Pet Peeve: Late Price Change Notifications

[bearcat99]

Why has it become so impossible lately for many moulding vendors to mail out new pricelists in a timely way? It used to be that retailers would receive a yearly pricelist update at least 2-3 weeks in advance of the "effective date" of the new price increases (never decreases of course). Nowadays these pricelists often arrive in the mail at the very last minute or even AFTER the effective date. Complaining usually elicits lame excuses of the "the printer was late with it" variety. Treating your customers in this way is disrespectful and stupid.

 

[Lance E]

The moulding suppliers in NZ are getting worse also, though this year they have been a little better in general. Dealing with photographic suppliers is simply a joke, often no notification of price increases on major items such as cameras and photographic papers and chemicals.
There is no easy solution for this problem as the suppliers are often left in the lurch themselves, due to the fact that we are not dealing with primary industry sources it is not likely this problem will ease as the raw products are extremely variable in the modern market. This situation basically requires someone to absorb the costs along the way, we have not really got the luxury of passing this cost onto the end consumer as they are standing right in front of us. Just my 1/50th of a dollar...

 

[Ron Eggers]

Originally posted by bearcat99:
It used to be that retailers would receive a yearly pricelist update at least 2-3 weeks in advance of the "effective date" of the new price increases (never decreases of course).

And, as often as not, the price changes are more than yearly. We'll receive one in June, effective May 15 and then another in November, effective October 15. I don't understand why all vendors don't publish price lists on a secure website. They could even code the ones that are out-of-stock or discontinued. The days of 10% computer use among framers are long gone.

In fact, I'm going to start a poll for Grumblers: "Do you use a computer?" For the sake of accuracy, I expect 100% participation!

 

[John Ranes II CPF GCF]

I believe that this is even more justification for the use of a commercial POS program!

CMC's & POS programs

Regards,

John
User of Specialty Soft POS Software

 

[Lance E]

Could you please explain your opinion a little further John. We use POS and cost tracking software to a major degree and it certainly does not resolve the problems with late notification of price changes, it simply makes them stand out and lets you know exactly how much it did cost you.

 

[John Richards]

We are a company that is guilty of a late price list this year. In most years we get manufacturer increase (and notices) from November through February and try to publish a price list in March. This year we were still getting notices in April! It also used to be that the notices from Manufacturers usually gave us about 30 days before a price increase and with what had already been purchased would give us about 60 days to make the price increase effective. Now we often get a two week notice.

POS systems do help keep up with price changes, however, most POS vendors only update monthly. (Better than the quarterly they used to do.) Usually our customers who do not have the latest pricing have not downloaded the newest list.

Multiple increase in a yearly period are going to be more common due to differences in foreign exchange rates, petrol price swings and the rising cost of wood pulp products. Most distributors cannot afford to publish more than one price list per year. I believe you will see more distributors with a web presence start to publish their current pricing on the web only and published (printed) price lists will become a thing of the past.

Also, if your distributor mails their catalogs and price list via bulk mail, the postal service from the time they receive the materials until the time it hits you mail box can be anywhere from the next day to six weeks. (Bulk is processed as the postal service can schedule sort and delivery.)

John Richards
TC Moulding

 

[John Ranes II CPF GCF]

Originally posted by John Richards:
......most POS vendors only update monthly. (Better than the quarterly they used to do.) Usually our customers who do not have the latest pricing have not downloaded the newest list.

Lance,

To elaborate.......Specialty Soft sends out vendor updates every Friday via E-mail reminders with lists of those vendors who have made changes (including product introductions).

My last two vendor updates were in place for two weeks in our shop PRIOR to receiving the pice change information directly from the vendor themselves.

No doubt that the burden falls on the vendor to get the information to the POS folks as fast as possible and accurately, but as John Richards states the burden of updating that information also lies with the retailer.

John

 

[bearcat99]

Although we have used POS software since 1994, I prefer to update and maintain our pricing database manually. I have my reasons for this.

Regardless, there are still plenty of framers out there who are not computerized at point of sale and who therefore depend on old fashioned paper pricelists.

To my way of thinking, any time a supplier (in effect) retroactively raises prices by late notification they are out of line.

How would our retail customers respond to a surprise "modest" raw materials surcharge tacked on to the price they were quoted when they come back to pick up their framing?

 

[John Richards]

Originally posted by bearcat99:
[QB] Regardless, there are still plenty of framers out there who are not computerized at point of sale and who therefore depend on old fashioned paper pricelists.

1) I agree many framers rely on paper price lists but like Ron all framers are going to have to get dragged into the 70's and become computer literate and use POS and the internet to do business sooner than later.

To my way of thinking, any time a supplier (in effect) retroactively raises prices by late notification they are out of line.

