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Pricing Items In A Pandemic

Hey Crewmates! 

We don't do blog posts that often but we wanted to put one together to go over some pricing changes and give you guys some visibility into the process of merchandise making, but also pricing. Strap in, we're going to talk NUMBERS today. 

So, what's up? 

Well, we're increasing the price of the plush that we offer on the Innersloth storefront to match the cost of producing those plush. For context: if we kept the prices as they were right now, we'd actively lose money, on every single sale. 

To explain why this is happening, we have a fun (if you're the kind of person who finds reading about supply chain issues fun) article: 

Freightos - Corona Virus Updates 

The most important part is just this image here: 

an image describing the huge increase in shipping (from $1300 to $18000)

This is an insane cost increase for any small business, and we're watching other companies have the same issues in weathering it (see this post about how the cost for paint is increasing due to supply chain issues) trying to figure out what the solution is. The solution is: raising prices. 

Rather than raising prices across the board on all items, we're doing a few things to try and mitigate the number of items we have to increase cost on: 

  • We're searching for more domestic manufacturers for items that can be produced domestically. Right now, that is limited to prints/paper goods (though paper is...also dealing with a shortage right now!) as well as apparel. Plush, unfortunately, are very difficult to get manufactured domestic as most of the plush makers out there are either individual artists (for example, like the designers Frisk Wolfie who did our original AU design that was ripped off by all the fake resellers) or people who just offload the manufacturing to their facility overseas anyway. 
  • We're searching for domestic sewists who focus on clothing manufacturing to see if we can figure out a partnership/way to work together that allows us to give business to those locations to sell plush, but the safety and testing methods required may differ and this is difficult and time consuming. 
  • We're looking at working with more small, independent sewists to produce items in their homes, but this doesn't really solve the high cost problem - our cost of living in the United States is higher than a lot of places where manufacturing happens. It also limits the quantity that we can produce, as individual creators can only make so many in a day. 

Okay, so let's take a peek behind the curtain and actually talk numbers. We're lucky enough that Innersloth allowed us to go into way more detail than some partners will let us go into, so we can really explain the full extent of what we're looking at here. 

For holiday, we placed our order for the plush (new colors and a remake of the first plush Innersloth did) months ago. When shipping internationally (from overseas to Washington, USA)  there are two methods:

  1. Air shipping - your box goes on a plane across the ocean! This takes about a week, if customs cooperates and clears it quickly enough! 
  2. Slowboat shipping - called slowboat, because this process takes anywhere from 30-40 days on a boat, and then 10-30 days to be in the port, get unloaded, get transitioned to a truck, etc. 

We ordered a large quantity, specifically to have them last us through holidays, which meant we were faced with the following options:

1. Send the entire shipment via slowboat which is cheapest, but will not arrive until mid-Nov or early December, if we're lucky. This means that with the increased delay in shipping individual units, if someone ordered from Spain in mid-November, they likely wouldn't receive it in time for Christmas. 

2. Send the entire shipment via air shipping, which would arrive right at the start of November. This would be the most ideal situation and is one we've done before, except the cost was astronomical. 
      • The shipping cost to send all the plush via air was a whopping $137,000, which would make the shipping cost alone $22 per unit.
    3. Do a hybrid solution (which is what we opted for.) We sent 700 units of plush via air, to arrive by holiday (they're here!) and the remaining units will be slowboat shipped, arriving end of this year or early next depending on the customs situation. 
    • This means that the shipping cost for the plush we expedited was $13,000, which...still isn't ideal, actually. We won't really wind up making any money on the sales of those 700 plush, as the cost per unit winds up wildly increased, but by raising the cost, we won't lose money on them. 

    We won't be raising the costs of items that we don't receive increased costs on, and these costs aren't going to impact our international partners (though, they set their own costs and it's reasonable to assume that the cost of everything goes up for everyone. With mass market selling, this is easier to eat because of the sheer quantity.)

    When shipping rates calm down, we anticipate being able to drop the cost back to a more reasonable number so we have decent margins (and make a profit) but not so much that it gouges customers. 

    I, personally, find all of this really fascinating and I'm always happy to answer questions about how the items are made, why things cost what they do, or honestly anything else, so if you DO have a question, feel free to email us at DWS! 

    Thanks and best wishes from the Innersloth and Dual Wield Studio teams!

    - Rowan