Pricing Tip - How To Ensure You'll Benefit From A Strong Australian Dollar
Exchange rates are something that most people only think about when going overseas for a vacation. But when you run your own fashion business exchange rates become important variables that need to be monitored on a much more frequent basis. Why’s that you ask? Well, if you manufacture your products off-shore there’s a good chance you’re paying for the finished product in US Dollars, and as we know exchange rates can fluctuate up and down every day, sometimes wildly, like when a new and unpredictable US president is elected for example.
A strong US Dollar / weak Australian Dollar is not good news for us Aussies, so to ensure your business is not impacted in this situation you need to make sure that your cost price (the total cost of producing your products) factors in the highest possible exchange rate that you have paid or are likely to pay in the foreseeable future. If you think smart and play safe by working to the worst case scenario you’ll avoid the undesirable situation of losing margin your next production run being more expensive because of a jump in the USD. You can’t just hike up the RRP (recommended retail price) on the consumer. Likewise, by building in a higher than average exchange rate from the beginning you’ll reap the rewards of higher margins when the Australian Dollar is strong.