If anything their prices are too low. At the current rates, there's clearly more demand than they have the capacity to satisfy.
From an economics perspective, they should raise prices and let the number of submissions decline on their own. At least then turnaround times would get back to a reasonable level. From a long term business perspective, it's likely to do significant damage to future prospects, but at the end of the day they've proven either unable or unwilling to significantly increase their capacity anyway. So why not milk it for all it's worth?
While reasonable, as you point out that strategy is not in their long term interests. Capital investment would be, as in more graders and another encapsulation machine or two.
If TATs dropped I think it could be argued that they would make enough additional scratch to cover the costs, especially long term with the new equipment. Plenty of folks around here say they have either quit subbing books because of the long TATs, will quit, or would sub more if TATs were near historic advertised rates. I fall into this last group. TATs don't impact my SS collecting, as I will get signatures regardless of the wait (though raising the prices would impact how I collect them), but I have plenty of books I would sub under the Economy tier for blue labels that I am holding off on because of the crazy 6-7 month TAT. CGC would get more of my business if they went back to a 3 month TAT on Economy, and I imagine others would follow suit if they could get their act together.
Totally agree with where you're coming from. The problem is that TAT have been this way for literally years at this point, so it's not as if this is a new problem for them.
So why haven't they increased capacity? The only two options are that they are:
1. Unable to (due to the lack of qualified graders perhaps), in which case they should raise prices to decrease TAT and improve satisfaction among the remaining customer base, since capacity won't be going up and they actually need a reduction in demand.
2. Unwilling to (maybe the NPV of new slabbing machines doesn't match up favorably with other investment opportunities in sister companies), in which case they should still raise prices to increase the value (i.e. the future revenue streams) to the company of those capital investments.
Now obviously I don't have access to any financial results or projections, so I could be totally off base. But from an outsider's view, it seems pretty clear cut to me.