Embracing Change : Adjusting Pricing
EMBRACING CHANGE
PT 1. Adjustments in Our Pricing Structure
Measuring success for Aketekete includes counting the sustainable improvements and partnerships made. From materials sourcing to collaborations made, and finally production. Since Aketekete started, we have made sure to be as eco, social, and culturally conscious as possible, thereby contributing to the larger economy of the Ghanaian community.
For quite a while we have been working together with our team and artisans, wanting to offer some insight into the value chain of our business and how we financially work out to ensure fair wages. But, through this process, while ensuring safety and economic status, inflation came in and messed little things up.
Our commitment to equitable and ethical practices is a core testament to our dedication to fairness and transparency and aligns seamlessly with our overarching mission. Regrettably, to be able to continue working with the same systems, we need to reconsider our pricing structure.
But, how does it work?
Generally, our prices include the artisans' labor, which is of course the most essential part of our business. Then you have to add material costs, shipping costs, customs, taxes, packaging, indirect costs of the business’ operations (salaries, rent, supplies, etc), and then the big one - retail markup.
For each store, we have to add at least a 2.5 markup to our product’s prices. This is the minimum markup that most stores accept to even consider buying your product. This quickly escalates prices - even just the smallest amount (3 EUR) at the very beginning of a value chain multiplies into big amounts when you add all the costs and multiply it by the markup. You can find an example here.
Because of this reason, some businesses might decide to not sell wholesale, as the profit can be very low, but as a social business, we are grateful to have retail partners that believe in us and what we do, as through them, we fulfill our primary focus of providing steady jobs through bulk orders, generating significant income for our artisan team.
And back to our current situation.
Through the last two years, we have seen a high escalation of costs of living here in Ghana, a global surge in prices, which also affected our production costs directly (although we source most materials from Ghana, the increased cost of living increased its cost too). Also, essential services like shipping, have been quatriplicated since we started in 2021. Adding up to new taxes and duties. Consequently, we have augmented our salaries to reflect the intrinsic value of the work undertaken by our artisans in Ghana.
A significant determinant of our pricing framework is the unavoidable escalation in shipping expenses, propelled by factors such as rising fuel costs. This has compounded the intricacies of maintaining a sustainable business model.
In response to these challenges, we find it imperative to implement a prudent price adjustment. This decision was arrived at through careful consideration and evaluation of pertinent data and is undertaken with a profound understanding of potential concerns within our esteemed community. However, this adjustment is indispensable for the continued viability of our business and, more crucially, for the welfare of our team in Ghana.
Through this evaluation, growth, and challenges, we are also working on the structure of the company and work processes. This information will be more detailed in a near future post, but some of these steps include:
In response to the escalating shipping expenses, we plan to relocate our products to a warehouse in Spain, optimizing shipment expenses and helping our clients avoid additional duties.
As part of our growth strategy, we are increasing our office team, refining our production formats, and implementing ESG strategies to enhance our sustainability and ethical practices.
We are changing our production format: We will be reducing our stock, focusing on creating more unique pieces and enhancing our production system to cater to both retail and wholesale clients more efficiently. This strategic shift aims to ensure timely delivery while minimizing waste, achieved through an emphasis on made-to-order production methods.
This is a huge leap of faith for us. We are of course nervous about how you as a community will receive these adjustments and if you will continue sticking with us and supporting us as much as you have so far. We really hope so; Our commitment remains steadfast – to deliver uniquely crafted designs made by the skilled hands of our artisan partners in Ghana, creating meaningful products that leave a positive impact.
The implemented price adjustment will come into effect on March 4th, impacting our entire collection. So if there is something you have been contemplating buying, maybe this is your sign.
Thank you, always, for being part of the Aketekete journey!
Sending love from Ghana,
the Aketekete Team
