Monday, April 3, 2017

When Costs go Up - A LOT - A Tale of Woe

When you're a fair trader - or maybe just an ethical business person - you always worry about those around you.  We want to make sure our artisans are paid fairly and earn living wages.  We also want to make sure we charge our retailers and customers the fairest and lowest price possible. And although fair trade is about supporting everyone along our short supply chain, we personally sometimes take the short end. 
Over the many years we've been at this, we've estimated that labor costs (in Guatemala) rise about 5% per year. We have many designs in our arsenal that we've sold to our retailers year after year. With only a very few exceptions, we've never changed our wholesale prices on these items. No wonder our customers think they get such awesome value for the prices they pay Dunitz & Company. Essentially we've absorbed and the owners of our workshops on the ground have absorbed these cost increases. With rising rents, trade show fees and other expenses incurred in running our US Operation our margins deteriorate.
So, here's our tale of woe. This year there are significant issues out of our control where we don't see how we can absorb the extra costs. Guatemala has new legislation in place charging 7% of all invoiced product leaving the country.  They're also requiring a $44.00 "documents" fee per shipment. This doesn't sound like a lot of money, but as a percentage of product costs when you ship often and reasonably small parcels, it adds up. And finally the Quetzal (Guatemalan's money) continues to weaken against the US$.  This affects our artisans. In only a few years, the Quetzal has dropped from 7.75/$ to 7.20/$. At some banks in Guatemala, the rate is 7.  The differential is huge.
The prices we pay for our older fused glass designs are being worked out as I type.  If you're reading this blog, I say "stock up."  As tough as it is, we will most likely have to to raise our prices on our various fused glass designs between 15-25%. We'll make an official announcement soon.  Unfortunately these added costs I describe here make it impossible to keep our pricing artificially low. And truth be told, even with a price hike, I think our prices will still be very good for the high quality and design you will receive. Feel good. You know everyone is being treated fairly. -ND