Price gouging with soy

[2rottndogs]

Ya know, I was just going over sites that sell c3 and I've got to say that I think suppliers are raping those of us that use wax just like the gas companies do with the price of gas.

I expect increases... I have no problems with price increases... but when you can look at several sites and some are charging $85 for a 50 lb. box of wax SHIPPING NOT INCLUDED IN THAT PRICE and others are charging $48 to $63... you can't convince me that kind of price gouging is neccessary.

Kimberly

[tootie04]

Here is what I think...

Supplier A orders X amount of wax....it lasts say 6 months

Supplier B orders x amount of wax...it lasts 1 month because supplier B is a busier supplier.

Supplier A wax is still 50.00 BUT when they reorder their prices will go up too.

Supplier B sells more volume so their prices go up faster cause they go through more wax

Make sense?? I hope...

tootie

[greenleaf]

Tootie is pretty much right on with the explanation. There are all sizes of suppliers and all of us buy in different quantities. One supplier may buy 1-2 pallets of wax at a time while another buys all the way up to a truckload. The supplier that buys the larger quantity may have wax for quite a while and be able to hold the lower price whereas the smaller supplier that purchases 1-2 pallets will have to go back more often to purchase and have to charge more based on current costs.

Right now, most soy wax manufacturers are announcing price increases at least once a month. Some of the soy wax manufacturers are making smaller batches in the hopes that they can get soy oil at a cheaper price in the futures market in order to try to minimize the increases as much as possible. In just the last week we have been notified of another price increase in the next couple of weeks from two different soy wax manufacturers.

Eventually you will see most of the suppliers be within a few dollars of each other as each one goes to purchase more wax. It's ugly, for sure, for everyone.

Hope that explains it a little bit for you.

HTH

Brenda

[2rottndogs]

I understand the explanations given...I know how that's how things work with suppliers...BUT I also know that there are suppliers out there that want to make a buck while they can.

As I said... I expect cost of living increases... I expect supply and demand increases... I expect to make some money off my salon clients when I buy and then sell retail...however, $85 without shipping for a 50 pound box of wax from a supplier is unreasonable when the order I just placed from Candle Science was for a 50 pound box and I paided $88 and change with shipping.

The bottom line is a person in business can do 1 of 2 things... they can pass 100% of the increase along to their client base so that business can continue making the money they are used to making OR the company can can increase the price just enough to continue paying their overhead and still put a bit in their pocket.

I'll give an example of what I mean... I buy a bottle of shampoo for $5 and the standard practice in salons would be to mark that bottle up to $10 to retail to the general public.

I have owned my own business for 15 years and I've managed other peoples salons for 5... I will NOT gouge my clients that way. I will mark that bottle up $7 or $8 and work a little harder to make what I would have made in a better economy.

I work a bit harder for the sale and I have to sell twice as much to make up the lower cost...but my retail sales in my salon have not dropped in 2 years. My goal is too keep people buying what I offer, not put it to them to the point where they can no longer afford to buy my retail and go elsewhere.

I would think that would the goal of most people in business right now... keep people buying what you offer, not drive them off.

It's only my opinion... I've been in business for a long time and my moral beliefs have worked well within my business plan...obviously, they may not work well for everyone else. I expect increases, but I also expect reasonable increases.

Kimberly

[Judy, USMC]

I am by no means a business major, but this is the way I understand it. Lets say all companies involved are selling the same wax and have no inventory on hand.

Co. A is small and purchases 2 pallets at a time with raw material and shipping to them @ $60 per box. Co. B is larger buys a truckload. Their initial bill is the same but they get a quantity and shipping discount of 14% with delivered cost to them of $51.60. Add a $20 profit per box and Co. A sells at $80 while Co. B can sell it for $71.60.

Now there is also Co. C. Their approach is a little different. They want you to do one-stop shopping. If lower wax pricing attracts customers they will sacrifice a little of their profit on the wax hoping you will also get your other materials from them. They carry a large array of additives, molds, equipment and fragrances they can also make a profit on. They are a large company and pay $51.60 a box and add only $10 profit. So they price wax at $61.60 per box.

I don't think Cos. A & B are price gouging - they have a business plan that needs to make that profit per item to keep their doors open. Company C may or may not pick up orders for other materials to make up for the profit they didn't realize on the wax. And if the price of wax keeps going up their profit on the wax will eventually reach $0. So they will also be forced into increasing their price down the road. And if pirces decrease they're stuck with the higher priced inventory. But those are the risks they take.

