thread Re: Inflation: How is your business dealing with it? in Retail & eCommerce

Inflation: How is your business dealing with it?

TCSlaguna — Tue, 08 Mar 2022 22:23:14 GMT

Hello everyone!

With the U.S. inflation rate accelerating to a 40-year high of 7.5 percent, I was wondering:

How is your business dealing with inflation?

How much have your input costs increased?

Have you increased your prices to account for inflation or have you kept your prices the same?

Has it caused you to look for alternative vendors?

@homeprogreen @keicollective @DinaLRosenberg @JessPoynter @HC_Charlie @ginawood @egpcrafts @soycandlesbytas @MudFire_Dex @TOTSC @specialtiesgame @JupiterGames @GourmetOnWheels

Re: Inflation: How is your business dealing with it?

homeprogreen — Tue, 08 Mar 2022 22:44:50 GMT

Shipping costs have definitely risen. I set my margin long ago so it’s simple. Every order I run the numbers against margin so if my costs go up then my prices go up. But my customers seem to take it in stride because they know that if my costs on an item goes down then the price they pay also goes down

Re: Inflation: How is your business dealing with it?

MudFire_Dex — Tue, 08 Mar 2022 23:43:33 GMT

My shipping costs are double right now (without the gas increase that I am sure is coming). On some things, we are eating the difference and on some, we have increased prices. A pallet of clay has gone up .03 per lb in the last few months which correlates to a small increase but shipping is usually is closer to $200 per pallet and was closer to $400 on the last order I placed but the larger issue for us has been supply chain in general or shipping delays. The supply chain has us testing a new line of products because of delays from one of our suppliers that have become 6+ months. We actually were rung out for products in December that we didn't get until March which didn't feel good. We also had a pallet completely freeze coming out of St. Louis last month which was a real pain. Customers have been understanding in general about price increases. Since a lot of our income is in our membership fees we haven't increased those since those costs haven't been super affected yet but that may change if energy costs rise due to gas/energy prices from the war in Ukraine.

Re: Inflation: How is your business dealing with it?

DinaLRosenberg — Wed, 09 Mar 2022 00:44:15 GMT

We're pretty lucky in that we just purchased a huge amount of product that can hold us over for quite some time. We did have to freight that product in so we take our regular margin plus a little bit to recoup that expense. To reiterate above, shipping has gone up. Uline is raising their prices on packaging- but we're transitioning to using the free priority boxes from the post office when we can. Regional Rate A is our friend.. We haven't raised our services prices in three years since we opened so we are going to move them up just a little bit... not a ton- but something.

We gave our employees raises- we probably can use one more person on staff but are holding off and instead using people on project basis.

Re: Inflation: How is your business dealing with it?

keicollective — Wed, 09 Mar 2022 01:49:47 GMT

As an artist collective, our community has been hit by not only inflation but also by the rather substantial Etsy rate hikes of late.

The shop itself runs off of rent paid by each artist based on how much space they occupy. So haven't seen anything effecting the shop directly. But our artists are feeling it for sure. There's several common art supplies that are having shortages due to shipping/supply chain issues. And like I mentioned, Etsy just about doubled their fee (3.5% to 6.5%).

In store, we've had several of our artists raise their pricing in the last month to help adjust for all the changes. We also all share info in a discord server so when someone finds a good deal with a printer or a new supplier of an art supplies we all know about it! Crowd sourcing info has been a life saver for some.

Re: Inflation: How is your business dealing with it?

GourmetOnWheels — Wed, 09 Mar 2022 02:38:23 GMT

I do not see it as inflation, I see this as Price gouging. Businesses are raising prices as they see the world slowly return from Covid-19 and there is a lot of demand for products and services.

As my meat and poultry supplier has not raised any prices, my cheese and charcuterie supplier is raising prices and it is clear it is price gouging.

René

Re: Inflation: How is your business dealing with it?

GourmetOnWheels — Wed, 09 Mar 2022 02:40:05 GMT

@keicollective That is a perfect example of price gouging by Etsy

René

Re: Inflation: How is your business dealing with it?

GourmetOnWheels — Wed, 09 Mar 2022 02:41:57 GMT

@DinaLRosenberg Shipping prices have gone up massively and that is also price gouging, not inflation.

René

Re: Inflation: How is your business dealing with it?

