Today we’re going to dive into the world of pricing, a subject as old as business itself. With recent changes in supply chains, raw material costs, and freight prices, it’s time to explore why prices decrease in some areas and not in others.
Table of Contents
The Hoarding Phenomenon: Toilet Paper to Raw Materials
Remember the toilet paper shortage? Just like people hoarded toilet paper and face masks, manufacturers started hoarding raw materials.
This was done out of fear that prices would continue to rise, and they would run out of essential materials for production.
Now, they’re stuck with higher-priced material, just like a closet full of toilet paper.
The Bakery Analogy: Understanding Business Sustainability
Think of it like a bakery giving away day-old bread for free. It’s a great concept, but it’s not sustainable long term.
Big corporations aren’t willing to take a loss on everything.
They need to deplete their inventory before moving on to lower-priced stuff.
Inflation Explained: A Rising Tide
What is Inflation?
Inflation is like a rising tide that lifts all prices. Imagine going to the beach and watching the tide come in.
As the water level rises, everything on the shore gets lifted. Inflation works the same way, but instead of water, it’s the general price level of goods and services that’s rising.
Inflation in the Packaging Industry
In the packaging industry, inflation can lead to increased costs for raw materials, labor, and transportation. It’s like a chain reaction; when one part of the chain gets more expensive, it affects everything else down the line. For example, if the cost of plastic or paper goes up due to inflation, the price of packaging materials will also increase.
This can lead to higher prices for the products being packaged, affecting both manufacturers and consumers.
The Bakery Analogy Revisited: Inflation’s Impact on Consumers
Remember the bakery analogy from earlier? Now, imagine that the cost of flour, sugar, and other baking ingredients goes up due to inflation.
The bakery has to pay more for these materials, so they might increase the price of their bread and pastries. As a consumer, you’ll notice that your favorite treats are now more expensive. That’s inflation at work, affecting your daily life.
Chu’s Flexibility: Passing Savings to Customers
Fortunately, at Chu’s Packaging, we have the flexibility to offer price adjustments to our customers whenever possible.
Like a friendly neighborhood store, we’re more than happy to pass those savings on to our customers. We’re always here to help when we can.
