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    JonoSmith1980's Avatar
    JonoSmith1980 Posts: 1, Reputation: 1
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    #1

    Aug 14, 2016, 04:28 AM
    How much should I *increase* prices?
    Hello

    I run a bag company in the UK. Every six months, we send our seasonal collection (20 different samples of new styles) to a sales room in Japan.


    We set a wholesale price for every bag, the sales room in Japan adds a markup and sets a showroom price, and that is the price presented to would-be shop owners who wish to stock our bags (who then mark it up by the time it appears in the shops).


    We send our new collection next week, and we see the weak GBP (see Brexit) as a good opportunity to increase wholesale prices.


    Looking at the current exchange rate, 100 (the wholesale price for a bag) is worth 197. This time last year, the same was true of 143. Does that mean, theoretically, we can increase prices by 47%, and the price in YEN would be the same?


    I very much doubt it is that simple. But could someone please advise how this whole thing works, and what a reasonable price increase is, without our Japanese friends feeling the pinch?


    Thanks in advance.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,272, Reputation: 7690
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    #2

    Aug 14, 2016, 09:42 PM
    You should not increase selling price, merely because of the change of the price of money exchange.

    You increase prices do to production, overhead and other costs to produce.
    Increasing prices, only to profit more from an exchange rate, will come back to haunt you, if the exchange rate changed quickly and your bags are priced out of the market.

    The exchange rate is no reason to change prices.

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