HC_Charlie — Wed, 09 Mar 2022 16:17:46 GMT

Inflation hasn't touch my general merchandise much. A lot of my suppliers/manufacturers have tried to absorb some of the cost, but not sure how much longer. Inflation has mostly touched my raw materials for the products I make for wholesale. My solder costs have more than DOUBLED and sometimes TRIPLED over the last several years. This increase has been going on the last several years as raw metal prices like tin and copper have soared. I've just absorbed the cost so far since my profit margins are pretty good on these items. If it continues to rise over the next year I may need to make some adjustments.

Re: Inflation: How is your business dealing with it?

Innerglo — Thu, 10 Mar 2022 22:07:31 GMT

Raise prices. It is what it is.

My prices reflect the cost of doing business and not "what the market will bear" or "threshold of pain" price point.

If my cost goes up, so do my prices to protect the profit that makes this worth my time. Its not like the competitor down the street can offer a substantial discount. They have the same issues I have. Even if they do, they are just hurting their operating budget for future growth.

That is my thoughts.

Re: Inflation: How is your business dealing with it?

shopfybr — Fri, 11 Mar 2022 00:30:32 GMT

I have increased our prices accordingly with our vendor increases, mostly sticking to MSRP. However I'm thinking about doing additional increases to accommodate the cost of doing businesses.

Re: Inflation: How is your business dealing with it?

Bluetozai — Fri, 11 Mar 2022 06:31:37 GMT

As a small restaurant, basically….the product rises from the vendor that’s a fact, but as we offered free delivery in to our neighborhood, now we have to charge for delivery due to fuel/gas increase

Re: Inflation: How is your business dealing with it?

Enigma — Fri, 11 Mar 2022 07:44:14 GMT

I’m a mobile hairstylist and honestly I getting hit from every angle. My car use to take $25.00 for a full tank… Now it’s $50.00and hair products have went up significantly. A social site stated that all cosmetologist should go up 30% on all services. I’m going to stay positive and just keep on moving forward! Just keep swimming 🐠🐟

Re: Inflation: How is your business dealing with it?

Eric257y — Fri, 11 Mar 2022 14:48:26 GMT

I move my prices along with the price of the material I need to fill my clients needs. It's the shipping that customers are complaining about

Re: Inflation: How is your business dealing with it?

TCSlaguna — Fri, 11 Mar 2022 19:29:09 GMT

Absolutely love and appreciate everyone's insight on this. I know many economists said that inflation would be transitory, clearly doesn't seem that way. I think it's important that businesses recognize the increases in their costs and adjust accordingly, otherwise it will be difficult to stay afloat.

Re: Inflation: How is your business dealing with it?

JUYBoutique20 — Fri, 11 Mar 2022 20:37:01 GMT

As a boutique owner we increase our prices as our vendor increase theirs. Each quarter I look at my prices to make sure I'm on track with the margins I'm goaling myself for. I think the biggest price change for me will be shipping. I've been offering a flat rate but I'm looking into changing that because I'm literally paying out double of what I charge sometimes.

Re: Inflation: How is your business dealing with it?

amandalocho — Sat, 12 Mar 2022 17:57:15 GMT

I agree.

Re: Inflation: How is your business dealing with it?

blackberryhouse — Sat, 12 Mar 2022 18:21:42 GMT

We are a manufacturer/distributor of home decor paint and sundry products. Our costs on literally everything we use and sell has gone up significantly on a steady basis for 2 years. Prices on resins and plastics have dramatically increased, which directly affects our bottom line - we use one or the other in 95% of the products we use and/or sell. We always buy in bulk to save on shipping, but even that is now a challenge. For example, In Feb of 2020 shipping on a pallet of product we buy on a regular basis was averaging around $98-106 per pallet. This pallet has 1188 pieces of product on it. So, this means we paid around $.08-.09 per piece for shipping - which we factor into our cost. The product itself cost $.67 each, and the lids for them was $.09 each. In Feb of 2021, this same product cost me $.98 each, and the lids were $.14 each, and shipping on the same pallet of product was $264. So, at that point, our price went up on the 1 item a total of $.50 per item - which equates to an increase of $594 for that 1 pallet. (For reference, we order 3-4 pallets at a time.) In Feb of 2022, for the same product, we are now paying $1.37 for the container, $.19 for the lid, and shipping on that same pallet is now $319. So, doing the math, that's now an increase of $.98 PER ITEM on that pallet from 2020, and an increase of $.49 over 2021, which is a total increase of $1164.24 PER PALLET over 2020 prices, and an additional $582 over 2021. And this is only on ONE of the items we use. We have 26 different containers we use!

