Prices Going Up Significantly and Why
I’ve got some news that will make some people really happy and some people really sad. The good news is that starting September 1st, we’re raising prices significantly. The bad news is that starting September 1st, we’re raising prices significantly with all Saddleback, Love 41, Mountainback and Backcast designs.
I want to let you know now so you won’t be shocked when it happens. And I want to be transparent so you understand that we’re not raising prices trying to become some big fancy pants elitist brand. We’ve actually got some really good reasons that hopefully you’ll be cool with and even excited about.
The Main Reason - Financial Ignorance
Until recently, most everything has been priced way lower than it should have been from the start, but we were clueless about how much our designs cost to make and the cost to run the quality business to sell them.
My intent has always been to offer durable designs made with quality materials at a fair price. I wanted to force the foofy elitist brands to either raise their overall quality, lower their prices or go the way of the phone book.
We’ve been pricing with our gut and not according to sound accounting and business principles even though I got a D- in Accounting 101 and didn’t take one math class in college. And I guess that’s why hundreds of our customers, consultants and friends have been telling us that we’re grossly under-priced for the quality we deliver.
Now, for the first time in our history we have true and honest financial visibility to understand why we start each year not having nearly what we had hoped to invest back into the business. But please don’t worry. Saddleback has never been happier or stronger than we are now.
A Little History
In 2012, Suzette and I began sensing something was deceptively wrong with our business. We had a fun good hearted quality company that was a financial trainwreck. We didn’t have anybody around us who honestly knew the first thing about running a true and quality business, much less running one by the numbers.
In 2013, I took over the reins of Saddleback and started to clean things up. Not that I knew how to do it, but I knew somebody who did. I hired an older wise CEO coach named Larry Briggs to guide me along. One of the first things he started emphasizing was that I needed to run the company by the numbers.
By 2014, I brought on Saddleback’s first financially minded folks to help me understand the business more. It took thousands of hours unscrambling the dozens of overly complex spreadsheets I was left with, to begin seeing the truth of what things really cost us.
2015 was the first year we ever had a simple budget and things started making sense. We could see better, but still couldn’t see clearly how much the bags cost to make and how much the business cost to run. We thank God he kept us alive that long.
2016 has been a year of running the business by the numbers for the first time. Now that we know, we’re raising prices so we can confidently keep raising the bar on quality and business all around us for the next 100 years.
High Quality Standards
One thing we didn’t account for was how much money we were losing because of our high standards in production. Honestly, you’d be sick if you knew how many almost perfect bags we’ve had to take apart and rework and throw pieces away because of little mistakes or flaws that got missed. Most companies have no problem with them… yet. The “What’s Acceptable” bar is raising.
Until recently, we never correctly calculated the cost of all of the scrap leather laying on the cutting room floor. Every company produces scrap, but I design using very large pieces so we don’t have as many seams, where bags fall apart. Low quality “patchwork” bags are made of a lot of small pieces sewn together with miles of seams. It would be so much cheaper to do the patchwork thing, but I think the high quality thing is the way to go. And in order to keep going that way, we need to raise prices. Watch video below to understand more.
Research and Development isn’t cheap. We’ve built hundreds of different designs and variations of those designs that ended up not cool enough to make the cut, but we never accounted for how much prototyping costs us.
For example, the Hardsided Briefcase that I’ve been working on since 2009. It’s going to be our crown jewel once perfected. We’ve built around a dozen prototypes so far, but all were too weird or heavy or not functional enough. Each prototype took at least one week to build. I also bought some old high quality hardsided briefcases and tore them apart to learn how the masters constructed their frames to be lightweight and long lasting. This hasn’t been cheap, but guess what’s almost ready (Customer Service does not know when or how it will be priced and there is no waiting list, so there is no need to ask them those questions)?
We haven’t had a price increase of consequence for about 4 years, but it seems our suppliers and our government gives us price increases daily. Taxes, health insurance, leather, thread, hardware, pigskin, boxes, rent etc. You name it, it’s been raised. I don’t like raising prices for you every time Saddleback gets handed a price increase, but it’s time.
The Good News
Faster Customer Service
Sometimes we get an interview on NPR or some big thing happens and all of a sudden customer service is slammed with a few weeks worth of emails that we can’t get to fast enough. It’s embarrassing and not at all acceptable for them to be working so hard and for you to be waiting so long.
The bad and sad news is that because of higher prices, we could have fewer people needing help, but we hope not. The good news is that we’ll be able to give you the same personable and excellent service we’re known for, but right away. Did you know that a lot of our customer service folks privately pray for you after the call? They even call people back sometimes to check on the personal situation that they shared. Our folks care.
We try our hardest to get orders out the same or next day. It’s not easy and sometimes we get behind. That’s not acceptable either. So processes and people need to be put in place to ship your leather out faster and in a cooler way. You’ll see.
Our Quality People
If you don’t have quality people, then you don’t have a quality company. And the way you attract and keep quality people is by treating them like you’d like to be treated. We pay normal wages and give pretty darn good benefits, but there’s a “hidden paycheck” made up of all the “other” things that make our people happy in life and proud to work at Saddleback. But the “other” things don’t grow on trees and we weren’t fully accounting for those “other” things either. The happier we are, the happier you are.
Selling Millions of our Bags
Maybe a couple thousand stores so far have asked us to wholesale to them. The answer is always no and it always will be. Of course, that would mean a MUCH higher sales volume, BUT we would make a whole lot more money, BUT Saddleback would just become one more common brand out there.
So you know how wholesale works, here you go. Let’s say I designed a bag that costs us $400 to make. We would mark it up 50% and sell it to the retailer for $600. They “Keystone” it and sell it for double what we sold it to them for, plus their freight to get the bags. Therefore, the bag would cost you at least $1200 in their store. By us selling directly to you from our web shop, instead of putting a middleman in there, you’re getting a quality bag at a much better price and we’re keeping the brand tough as nails.
They say in the book Good to Great that it doesn’t take much more effort to be the best in the world, you just have to plan to be. We’re not there... yet, but that’s the plan and we hope you stick with us to help us get there. We really do love you and are honored that you’ve chosen to be a part of the Saddleback Family. You are much appreciated.
El Presidente (The President)
Saddleback Leather Co.