For quite a while we have been wanting to offer some insight into the value chain of a (our) business and how we set prices. But then we have been left in limbo because INFLATION entered the conversation.. a mega killer and a mega stresser.
Calculating our prices is not the easiest task for us - let me try to briefly explain why.
We have a whoooole wage setting method for our team in Guatemala which is a time motion study elaborated by Bernabela herself (and now tested with the Nest’ tool for time motion studies for artisans - if you are really into these things you can read more about it here in our IMPACT REPORT).
Okay, so back to the first step in our value chain: the price for our team’s labor, which is of course the most essential part of our business. Then you have to add material costs, shipping costs, custom, taxes, packaging, indirect costs of the business’ operations (salaries, rent, supplies etc) and then the big one - retail markup.
For each store we have to add at least a 2.5 mark up to our product’s prices. This is the minimum markup that most stores accept to even consider buying your product. This quickly escalates prices - even just the smallest amount of 3 dollars in the very beginning of a value chain multiplies into big amounts when you add all the costs and multiply it with the markup. We actually made a RECEIPT EXAMPLE of a product calculation a while ago to demonstrate this more easily. In our social business it is not very profitable for us to wholesale our products, there is hardly any earning with that - BUT we need wholesale, because our retail partners provide bulk orders and this gives volume and generates a lot of income for our team in Guatemala.
Okay.. so moving from the contextual explanation back to the current situation. INFLATION!
Prices are (as we have all felt in our empty pockets) seriously increasing worldwide - from the living cost in Guatemala, to the cultivated fresh water pearls and DHL shipping (gas prices guys, ugh!). We have been trying to push it off for as long as we could because we like our prices as they are now because we want to have as many things available for as many as possible. But reality is that we have to take our business seriously and look at the hard numbers. We have adjusted prices for labor in Guatemala, we are paying up to twice as much (and sometimes more) for our beads and freshwater pearls.. it’s really insane. There is no way around it for us now, we have to make a price adjustment.
It is a huge leap of faith for us because we are of course nervous about how you as a community will receive these adjustments and if you will continue sticking to us and supporting us as much as you have so far. We really really hope so.
We can promise you that our mission stays the same, we will continue to make designs (with the best quality beads) by the insanely skilled hands of the women in our team to create meaningful products that have an impact.
The price increase will affect our entire collection from March 31st. So guys! If there is something you have been contemplating buying, maybe this is your sign?