brexit2At midnight on 13th January 2017, we are increasing the GB pound prices in our webstore. This article explains how we calculated our new prices, and some of the reasons for the increase. For a full breakdown of the reasons behind this price increase, see my previous article, Brexit and Price Adjustment.

Why Adjust the Prices?

Before I get into our methods of calculation, I’ll quickly cover the reasons for the price change and how it affects our customers. This is entirely a financial decision. Almost all of our trade is in US dollars, and we account for most of our income and expenses in dollars. So, when the GB pound fell in value against the US dollar after Brexit, our income in dollars from the mail order store declined, because all our non-US and Canadian sales are in GB pounds. We’ve paid our US printers in dollars to ship every book we sell from our mail order store, so not only are we making less money gross on every sale, our fixed costs remain steady in dollars, and are now higher in pounds, so we make far less net margin.

I’ll give you an example. On 13th January 2016, you could buy a 13th Age Core Book for £29.95. At the time, this was US$43.37 – compared to a USD price of $44.95. On 13th January 2017 (the day I am writing this article), that same book, selling at £29.95, is worth US$36.23. Tomorrow, after the price change, the new price of £34.95 will be worth $42.21. If you are a UK customer, you’ll be paying £5 more, and we’ll get slightly less in dollars.

currencyThe Effect of This Change on Our Customers

The impact of the price change compared with last year’s prices depends on where you live. If you live outside the UK, there will be almost no difference in the average price you pay for our products in your currency, compared with what you paid this time last year.

US and Canadian customers

The US dollar prices are unchanged.

Eurozone customers

After the price change, customers will be paying almost the same in euros as this time last year.

This time last year, the 13th Age Core Book would have cost you €40.07. Today, the same book would have cost you €35.13. Tomorrow, it will cost you €40.99.

UK customers

UK customers will be paying an average of 17% more in pounds for our books than last year. After the increase, we’ll be making about the same amount from UK sales in dollars as we were in January last year.

Other customers

For most of our customers, there is very little change, compared with this time last year. The pound is at a historic low against a basket of currencies.

Here are a couple of examples:

  • This time last year, the 13th Age Core Book would have cost Australian customers AUD61.39. Today, the same book would cost you AUD49.11. Tomorrow, it will cost you AUD57.31 – significantly less than last year.
  • This time last year, the 13th Age Core Book would have cost customers in the Czech Republic 1077 Kč. Today, the same book would cost you 926 Kč. Tomorrow, it will cost you 1081 Kč – pretty much the same as last year.

To work out the values for your currency, get the conversion rates here.

How We Calculated our Prices

Historically, our UK prices have been based on the approximate exchange rate between the $ and £ at the time the product was released. This means our current UK prices are not consistent with the UK prices of historic products. So we’ve taken this chance to make our pricing more consistent across the board.

The first thing we did was pick an exchange rate: 1.28 USD/GBP. This currently favours non-US customers, and shows a certain optimism on our part.

Then we rounded the figures to .95 and 50p. We weighted the rounding towards the nearest pound because 50p prices don’t sell as well. Any price 40p or below was rounded down; 60p or above, rounded up.

The we applied a “Magic Nine” formula. Magic Nines are prices where the significant digit ends in a 9, like 19.95, 29.95, and 39.95. So we rounded prices near these values up or down as appropriate. We didn’t adjust prices around the 9.95 mark, because the impact to the price was too great. Numbers ending in 7 and 8 were rounded up to 9, and numbers ending in 0 or 1 were rounded down to 9. The combination of all these measures lead to a an average 17% increase. For comparison, if we hadn’t applied this formula and had instead just gone for a Round to Nearest 50p  /.95 there would have been an average of 20% increase in the prices.

Revisiting our 13th Age example, the US$ price is $44.95. We divided this by the exchange rate (1.28), to get a value of £35.12. When we rounded the figures to .95 and 50p, this produced the new price of £34.95 – an increase of 17% for UK customers.

If anyone is interested in the Excel formulae, email us for more details.

Stone Skin Press and Dying Earth

Stone Skin Press books and some of the earlier Dying Earth books have UK prices printed on them, so they remain at their former price.

