Sometimes businesses change the price on your favorite product and you begin to question, “Why did the price go up?” or “How can I get this price back down?” Waveband Communications is not immune to the outside pressures a business faces when creating prices for products.
We decided to write this article to be clear and straightforward with our customers to show you why Waveband’s prices may change over time, how these decisions are made, and how you as the customer can respond to the changes.
What is going to drive the cost up?
There are several factors that are going to drive up the costs of products. The first is raw material shortages—without a consistent supply of raw materials, the products take longer to make causing the stock to lessen and the price to rise with demand. For instance, chips for Impress Chargers that recondition batteries are in short supply; causing the prices of batteries to rise.
Another primary factor that causes price increases essentially in any industry is labor shortages. This is an impact we are seeing across the country from restaurants to factories. Within the communications community, this shortage is impacting manufacturing facilities like 3M, Motorola, Harris L3, and Kenwood. A shortage of workers in manufacturing causes a backup in production, shipping, and more causing a rise in the price of the individual product.
The quality of materials used often causes the price of a product to fluctuate over time. A company may begin manufacturing a product with a specific set of materials but find better options over time. With the switch to higher quality materials, the price will raise. For instance, at Waveband Communications, the batteries are made with Japanese sourced cells over Chinese materials because they have been proven to be more durable and higher performing. Therefore, these batteries will often cost more than those that are made with units sourced from other areas.
Shipping costs can also drive prices of products up or the cost of shipping will raise. Overall, if a company wishes to offer free shipping, they will still need to offset that cost for themselves so the price of individual products may increase slightly. Shipping costs can rise for many reasons. A recent reason was simply the COVID-19 pandemic.
China is a primary provider of shipping containers; during the shutdowns, there was a major backup including the infamous events of cargo ships getting stuck or not loaded efficiently. Although these backups were for a short amount of time, there was a domino effect and many steps within the shipping industry were impacted. We are hoping that over time and into this new year, this price will lower, but it is effectively out of the small business owner’s hands.
Another factor that can impact a products price is market research and development. To provide customers with the right products that fit their needs, businesses need to conduct surveys and more. For instance, if a business wanted a metal 3D printed model of the product they are developing—one model can cost an upwards of $500+. In addition to initial prototype costs new product molds, and material costs can reach up to $100,000. Therefore, the research and development of one product can be costly overtime; those costs are then factored into the end sale price of the product.
Lastly, the cost of stocking inventory can absolutely cause the pricing of the product to move. Because Waveband Communications works to stock the shelves with industry leading technology, it comes with high costs. To have valuable inventory there is a higher overhead that must be covered with the sale price. Moreover, Waveband must cover the fees of having space for available stock, labor, transportation, handling, insurance, item replacement, and more.
When Waveband Communications prices products, all of the above factors, which are often changing in prevalence, are taken into account.
What is the going to drive the cost down?
To drive the cost of products down, Waveband Communications offers several opportunities. The first option is utilizing promotional discount codes. These codes can be found on the Waveband Communications website. Moreover, you can peruse the products that are already marked under the SALE tab..
The next factor that drives prices down is the economies of scale. This phrase refers to “when more units of a good or service can be produced on a larger scale with (on average) fewer input costs”. This occurs because efficiency increases through division of labor and specialization, and a business becomes less vulnerable during mass production. Overall, the more production, the more smoothly everything runs causing fewer financial obstacles so products can sell at a lower price.
If you are an agency looking to buy in bulk, then a way to lower your costs is using a contract. This can entail the GSA contract, Maryland state contract, Pennsylvania state contract, and more. A GSA contract can help lower pricing because, “the contract delivers savings to all Federal agencies through pre-negotiated and firm-fixed-price rates”. Waveband Communications is GSA compliant along with other contracts.
Another way to get a total purchase price lowered is open communication. During your purchasing process, provide us with as much information as possible like total budget, operational requirements, etc. With clear communication, this will allow the Waveband Communications sales staff to provide a customized solution to your needs. As a result, we will be able to meet your operational and financial objectives.
What is our pricing process?
When calculating prices of products, Waveband Communications takes great care to be fair and honest.
We start by calculating our variable costs by product. This breaks down to the cost of goods sold, packaging, shipping, promotional materials, and affiliate commissions costs. When creating the sale price of a product, Waveband must make sure the above costs to the company are covered by the sale of the product.
To calculate a price, we use a standard target price equation for any business. By using this equation we are ensuring we can keep our prices at market standards whilst also supporting Waveband Communications’ specific needs.
Additionally, Waveband calculates fixed costs. These refer to the business costs that are constant and independent from the quantity of goods produced. Fixed costs include rent, leases, salaries, utility bills, internet, insurance, and more. The fixed costs need to also be factored into individual product sale prices because these costs are the backbone of any business and must be covered.
Waveband also takes into account the comparable products in the market from competitors. The main competitors within the critical communications community are Motorola, Kenwood, Harris L3, Impact radio accessories, and OSI batteries
Pricing products fairly is a lengthy process and Waveband Communications takes it very seriously. We consider all of the above information and then come up with a target profit to then determine an end price.
Conclusion-
Small businesses are the cornerstone to the American economy. Waveband Communications is part of the small business community and is proud of our customer relations. Read testimonials from Waveband customers. We hope this article helped you as the customer understand our pricing process and why prices fluctuate.
Works Cited
https://www.yahoo.com/now/panasonic-slashes-full-operating-profit-064332807.html
https://www.investopedia.com/insights/what-are-economies-of-scale/
https://formlabs.com/blog/injection-molding-cost/
