The Real Reason Dollar Store Products Are No Longer $1

Few things actually cost a dollar in dollar stores anymore. Whether you’re shopping at Dollar Tree, Dollar General, or Five Below, prices are now typically $1.25, $1.50, or higher.

“A dollar in 2025 buys significantly less raw material, energy, and labor than a dollar in 2019,” says certified financial counselor Robin Valadares, who closely follows the retail market. “If these stores had stubbornly refused to raise prices, they would have been forced into a practice known as shrink-flation, where the price stays the same, but the product gets smaller.”

That could mean thinner aluminum foil that tears easily, watered-down dish soap, or spices and condiments filled with excess air, Valadares suggests. By moving the minimum prices a little higher, these stores can instead avoid offering smaller, thinner, more diluted products.

“[Dollar stores] chose to ask for a quarter more so they could keep providing full-sized, functional items, like a spatula that doesn't melt or a roll of paper towels that actually lasts more than a day,” Valadares says. “The price hike was necessary to protect the utility of the product and maintain their viability as a business.”

Dollar Tree Price Increased Over the Past Few Years

When you go to a Dollar Tree, there are little red stickers everywhere—on price labels, shelf signs, and on the products themselves. These indicate that prices have recently gone up. In many cases, items are $1.50, but some are as high as $10.

The trend towards a multi-pricing strategy isn’t new. In late 2021, Dollar Tree made the decision to start permanently raising prices on most products to $1.25. Inflation and the rising costs of the items themselves led to that initial change.

In early 2024, Dollar Tree’s then-CEO Rick Dreiling discussed the prices during a fourth-quarter earnings call. “One of the most important initiatives at Dollar Tree is our multi-price point strategy, which we're calling more choices,” he said. “The underlying premise here is that we can present a more relevant assortment to our customers if we are free to offer items at a variety of price points.”

In early December 2025, Dollar Tree announced in a statement that 85% of the company’s merchandise is priced at two dollars or less.

Other “Dollar” Stores Also Increased Prices

When Dollar General first opened in 1955, founder Cal Turner Sr. was fascinated by the “dollar days” sales that department stores often offered. So he launched a store where everything was always just one dollar. For many decades, the store kept prices for its products at one dollar.

One dollar in 1955 has the equivalent purchasing power of about $12 today, according to inflation data. Just like Dollar Tree, Dollar General eventually raised prices on many items and adopted multi-tier pricing, but the company still sells more than 2,000 items at one dollar or less.

“We recognize the dollar price point is important in helping customers stretch their budget, especially at the end of the month when funds may be limited,” said Bryan Wheeler, executive vice president and chief merchandising officer, in a December 2025 statement. 

Similarly, retail chain Five Below opened in 2002 with the strategy that everything in the store would be five dollars or less. But with rising costs, the company began offering products priced at seven dollars, ten dollars, or more over the past few years.

At the company’s fourth-quarter earnings call in March 2024, CEO Winnie Park said Five Below is returning to its “core focus at whole one-dollar to five-dollar price points” and making sure items above five dollars have increased value.

“This commitment not only sets us apart in retail, but also resonates more than ever with customers looking for budget-friendly options in these uncertain times,” Park said.

The Reason Behind the Price Increases

Rising prices and the economy are certainly among the main reasons for price increases at so many retail locations, including dollar stores, says Valadares.

“It is a calculated mix of economic pressure and a strategic pivot,” he says. “From start to finish throughout the supply chain, it costs more for the same goods. When your profit margin is measured in pennies, these ‘invisible costs’ destroy the business model. Breaking the one-dollar barrier wasn't just about making more money; it was about covering the compounded inflation of the entire supply chain.”

It’s also a type of rebranding. When everything was one dollar, the stores were limited to selling things like snacks and knick-knacks.

“By expanding the price range, they can now sell grocery staples, like frozen meats, name-brand detergents, and decent cookware,” he says. “This strategy transforms them from a convenience store into a legitimate competitor to the grocery store, allowing them to capture a larger share of the family food budget, especially in an economy where individuals and families are trying to stretch their dollars as far as possible.”