It’s that time of year again… time to start costing out and implementing the annual increases. As for any independent business this always poses a conscious dilemma to strike a balance, between what the business needs and what I feel I can charge the customer. Of course I know my title has already freaked a few people out… but please don’t worry there is nothing extreme in any increases I have had to implement. Instead this is a scribing of my own consciousness and highlights my own struggles with such business matters. A similar story I’m sure at other independent HQs.
Generally most things have increased this year by around £0.30. This represents annual increases from farmers and suppliers. 2012 being a damp year meant a lot more feed and preparation went into the animals, their fleeces, tops and other fibre based product, pushing up increases at cost level. You will find that silk has seen somewhat higher increases. Something that has been the case certainly for the last 2-3 years, especially now that China is trading these more widely and the taste for silk has increased. I also found exotic fibres such as Alpaca and Camel have seen increases higher than ever before. So rather than continue storing such expensive options I have decided to discontinue them and so have given them a sale priceon my website. To be honest these are items that I do not sell as regularly as other fibres and having had slower sell through from the last increase I found my stock holding unsustainable. Freeing up these monies into my cash flow will again allow me to launch other woolly product and so I feel far more confident that this is the right thing to do.
Hand dyed fibres and yarns have increased by £1 this year. This is much higher than I would have liked, but during the year I have had to use electric drying facilities to produce in volume, as the weather has been against me. With the increase in fibre and dye stuff this increase is much more than I had hoped. So for example a 100g braid was £4.75 and is now £5.75. Braids still give you a large value for money aspect though, as most competitors of equal quality would charge at least £8-10 for a similar 100g braid.
Ashford equipment will also go up. I am now selling these at RRP, as underselling is simply not possible for such a small business. Don’t forget though, service is extremely quick and I do have many complimentary items for say, your first wheel, or drum carder.
All in all, as I say the increases aren’t as bad as all of that… I wish I could hold them lower, but in most cases I have held prices for 1-2, or even 2-3 years, so you can see that this year it would be impossible to forgo a further cut in margin in such a tight trading time. Of course if I can grow again this year I will use any new buying powers to bargain us some extra savings and I hope to hold prices next year.
Shipping… well you will be pleased to hear that as a counter balance to the price increases I have been able to pass on savings to you via your shipping. Last year I spent around £18,000 on shipping with Royal Mail (scarps herself back off the floor), yes £18k! While I shudder at the thought of us handing over such a large amount on shipping, I know the potential is for it to be more this year if I can continue to grow. So the business hat said enough was enough and I now needed to ask again if I have hit the next tier of revenue with RM to make us better savings. To my surprise the answer was yes and so I have been playing around with figures and options to come up with something I hope will suit. So;
UK shipping is now a flat rate of £2.90 (Feb-Apr 2013). I am hoping to be able to hold this across the end of the year, but we will see what increases RM advocates in April. I know there will be some of you who shriek at the horror of a flat rate shipping price… I know, we have had these conversations and truly, I fully appreciate if you want just one smaller item that a flat rate ship is not always advantageous… but, bear with me while I explain. Last year customers who spent £60+ where subjected to a £27 by Royal Mail, if I could not find a cheaper courier service. This was just ridiculous. Also anyone spending over £39 had to stump up cash for Special Delivery services of £10, so I could buy insurance for their packages. This could not continue. My new system allows those same customers a break in spend on shipping and so while it does mean more for the one-off purchaser I hope you can see my solution is ultimately the way I had to go. So, if you are a single item purchaser, please bear in mind that if you have a list of items you usually buy… check those stash levels… maybe you could top up while you are on the site and save on shipping costs later on. I know it may mean less regular visits and I understand that, but it is the way to get around paying more in the longer run.
Overseas shipping (Feb-Apr 2013). Generally these prices have decreased by £3 per 1kg (1000g). That is in most cases the same value as the annual price increases… so you will notice your bills coming to very similar figures. At the moment I am not expecting to be able to hold these prices past April, as airfare increases every so often by larger amounts… but I am hoping that any increase in April of this year will be as minimal as possible.
Ok, so that it… my price and shipping ritual is done for another year and I have written my justifications... Am I nervous that this will affect sales? To be honest there is always trepidation in setting out new pricing and shipping rules. I know you cannot please everyone all of the time (as much as I like to). I do however remain confident that I have kept my increases to a minimum and found the right balance of savings to pass on. I do not feel I have out-priced my product or quality and believe I have found the best shipping options for the wide majority of customers. So I am hoping any affect will be a positive one this year.
I look forward to sharing lots of new product and getting together this week’s shop update!