Did prices go up?

Unfortunately, yes. We just went through a big audit that found we were dangerously low on some products. We had single digit margins on some things. As everyone here knows, I value consistency above most things. This is why we keep prices the same as long as we possibly can. However, in times of rapid inflation this can bite us in the ass. This is what has happened recently. I was not even aware how bad the situation was/is, because a lot of things are obfuscated. The big ones are tariffs and duties, as those are not assessed right away. We get billed for them later, and they were not being directly tied to a per kg cost analysis. These tariffs are really fucking things up. Some of our shipments are being hit with a 25% country tariff, then an 8% HTS code tariff. This is because not only did Trump put in 25% across the board tariffs from China, but they put in extra tariffs for certain classifications of goods. These tariffs fucking STACK with each other! These are assessed on the value of the imported goods, which you can't understate anymore without risking seizures of the shipment. This means that you have to add 33% more on top of the cost of goods as payments to the government. I had hoped the Biden admin would remove these fucking tariffs when he got in, but I guess he is content to leave them all in there fucking everyone.

To add insult to injury, the US dollar has been dropping in value because of the inflation happening. This means that the conversion rate between us and other countries is making each dollar worth less and less for the same goods. So even before duties, taxes, and tariffs come into play, every kilogram is costing us more because of the falling USD value. The consumer CPI report just came out yesterday, and the numbers are not good. It's the highest increase in CPI since the crisis in 2008.

https://www.cnbc.com/2021/06/10/cpi-may-2021.html

https://www.bls.gov/news.release/cpi.nr0.htm

This is even using the flawed CPI metric. Anyone with half a brain can see inflation is here. Go to the grocery store and look at the prices of food. Go try to buy a used car right now. Go try to buy building materials, houses, or collectables. Everything is through the roof. The government telling us this is just a temporarily limited thing is bullshit. It's worse than the government is letting on, and it is not going to get better anytime soon. They are playing damage control to keep people from panicking. They really need to raise interest rates, but they can't. That would crash the economy. They have backed themselves into a corner with their monetary policy over the past 10 years. Now we are seeing the result of that policy. You can't make money so cheap and inject as much as they have without drastically affecting the balance of money and inflation. Anyone gaslighting you into thinking you can is either being obtuse or willfully deceiving you. The people at the top don't want the over-juiced stock market bull run to end, so they are going to try and convince people as long as they can that everything is fine. It's not fine. I am not telling you to panic, but be prepared for everything to be a lot more expensive and harder to get for a while. Be prepared for shit to be weird for a bit.

Then on top of this you have to throw in shipping. COVID-19 massively fucked worldwide shipping. I can't express just how badly it fucked it. Like never before been seen fucked. Freight prices are triple the price right now in some cases. Right now air freight is costing $15 PER KILOGRAM in many cases. That's batshit insane compared to normal. Sea freight has tripled in price as well. That's still more reasonable at $2-3 per kilogram, but there are not enough longshoreman to unload the ships and not enough ships to move all the goods. Ohh, and there is a shipping container shortage as well! So sea shipments can take as much as 60-90 days at the moment. This has made many people shift to air freight to get things in time, which has eaten up all the available space in the planes. This is why shipping is so high and slow right now. So every kilogram of product coming air right now you have to add $15/kg to the cost of the powder. Then you have to add 25% on top of that for the tariffs. Then you might have to add another 8% on top, depending on the HS code you are importing it under. Let's say something is $10/kg normally. Well the falling USD and increased demand has made that jump to probably $15/kg. Then you have to add another $15/kg to ship it air. That's $30/kg now. Then you have to add the tariffs, which would be $7.5 at the low end and $9.9 at the high end. Air freight might usually be $5/kg, so normally it would be $15/kg to get in before all this started with things. Now the product that used to be $15/kg costs around $38-$40 per kilogram. If you wanted to plan well out in advance enough, you could do sea. That would make things $26-$28 per kilogram instead. However, it might not get to you in time and you run out of stock. So you can see how the shipping costs and tariffs are massively fucking things that are less expensive per kg. If you are buying something that is $1,000/kg normally, the shipping costs amortize a bit better. However, the tariffs still fuck you.

https://think.ing.com/articles/the-rise-and-rise-of-global-shipping-costs

https://www.abc.net.au/news/2021-06-10/prices-consumers-shipping-ports-trade/100203086

Then you have packaging costs. Those are through the roof right now, and there are shortages of various plastics used for bottles, lids, liners, and labels. The cost of all those components has spiked recently, and orders we place in December won't be fully fulfilled till November... This means we have to scramble to buy up as much inventory of packaging as we can at whatever price we can to ensure we have enough to last us till our normal shipments get here. So that adds even more to the packaging costs that are already inflated enough. You'll notice that a lot of the increases we had to make were on smaller sizes of things. This is because our fixed packaging costs going up disproportionately affects smaller sized units. This is because we have less doses to amortize those fixed costs over. So you will see that some products we only increased the price of the smallest size. This is because of packaging cost increases. Of course that is only part of the story, but that's why the smallest size ones are more likely to be affected by these rapid inflationary periods.

Then we get to the final piece of the puzzle: labor. Not sure if everyone has noticed, but we have a labor shortage in most of the US right now. The available workforce for certain positions is much less than it was a few years ago. There are a number of reasons for this. I won't get into the nitty gritty political ones, but the fact of the matter is there are more job openings for unfilled positions right now than at any other time since the government started tracking that data.

https://www.politico.com/news/2021/06/08/april-record-job-openings-worker-shortage-492144

https://www.wsj.com/articles/the-great-american-labor-shortage-11623191784

This means companies are having to fight for a smaller number of workers. This means that companies have to increase compensation to attract new people. Luckily we already pay our employees well and offer a ton of benefits, but the amount of money we have to spend on labor is only going up and up. It costs a LOT to employ someone. It's a lot more than just their take home pay. You have the company share of employment taxes. You have benefits like health insurance and 401K. You have liability insurance, which keeps going up every single year. Workers compensation insurance is going up right now because of the risk from COVID and more work-from-home happening. So every single piece of labor cost is going up right now along with everything else. Luckily we get more efficient as time goes on, which helps to dampen the effects of rising labor costs. However, it's a massive part of our budget every month that continues to increase as inflation speeds up.

So that's what is happening right now. I never like raising prices. I like to keep things consistent and steady as long as we can. We even weather short-term increases all the time to maintain that consistency. However, the cost increases happening right now are so significant, and proving to not be a short-term transient thing we can weather, that we simply have been forced to address it. If our damn government can get their heads out of their asses and remove the tariffs, that would help a lot. If we can slow the devaluing of the USD, that would help as well. When your dollars are worth less and less as the months pass, and you have to pay tariffs as a percentage of the total shipment, you can see how things can get out of control really quickly. I realize the timing isn't great with the sale, but our hand was forced on a lot of this. I didn't get the data and full picture of just how badly costs have risen until recently. We absolutely had to increase the price on some things, because we would literally be losing money on every unit of some of the products with the sale. We only increased the price of things we absolutely had to. Most prices are still the same as they were. You will find that the smallest size of products were increased the most, due to the fixed costs going up as a higher % of the product total, but some things we had to increase the price of all sizes. We went through each one on a unit by unit bases, and if we could swing not touching the price, we left it. There are some things that really should be increased more, but I left them if we could. Unless something changes with how the economy is going, this will not be the last time we have to raise prices this year. I really really hope they can remove the tariffs soon, as that is a massive drain on consumers at the moment.