2) If you think that late notification is out of line then you will just have to chose suppliers that do not do that. But supplier that do not change prices to reflect increases from the manufacturers will soon be out of business much like the framer that doesn't raise prices based upon increases from the wholesaler. We have lag time, you'll have lag time. At the end of this post I have a list that's tough to read but you can see that a small distributor has much more to lose by not being responsive to both price increases and notifying framers.

How would our retail customers respond to a surprise "modest" raw materials surcharge tacked on to the price they were quoted when they come back to pick up their framing?

3) They probably wouldn't like it. That's why everyone must carry enough margin to cover any COG expense changes in the raw mix of things. If you get invoiced for a matboard and notice or are told that the price went up 8% across the board I would hope you would manually update those prices or increase your markup to account for it.

This is easier to read in a spread sheet. Hope it makes sense and cents!

2002 CRESCENT #C-07120 SUEDE POLARIS BLUE 32X40
BASE WHOLESALE TOP DISCOUNT PROGRAM
$23.05 $17.98
2003 PRICE INCREASE OF 8% (LIKE 2002)
$24.89 $19.41
2002 SELL PRICE BASED UPON 2.5 MARKUP
$57.63 $57.63
($62.23 SELL BASED ON 2003 INCREASE)
2002 PROFIT MARGIN BASED ON SELL PRICE
60.00% 68.80%
2003 PROFIT MARGIN BASED ON 2002 SELL PRICE
56.81% 66.32%
MARGIN SLIP BASED ON 8% COG PURCHASE INCREASE
3.19% 2.48%

BASED ON 2002 PRICES:
IF YOU SELL 10 C-07120 PER MONTH YOU WOULD
PROFIT $345.80 ON THE BOARD, IF YOU BOUGHT AT THE
BEST DISCOUNT YOU WOULD PROFIT $396.50.

BASED ON 2003 PRICES:
ONCE YOUR PRICE INCREASE TOOK EFFECT YOU WOULD
PROFIT $372.50 AND $428.20.

DISTRIBUTOR SALES OF 150 BOARDS AT $23.05 AND 100 AT
$17.98 WOULD BE A LOSS OF $290.93 PER MONTH UNTIL
A NEW PRICE LIST COULD BE PUBLISHED. IF THAT TOOK
SIX MONTHS THEN THE DISTRIBUTOR WOULD MISS OUT ON
$1745.58 OF THIS PRODUCT WHILE YOU WOULD LOSE
$160.20 AND $190.20 RESPECTIVELY OVER THE SAME
PERIOD.

Everyone has to be responsive to make a living!

John

 

[David Waldmann]

Originally posted by John Richards:
Most distributors cannot afford to publish more than one price list per year.

That may well be. However, some simple math will quite often give a surprising answer. How much is it costing to not make a price increase? In our business, where the only thing we sell is stuff we make ourselves, it is a no-brainer to adjust prices (and yes, we HAVE lowered prices more than once). The amount of money it costs us to publish a new price list is far outweighed by what it cost to continue on, losing money. But again, we only have one product line. A distributor that carries 20 or 50 or however many a typical distributor might carry may well be hard pressed to cover the cost of a new price list by the increase of one of its product lines.

Although I personally don't agree with "retroactive pricing" as it was referred to by bearcat99, we deal with it all the time in our industry. Raw material makes up approximately 45% of our COGS, yet we don't know what the price is going to be until we order it. The better sales people will let us know if there is a general trend one way or the other, but it's pretty much a gamble. When we are planning on our new prices (hopefully for the next full year(!) we are sticking our necks out pretty far based on trend and suppositions.

Originally posted by bearcat99:
How would our retail customers respond to a surprise "modest" raw materials surcharge tacked on to the price they were quoted when they come back to pick up their framing?

Probably the same way you would if you called your distributor, asked for price, ordered it, and when you got the bill it was more than you were quoted. Which would be different than if the retail customer came in, got a price, and when (s)he came back a month later to order it and you told them it was going to be $X more.

 

[bearcat99]

We always update our pricing immediately upon learning of any vendor price increases. We know how to do this.

The problem is not what to do when price changes occur, the problem is getting a new pricelist in the mail from a vendor on (say) March 15, 2002 that says "Effective February 1, 2002" on the cover.

I am not questioning the need we ALL have to pass along COGS expense increases.

However, it does not seem like too much to ask to expect notification of price changes (via internet, email, U.S. mail, sales rep, whatever) BEFORE they take effect.

 

[David Waldmann]

Originally posted by bearcat99:
However, it does not seem like too much to ask to expect notification of price changes (via internet, email, U.S. mail, sales rep, whatever) BEFORE they take effect.

Absolutely. In fact, if I were a regular customer of a particular vendor and they didn't notify me of a price increase until after an order was placed I'd give them a real hard time about paying the increase.

In fact, just this morning the trucking company we use called and told me that effective June 3rd they were implementing a surcharge on all deliveries to Manhattan, and that a shipment we made Tuesday was going to have that on it. Guess what? I'm declining to pay it. We'll see how responsive their customer service is