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🗓 04/05/2022 👤 Daniel Kundt

Price adjustment - how the UK is affected

It is time for another price adjustment at KoRo - for the UK we have both increased and decreased the prices of products depending on the VAT rates. Find out here how it fits in with the current market situation, in which many things are actually becoming more expensive.

Price adjustment - how the UK is affected

Frequent price adjustments for the fairest prices

Price adjustments are part of KoRo's daily business. Unlike many retailers, who often want to keep prices constant for as long as possible, we at KoRo like to retain a high degree of flexibility in our pricing. This means that we review our prices regularly and adjust them to the current market conditions. Our goal is to offer the best possible price-performance ratio at all times. For example, if raw materials become cheaper, we can pass this advantage directly on to our customers. We do not have to take into account possible price increases in the future, but have the freedom to increase prices only when it is really necessary.

Our price adjustments are normal for us, but we would like to take you behind the scenes. Especially as we are lowering some of our prices - which may seem a bit unusual in the current market situation, where many products are becoming more expensive.

How does KoRo's pricing work?

We have already explained in detail how we set prices at KoRo in the past, but you are welcome to take a look here for more details. The two mathematicians at KoRo have come up with the underlying clever formulas. As a non-mathematician, I will briefly summarise what the most important factors for our prices are:

  1. The base for the sales price is our purchase price or our production costs. If our production costs increase, the selling price will logically also increase.
  2. In addition, we always look at the cheapest comparable competitors and compare ourselves with them to ensure that we can offer the best price-performance ratio for every product.
  3. In addition to the production or purchase costs, there are of course other costs associated with the sale of the products (e.g. logistics costs - no, unfortunately the shipping costs do not cover these), costs for Paypal and other payment method suppliers, rent and, last but not least, my salary - and that of my colleagues. That's why we define minimum margins that we have to achieve with the products in order to keep KoRo going.

These factors are then used to determine the prices of our products (โ†’ details). 

What is causing this new price adjustment?

In the current market environment, we are observing an overall increase in procurement costs (factor 1) and rising competitor prices (factor 2). This would tend to indicate that our sales prices should also rise.

KoRo has become bigger and bigger over time thanks to steadily increasing sales figures. Even though we are still a comparatively small company in the German and European food markets, we can realise some economies of scale. For example, the share of fixed costs (e.g. rent, insurance, personnel costs) per individual order decreases the larger we become and due to larger quantities we can also negotiate more favourable contracts, e.g. with payment and shipping service providers, and normally also obtain more favourable prices from suppliers.

This enables us to reduce our minimum margin (factor 3) and pass this advantage on to our customers.

This means that we have opposing effects: On the one hand, rising raw material prices and changing competitive prices, on the other hand, a reduced minimum margin. Depending on how strong the respective effects are for an individual product, the product price increases or decreases (or sometimes remains unchanged). Across the entire product portfolio, there is a slight price reduction, which we consider good news for our customers in view of the overall increase in food prices.

Special adjustment outside of Germany: VAT adjustments

Outside of Germany, we also have price adjustments due to value added tax / sales tax.

The effect of value added tax in your country on our prices

Until now, we had always calculated the prices based on the German VAT rates. In concrete terms, this means that in some countries our products are slightly cheaper, but in others they are also slightly more expensive than the respective national average. We want to adjust this and from now on we will calculate according to the country-specific sales taxes. Of course, we have always paid the taxes correctly in all countries, only the prices for end customers were not calculated on the basis of the local taxes until now. The reason for this is quite simple: we always want to meet the high demand for our products before we adjust the prices. This means that we simply took the prices from the German shop and converted them into the respective currencies.

Due to our continuous team expansion, we now have enough capacity to adjust our calculation, which now also includes competitive prices for each country individually - since we can also take competitor prices into account from now on.

Above all, prices are distributed more fairly, because in some countries our products are significantly more expensive than the country average and therefore are not accessible to all customers - although this is one of our top priorities. From now on, in countries with high VAT rates prices will increase somewhat. In other countries, prices will only change on a product-specific basis, because the VAT there can be very different for different products. For example, drinks are taxed at a reduced rate in some countries and at the full rate in others.

What does that mean for you in concrete terms?

The UK has slightly higher taxes on our products than Germany. The German tax rates are 7 % and 19 %, in the UK they are 20 % and 0 %. This means that, overall, prices will go up by 2.97 %.

This increase in average price does not affect all products, and in fact, many of your favourite products have decreased in price. Only those products with higher VAT rates have increased prices.

We hope that we have been able to give you a transparent insight into our pricing policy and the upcoming changes. If you have any further questions, you can of course contact us at any time via our contact form.