Let's say the market turns and the prices decrease. Company A (who buys at a smaller volume) may be able to decrease their prices - even lower than Co B! I believe market volatility will determine the fate of a lot more suppliers. Possibly some may drop soy wax from their inventory completely.

Profit mongers are the ones who have a couple of pallets that they have sitting in the warehouse that they bought (for lets say $40 per box delivered) way before the recent increases ... and are selling at the $80 price. This is what the gasoline companies are doing. Only get gas delivery once a month but raise the prices of what they have in the undergound pump storage tanks almost daily, now.

Supply and demand has increased the prices. I think it's their business approach and delivered-to-them cost that determines what each company will charge.

[2rottndogs]

I believe market volatility will determine the fate of a lot more suppliers. Possibly some may drop soy wax from their inventory completely.

More than likely you're right on that account Judy... it's a scary thought to consider though. Although what isn't at this point with the economy in the condition it's in.

And I wanted to add... most of the sites I've been on the waxes, while the prices have gone up, still seem reasonable and the suppliers are within a $15 range or so of each other. It's the suppliers that are hitting the 80 plus that make me go, "hhmmmm".

All you have to do is go to this post and you can see exactly what I'm talking about. And the site I happened to be on when I originally posted isn't even one listed here.

http://www.craftserver.com/forums/showthread.php?t=70409

I'm just having a hard time buying that the select few need to be increasing the price of their wax so significantly. All the suppliers that are sporting the lower prices can't ALL be buying by the truckload.

I suppose in the end it isn't going to matter, the prices will be what they will be and if a person wants whatever it is badly enough, they will pay the price that's asked.

Kimberly

[Stella1952]

I truly do not think suppliers are gouging - I think their pricing is reflecting their increased costs. Judy and Brenda have given very real scenarios. Don't let the increases put you at odds with suppliers - they are hurting, too! Actually for most of them, they are hurting far worse than those of us who don't pay our mortgages, groceries and children's college expenses with candle money. I hope folks, especially hobbyists, will realize this and cut back on everything BUT candlemaking supplies so these good folks can stay in business.

[2rottndogs]

Well I know I'm not cutting back on buying wax...I want my c3.

It's sticker shock sometimes...since I usually buy by the cases, I don't always see the increases on a regular basis. It might be 4 months before I order my c3 again and it becomes a nosebleed moment when I see the price.

Not that the husband would agree, but it might give me reason to purchase things on a biweekly basis.

Kimberly

[Stella1952]

I feel ya, Kim... I have to do some ordering after the first and I am not looking forward to the "sticker" shock!!

It's just like groceries - I remember when a couple of paper grocery bags was like $10-15 bucks and those sacks had a LOT of stuff in them!! Now it's hard to buy the ingredients for two meals for that amount of money and two sacks would hold $50-75 worth of stuff!!

[Judy, USMC]

Just reviewed the link to the other thread. Of the 2 that were over $80 I could find the link for Bolek's.

A while ago my friend was dealing with them for other crafts she was making (not candles) and would frequently bring in their sale catalog. So if they are treating wax like they would a piece of unfinished wood they may be cranking in the discount to the base price. Say they plan on running it at 20% off in the future ... so they'll price it at $100 so the sale would bring it down to $80. It's just a different method of figuring a price point. Used quite often on the craft side - but does not work on the chandler side.

Add to that the fact that they probably don't stock nearly as much as a candle supplier and I'm sure they're paying more ... possibly even getting it from a reseller. Add that to the fact that they advertise having 3,500+ items their profit line doesn't depend on selling just the wax or candle supplies. It will just get dusty in a small space in the warehouse while orders for jewelry beads go flying out the door!

[so-soy]

I am disgusted by these increases too, but the one part of all of this candle business that I would truly like to see is what are these suppliers really paying for the Fragrance Oils. IMO, that's where the price gouging is going on! I understand about the different costs of the different materials in these oils and the different strengths etc...but it makes you wonder when you see someone selling oils for dirtcheap and they are turning out to be scents that work for many people, thus they can't be that god awful, and then you see oils that are basically standard oils that are being so overpriced it really makes you wonder! I guess when I have to pay a 'premium' price on an oil that I have to use the MAX/or just under that amount per pound to get a decent throw, that tells me its just overpriced! This is my opinion anyway!

