The Price Rise.

If you are not already aware, we have issued a price rise that is effective from October 01. In the interests of making sure you know as much of the details around this – because it is a large price rise compared to anything we have done previously – I wanted to offer this background.

The first obvious issue is the volatility of the exchange rate, particularly the New Zealand dollar against the American dollar. Since I have been working at Majacraft I have observed fluctuations between 58 and 89 cents – nearly 50% change in value. This makes it very difficult for our dealers to run profitable businesses. For example (and this is a hypothetical number), if the exchange rate increases by 10% from the time we set the prices and a dealer margin is 10% then dealer actually sells a product for nothing, that is $0.00. The dealer’s margin would in effect be wiped out. As a brief aside, the NZ/US exchange rate has varied by approximately 10% over the last 10 days. Our dealers are an integral part of Majacraft and therefore it is essential that we look after them as best we can. They cannot run their businesses and pay their bills without making a little profit on the products they sell. So, the first part of the price rise that you have observed is about Majacraft looking after dealers.

The second part of the price rise is an increase in our wholesale price to dealers. Majacraft relies on about 50 suppliers of goods and services to create a wheel who have their own businesses to keep going. Every month, we receive notification from at least one of these suppliers, “due to … we are raising our prices of … by 2%/4%/5%/10%”. It often does not seem a great deal at the time and because we have wanted to make our wheels as affordable to everybody as we possibly could, Majacraft has absorbed these increases and tried to improve the way we do things to offset them. However, recently we have had a detailed investigation into the cost of producing Majacraft products and it was sobering. The little increases that have been going on for years have actually put us in a position where in some cases it is costing us to create products. In addition, due to our own high standards and customer expectation, we are taking much longer, using better components and doing a superior job to what we did even as recently as 12 months ago. Just like you, we have families and mortgages that need taking care of. If Majacraft does not make a profit we cannot take care of our responsibilities or invest in developing exciting new fiber tools for you.

As a user of Majacraft products you will unfortunately directly feel the effects of this price rise. When I say unfortunately, I sincerely mean it. It is Majacraft’s ideal that we create the best products we can for the most affordable price possible and it is with great reluctance and reservation that we have carried this out. I often smile when I meet people that come to visit our workshop because the most common response is along the lines of “is that it?”. Many people expect Majacraft to be a mega factory with a huge workforce churning wheels out by the 100 (and swimming in vats of cash! 🙂 ). In truth, we are actually only 9 people – and not all full time – working out of Owen and Glynis’ converted farm implement shed working as hard as we can to make a living. Probably very similar to yourself. As you would hope to be paid a fair wage for your days labour, and have a job to go to next week too, we hope for these things too and raising the prices as we have done has been a necessity to achieve this.

I have noticed that some people have commented that because of the cost, our wheels are likely to be out of their reach now. For this I am very sorry as I would prefer everybody be able to have the opportunity to experience what we create if they choose. I personally believe that Majacraft wheels are excellent value for money. I am intimately aware of the time and care taken in the making of each product, the high quality (and consequently expensive) components that are used as well as the excellent service and guarantee given. We do not want to compromise any of these areas and diminish or minimise what we offer you. I am very grateful for your support so far because I actually love being a part of enabling people to create beautiful things with their own hands. It is indeed deeply satisfying.

I hope this explanation has given you some insight into what is involved in Majacraft and the reasoning behind the price increase.

Sincerely

Andrew (on behalf of Majacraft)