What can be a consequence of high overhead costs?

High overhead costs can lead to increased product pricing as businesses often need to pass along these expenses to consumers to maintain profitability. When a company's fixed and variable overhead costs, such as rent, utilities, and administrative salaries, rise significantly, the organization may find it necessary to raise the prices of its products to cover these increased expenses. This can ultimately impact how competitive the company's pricing is in the market. Additionally, excessive overhead can squeeze profit margins, prompting businesses to adjust their pricing strategy in response to maintain sustainable operations.

In contrast, higher quality of products, enhanced employee morale, and reduced customer acquisition costs are typically not direct outcomes of high overhead costs. While companies might strive for quality, morale, or customer costs independently of their overhead levels, those factors do not inherently improve simply because overhead costs are high.