The silver price has already been discussed in another thread.
That is why I went to the trouble of refuting this misjudgement.
If the price of silver doubles, a 20% price increase for the entire product can be justified by the rise in the price of silver alone.
I consider Schoeller’s prices to be acceptable and, given the falling turnover, even relatively fair.
In fact, with most suppliers, there is no sign that they are exploiting monopolistic positions. Quite the opposite. Schoeller, for example, has supplied Agfa and our other partners with a lot of good, expensive paper for many years, and even though sales have become marginal today, they do not want to discontinue an entire product and are keen to maintain old relationships. So we meet up, and the manufacturer explains what their minimum volumes are to keep the product running on the machine it’s currently on, and then we’re shaking under the table and hem and hawing. The manufacturer knew this, of course, and then offers to move the paper production to another factory and, in future, produce it just once a year on a slightly more flexible machine. We then nod like woodpeckers and breathe a sigh of relief. In the end, the paper didn’t get any more expensive, because under the adjusted production conditions, fewer set-up costs can be passed on and we (have to) buy more in one go. Of course, you then have to factor in the interest on the tied-up capital, and because in Germany energy has to serve as a source of state revenue, prices here also rise slightly every year (paper production is very energy-intensive), but it all stays within reasonable limits.
Nevertheless, when this switch took place (well, who remembers?), we had a different problem. We had misjudged the demand (or simply didn’t have any more money to stock up on more substrates); the switch came suddenly and, for several months in 2009, we didn’t have any substrates to pour MCC onto...... :-(
Other things are getting more expensive too. Cars, for example. With photographic products, we saw fierce competition among suppliers for sales volumes, resulting in a long period of stable or (as with Ilford) even falling prices despite rising raw material costs. During this time, those involved (manufacturers and retailers alike) absorbed every price increase and sacrificed margins until there was nothing left to sacrifice. Everyone waited to see what the others would do until there was nothing left to give away.
In the second half of 2010, the pressure caused by the sudden rise in the price of silver had become so great within a few months that, much like a reverse stock market crash, prices rose by up to 35% across the board in a short space of time. In a sense, the increased raw material costs from the previous 2–3 years and the speculative explosion in the silver price within a few months combined, with the silver price accounting for around 80% of the cost increases.
It is difficult to explain this to customers within such a very short timeframe, but we had already exhausted all our options beforehand.
It would have been wiser to raise prices slightly each year in line with raw material cost increases, so as not to have to react in a panic to the rise in the price of silver.
In principle, it is probably wise to make a small profit on one’s products, for example to be able to repair a machine if it breaks down, but the photographic industry clearly has other ideas.
I can only speak for ADOX. So far, we’ve only raised prices once by about 20% per paper type, and unfortunately that was unavoidable, if only because of the silver.
We’re still not getting rich. But we’re just about managing to make ends meet.
Best regards,
Mirko