Add to this the fact that the product we had always been able to get in stock within 2 weeks, we're now having to cross our fingers and hope we can get it within 6-9 months. This is no joke. We've waited up to 14 months for product we used to could call in an order for on a Monday and receive in house by Friday.

In my business, resins, plastics, pigments, and most all raw materials are now being rationed, which means if my factory is only getting 10 barrels of product each week where they used to be able to get a truckload, then we're in line with every other vendor begging for a share of those supplies.

In our case, we have eaten ALL of these price increases for the last 2 years up until recently. We only raised our prices last month, and only enough to cover our new costs. We're just trying to make the same margins we were making 2 years ago. So, when you say so many people are simply price gouging, I would encourage you to look behind the scenes at what a business really has to deal with. It's not cut and dry, and there are always other factors you may not know about.

We rarely ever get a complete order, so we started ordering double what we need at the time in hopes of receiving at least 1/4 to a 1/2 of that order. The paint industry has been hit very hard with supply chain issues.

The only hope in seeking out alternative suppliers is to actually find someone who had any product you need in stock prior to the slow down. It has happened, but we had to pay more for it also.

When the lockdowns first started, we began increasing our orders because we knew what could happen. The excess supplies only lasted us about a year, and then we were in the same waiting line everyone else was.

In an effort to recoup costs, we started selling directly to consumers on our website. Not competing with our retailers, mind you, because we do not sell into areas where there is a physical location selling our products.

Selling directly to consumers allows for higher profit margins. (We are primarily wholesale). However, we've also changed our marketing angle to gear our product more to the end user, and we've slowed down marketing for new wholesale accounts.

Overall, the supply chain issue for our industry is finally loosening up a bit, but we still have pigment issues.

Hopefully, we'll all be back to better business soon!

Re: Inflation: How is your business dealing with it?

rtfulk — Sat, 12 Mar 2022 20:42:55 GMT

We direct import so we haven't had to raise any of our prices, we also pre-pay for freight space. So if the price goes up we are locked in at a certain price.

What really gets me is the companies like Sezzle. They sent an email out a couple of weeks ago 6% plus .30 per transaction, we have stopped taking Sezzle, in my opinion that is way to much for me to pay so someone else can pay for my product over time.

Re: Inflation: How is your business dealing with it?

TheRealChipA — Sun, 13 Mar 2022 13:55:17 GMT

My costs have not increased as much as many others. Last year we could see the handwriting on the wall, and overhauled our business model. The best change we made was to focus on our ice cream and beverage business, and completely eliminate the food component. From all we could see, the pandemic was going to completely upend the food service business, and it turns out that was a lucky guess! Our biggest cost increases have been utility rate increases and shipping/freight charges, though we have seen more modest cost increases across the board.

Before inflation started, the pandemic had caused us to expand our vendor and manufacturer list. Now, for most products, we have multiple vendors and brands that we watch closely. When cash flow allows, we go ahead and purchase ahead, stocking up on products when the prices are good or we can see a tightening of supply. We open in a few weeks for our 2022 season, and I estimate that we have pre-purchased enough at decent prices to keep us going for at least the first 2 months of the season. That gives me room to watch the market and stock up when prices are good. It’s more time consuming to manage all of these vendors/manufacturers, but I’ve been rewarded for that effort on more than one occasion.

This year, we have only raised prices a little. We made the decision to take a cut in owner draws in order to keep our prices stable without cuts in other places (like labor). It’s going to be a sacrifice, but we are already getting positive feedback from people who are seeing our new menu and who notice that we aren’t following the pack in exorbitant price increases.

Right now, it’s a juggling game and I have lots of balls in the air. But it is working, and hopefully I’ll be able to continue it. One last thing. I’m pretty sure that as supplies allow, I will run up my line of credit this year and go ahead and pre-purchase most of my non-perishable inventory that I project I will need for the season. Energy prices are only going up for the next 6-12 months, which means that shipping and utility costs will only rise more. I’ve built my guesses into my proforma for this season. Hopefully I guessed correctly!

The debt doesn’t bother me because it will be short term, and it is product that I would be buying anyway. At least I’ll have the peace of mind knowing exactly what my CoGS will be, and I won’t be so susceptible to supply issues and bottlenecks, not to mention shipping bottlenecks.