First, the obvious.  The price of silver was fairly stable for almost 20 years hovering around the $4-$5 dollar mark.  It was only $4.60 as recent as January 2001.  That means that as of today's writing with the silver price sitting at $21.76 it has quadrupled plus some in the past 8 years with a huge gain in the past 8 weeks from today(March 5th 2008).  This has our phone ringing and email program working overtime.  The thing we hear most is doom and gloom about how the customer won't pay that much.  Here's the catch.  We ask how much is that????

 Before I get to that answer let me back track a few years.  We tend to fall into certain practices and when we try and drift from that it takes us out of our comfort zone.  For years the silver price was stable and when in retail whatever the item cost wholesale I would mark up 3 times (triple keystone) or 4 times and that became automatic.  It seems many are not ready for the new math that comes with growth. With growth comes change so here is an example of what is happening.  Please forgive any sarcasm :).

 We have a retailer we will call Mr. Smith.  For years Mr. Smith bought this ring from xyz wholesale for $5 and he marked it up to $15 to put out in his store.  This left Mr. Smith with a $10 profit on that ring.  He would make $10 profit whenever he sold that ring and was thrilled to death.  Suddenly the market changes and now Mr. Smith is paying $10 for that ring (remember this is only doubled and the cost of silver has quadrupled). Mr. Smith marks that ring now using his triple keystone mark up to $30.   But wait, he calls the xyz wholesaler and says my customers just won't pay that much what am I going to do.

 Ok, lets break this down when he bought the ring for $5 and marked it up 3 times we know he made a $10 profit and was content.  Now look at the new pricing did you happen to notice that on the same ring with Mr. Smith using the same mark up he has been using for years, he is now going for a $20 profit each time he sells that ring.  Cost of ring $10 times 3 equals $30 leaving a $20 profit.  That is doubling the profit he is use to.  So if he was used to making $60,000 per year now it seems he expects $120,000 per year. This example only shows the cost doubling.  We know that silver has quadrupled.   Hey, doubling, tripling quadrupling my pay!!!  Sign me up!

 Ok, I told you sarcasm was coming.  In fact it started sounding like certain companies who seem to use the same markup when the cost of their raw materials went up and rub record BILLION dollar profits in our face at our expense. The only difference is silver is not a necessity.  Now do you blame the customer for not wanting to pay that price?   We get so set in our ways of doing things that sometimes change does not come easily.   The important thing is you have to have your margin.  If you do not make a profit your business will fail. There is nothing wrong with making a profit but if you are having trouble selling your items remember the above and look at your bottom line. It is amazing how many have said I never looked at it that way.

 The cost of living is definitely on the rise so raising your prices is a must just remember to look at how you raise them and is the price in relation to profit in line with your past income plus increases for cost of living.

 Please don't take offense if you already get this but I have been doing this so long that change comes hard for me as well and with the high number of comments we get on this subject I felt it was time to break it down.  Thank you for reading my article and remember I am a wholesaler not a writer :)

 How do you handle the price increases?  Submit an article to sales@qsiwholesale.com