Final answer:
Informal pricing strategies often overlook the costs associated with changing prices, known as menu costs, and the impact on customer perception and market equilibrium.
Step-by-step explanation:
Informal approaches to pricing hospitality products and services fail to take into account costs. The concept of menu costs highlights the expenses businesses face when changing prices, such as the cost of analyzing competition and market demand, updating sales materials, and revising billing records. Furthermore, price adjustments can impact customer perceptions, potentially causing confusion or dissatisfaction if a product's cost is higher than expected. In addition, price changes are not instant across the economy due to these challenges, and frequent alterations can affect the market equilibrium and the perception of product quality.