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🗓 06/07/22 👤 Piran Asci 👌 Semplicemente

Price change at KoRo – What lies behind it?

Wir ändern unsere Preise! Was dahinter steckt und was das für Dich bedeutet, erklären wir Dir jetzt ganz in Ruhe.

Price change at KoRo – What lies behind it?

At KoRo price adjustments are quite frequent so that we offer you the best price while running our business in a fair and sustainable way. Open price communication and transparency are our key principles, and this is why each product page includes a price evolution graph, which shows how the sales price of the product has changed so far. We have lately carried out several price adaptations within our product range and would like to explain to you how these changes were decided and why some prices had to be increased while we were able to decrease others. 

Price decrease: how and why?

Products such as pineapple rings without added sugar are now sold by various producers and most of them are quite similar in terms of quality. We have decided to lower their sales price so as to keep up with our competitors. By foregoing part of our profit we were consequently able to carry out a price reduction for this product. However, reducing the sales price implies negotiating for better purchase prices and this principle is only applicable when buying large product quantities from our suppliers. Bulk purchase gives advantages to us as well as to our final consumers.

Price increase: how and why?

Innovative products such as our organic date and hazelnut spread are not easily comparable with other products. In such cases we need to rise our minimum margin to make up for high product development costs and the scarcity of producers who are able to create a top quality product in line with our standards and requirements. Therefore, we depend a lot on our suppliers and do not habe much room for negotiation in these cases. This is why we have increased the price of our date hazelnut spread by 20%. 

What do these price adjustments imply for you?

Best news first: on average, if we consider our whole product range, we have lowered our prices by 4.19%.

Where does this value come from? In fact, we wouldn’t get a trustworthy result by simply calculating the median price change percentage value. This is mainly due to the different weight and relevance each of our products has on our monthly revenue. For example, our date hazelnut spread monthly sales are way higher than those of rice crackers. Therefore, we calculated the revenue each product has brought us throughout the last month and have given each article a weight. As a result, the value is far more precise and transparent for you.

formula-prezzo

We apply this formula to each product and we are then able to calculate the average revenue-weighted percentage price change. 

However, in the future we would like to offer even cheaper prices to our customers. Does this mean that we would like you to buy even more so that we can purchase larger quantities and sell our products at even better prices? Well, basically… yes! Help us grow, recommend KoRo to your friends, housemates, family, acquaintances, colleagues or anyone who likes baking but can’t stand added sugar. You will also benefit from a further price decrease on your favourite products!

Behind the scenes: how do we price our products?

Our calculation is based on two main values: our lower limit, which depends on our minimum margin, and our competitors’ sales price. 

We can choose our lower limit, but we can’t reveal it both for supply- and competition-related reasons. Let’s suppose our mininum margin is 20% and we purchase a product for a net price of £10. Our lower limit would be £12.50 and we could not sell that product at a lower price than that. 


lower-limit-formula

As far as competition analysis is concerned, we first find different comparable products, which are qualitatively identical or similar to ours. After finding our cheapest competitor, our goal is to be at least 10% cheaper. In the long term, however, we would like to create a larger gap between our competitors and us. 

We should then decide how to adjust our price. Two different situations can occur:

  1. The price of our cheapest competitor is under our lower limit: in this case we can’t achieve our goal and we sell our product at the lowest price possible, namely our lower limit.

Our lower limit is way under the sales price of our cheapest competitor: in this case we can sell at a cheaper price while getting a decent margin all the same. Therefore, we sell our product applying the best discount possible on the competitor’s price. The value is then rounded to obtain an integer, which will be our new sales price.

Do you want to know more about price transparency at KoRo?

Here you will find everything you need to know about our price transparency.

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