are some basic
red flags for potential price gouging:
1. Prices that are considerably higher than they were before the crisis, but without justification for the
increase. Almost everyone understands that when things become scarce, prices go up. The issue with
price gouging is whether the price goes up for a reason that is justified or opportunistic during a declared
emergency. If you supply product X which previously cost you $10 and now costs you $30, in most states
you are justified in raising the price 200% because your cost went up that much. But if it only costs you
$12 now and you decide to charge $30 because the market will bear it, that's likely to be a red flag.
2. Prices that are considerably higher than average. Businesses are allowed to compete on quality and other
differentiators, even during an emergency. They are NOT allowed to raise the price of their products or
services excessively to take advantage of the current pandemic. For example, if competitor A is charging
$100 for something, competitor B is charging $110 for it, competitor C is charging $108 for it, and you
want to charge $200 for it, it will be a red flag during an emergency.
3. Price comparison between similar products. Some state laws prohibit significant increases in prices as
compared to other products. For instance, if your product X is priced at double the cost of similar product
X-es, that may again raise concern that you are violating price gouging laws.
These red flags do not necessarily mean that you are guilty of price gouging. However, they will likely
draw the wrong kind of attention to your company and you'll need to demonstrate why your prices are in
compliance with the law in whatever state(s) you are doing business. To do this, make sure you are keeping
a paper trail for every component of your pricing so you can demonstrate that what you are charging is
reasonable in light of your costs. Again, refer to the state by state resource to help you determine what sort of
evidence you will likely need. Find it here in the PSAI's COVID-19 Resource Center.
How Should I Report Price Gouging?
If you believe one of your suppliers is gouging you, report it to the entity shown
on the above resource for the relevant states. Generally, you will need to provide:
• The time, place, and specific products or services involved in possible price
gouging
• The name and address of the business you believe is price gouging
• The difference in prices before and after and/or
• Any prices competitors nearby are charging and provide the same information
on those businesses
• Photos, screen shots, emails, or other documentation you may have to verify the above price difference
• Your own name and contact information v
Please
let the PSAI know
about instances of
price gouging that you
notice. Call
+1-952-854-8300
or email
karleenk@psai.org.
Is It Price Gouging?…continued from page 1