[tootie04]

I agree with ya there so-soy!!

tootie

[Judy, USMC]

OK - A little off topic about the oils but worth a mention, I think.

Overhead is cranked into these prices. A one person operation working out of a space that costs them nothing extra to rent (read home) does not have nearly the expenses that a major supplier has like renting another building, utility cost and insurance, and staff payroll. Their approach is to build UP. Get a good customer base, crank all profit back into the company, never get paid for their time, and add only a few dollars profit. Heck - they may even live close enough and buy in a quantity to where they can pick up the oils and avoid shipping!

Their objective is to price to sell - and build a customer base and slowly grow. Once they get bigger and incur the other costs their prices will have to increase!

The price gougers are the ones cutting oils without letting you know and selling at premium prices! Again, Just my view!

[Stella1952]

When we order 1 oz. samples of FOs for $1.50-2.50 each, we don't think about the labor that goes into handling and filling and labeling and sealing all those little bitty bottles! It's MUCH more cost effective to bottle a pound or a bucket of FO - takes less labor, thus the cost per oz. incentive. We also have to remember that FOs have a shelf life. If they are ordering by, say, the 5 gallon bucket or larger quantity, they have X amount of time to move that product before it begins to change and/or lose potency and still leave the customer a reasonable amount of shelf life. The shipping for them is tremendous because liquids are heavy. The amount of space needed to store and organize all the stuff required to serve customers who want a gallon AND those who want a 1 oz. sample is pretty awesome.

In short, before you think that someone is "gouging," first think of ALL that goes INTO their business. Sometimes, I am amazed that our FOs are as inexpensive as they ARE, especially for smaller suppliers.

[tootie04]

Very good points made!! I never thought about it that way. I should have though since I do know better....:rolleyes2

tootie

[so-soy]

I have already thought of all that 'goes' into those prices, I do understand this, I do understand all about overhead, employees etc...I didn't just fall off the turnip truck! I still think there is price gouging going on with oils! You may not, that's fine, but IMO, I believe it!

[Sharon in KY]

I can tell you they are charging about double the price it cost them if it's $80.00 per 50 lbs. Or at least that was the price in Feb. I ordered another skid in March and it had gone up from the one in Feb. I use to buy all my wax GF435 from GF a skid or three at a time. But you can not unload from the dock anymore, skids must be driven onto your truck. And they have a 6 skid limit now. Never really used any other wax and I'm lucky I can drive to pick-up. Don't know what everyone is going to do. Maybe more co-ops will have to take place. I wish you luck. You can bitch to me cause I know you are right.....

[jharper]

I heard that soy will be a non factor in the near future. We won't be able to even get it. This coming from a supplier yesterday.

[heidijo]

I can tell you they are charging about double the price it cost them if it's $80.00 per 50 lbs. Or at least that was the price in Feb. I ordered another skid in March and it had gone up from the one in Feb. I use to buy all my wax GF435 from GF a skid or three at a time. But you can not unload from the dock anymore, skids must be driven onto your truck. And they have a 6 skid limit now. Never really used any other wax and I'm lucky I can drive to pick-up. Don't know what everyone is going to do. Maybe more co-ops will have to take place. I wish you luck. You can bitch to me cause I know you are right.....

Thanks for sharing your firsthand information with us, Sharon. I for one appreciate the facts :-)

[islandgirl]

I heard that soy will be a non factor in the near future. We won't be able to even get it. This coming from a supplier yesterday.

:confused::confused::confused::confused::confused::confused:

[bugtussle]

I don't believe that soy wax will ever be a non-factor in candlemaking because there will be a demand for it. We grow a lot of soy here in the US and some mfg will offer it. I do think the price will jump a lot but so will every wax + shipping + FOs + glass + tins + all other candle supplies (the price of glass, tin lids has already gone up big time.) You think we're "sweating it?" Just think about all the suppliers who have been making a "killing" or at least a GOOD profit off of us, expecially the home companies that only sell FOs. I think we will see some "terrific" sales/specials this summer and then some of the companies will go under.

As for Bugtussle Lane Candle, we are getting supplies to last thru December and then we'll go from there. We are planning on fewer sales for the rest of the year. You never know what could happen with this being an election year. Just sit tight and hold on to your hats!!!! Carole