Future Pricing

If there is a significant fluctuation in the dollar / pound exchange rate which we believe will last, we will adjust the exchange rate, and apply the updated formula again to get new prices. We’ll let our customers know in advance, so they can either chose to hold off from buying our books (if the prices will decrease), or chose to buy at that point (if the prices will increase), to take advantage of the change.

brexit2This is an update on the effect of the UK’s referendum in which the majority of voters (52%) voted to advise parliament to leave the European Union.

The short version

Because of a steady new lower exchange rate between the UK pounds Sterling and the US dollar, we will be increasing our mail order prices to non-US customers in January by approximately 15-20%. Now is a very good time for customers in the UK, EU and the rest of the world outside the US and Canada to buy our products. This month’s new releases are at the correct price already.

Pelgrane Press Price Adjustments – the Full Version

Now the full version.

The markets appear to have factored in Brexit by devaluing the UK’s currency. Our costs of production and are in dollars, and our books are denominated with dollar retail prices. Pelgrane Press is an unusual position in that most of our sales and our costs are are in the States and are denominated in dollars, and were are in effect importing our own goods to sell in the UK. Our webstore still uses an exchange rate from happier, fluffier times, so our UK pound prices are very low. As well as this affecting our margins, these prices are also unfair on non-US retailers, who buy our books at the current exchange rate and mark the retail price accordingly.

For example, let’s say that Esdevium Games (the UK’s mains distributor) bought a copy of our epic Trail of Cthulhu campaign Eternal Lies in January 2016. The US retail price for that book is $50, which was £35.42 at the time. Esdevium Games get a 60% discount from retail, and so at that stage, it would have cost them $20 -£13.88.  Then they sold the book to retailer Leisure Games at 40% off the retail price. Leisure Games then sold at the retail price to make their margin.

If Esdevium bought the same book today it would cost them £16, and the retail price to maintain margin is £40.42 – an increase of 14%. Currently the price on Leisure Games website is £38.99. The price on our website is £32.95 – based on the exchange rate at the time. So, as you can see we would need to increase our price by about 18% for parity.

Another way to look at it is this. We pay most of our writers and other freelancers in dollars. When we sell our books in pounds we have fewer dollars to pay our freelancers.

Our non-US sales have always made us lower margin, because of the price of shipping from the US to our UK warehouse, but as an outward-looking international company, we’ve always considered that a price to pay for a wider audience.

For these reasons, then from January our non-US prices will be adjust to match the new exchange rate – an increase of around 15% – 20%.

What this does mean is that until January, all our books will still be at the lower price.

We hope you understand why we have made this choice, and continue to support our lines – and if you want to get the books before the increase, visit the store!

eternal-lies-price

 

 

courier pelgraneThe UK government held a referendum to decide whether United Kingdom should remain within the European Union. The refererendum result was 52% in favour of leaving the EU (so-called Brexit). The UK will remain part of the EU for at least two more years, and that clock starts ticking when the Prime Minister gives notice to the EU that we are leaving.

How does this affect Pelgrane Press, and our customers?

We’ve had a lot of experience over many years of economic downturns and crises. The first and most important thing to say is that, financially, we have been barely affected by such crises. Other factors such as the release of new editions of D&D or the d20 glut have a much stronger effect (the first positive, the second, negative). My view is that the RPG companies are like Dominos Pizza – their products are in demand in recessions, as an alternative to more expensive options.

Or, to put it another way, there has never been a better time to enter a world of fantasy!

We trade mainly in the United States, so the immediate impact of the vote was to increase the net value of our cash reserve and stock. Sales over the past few days are unaffected, and we hope that this will continue.  Our expenses are mainly in US dollars; our income is mainly in US dollars, so we might see a modest increase in GBP revenue if our sales remain steady, counteracted possibly by lower sales in the EU. Much further in the future, it might become more difficult to trade with the EU. However, we are a flexible company and have the option of moving into the EU if we need to – co-owner Cat Tobin is based in Ireland. In fact, we can run Pelgrane Press from anywhere with a good internet connection.

I can foresee no delays in production or our release schedule as a result of the vote.

The only possible effect it might have on our customers is that we might increase our GBP prices or non-US shipping costs. I can’t see that being a possibility for a while, though.

Our company connects with colleagues, customers and friends all over the world, including the EU. We value diversity, and enjoy working with people from a wide range of backgrounds and nations. Last year, for example, we had customers in 85 countries and freelancers in at least eight.

We will continue to work with, and support, gamers and creators all over the world, and do our best to overcome any barriers between us, however they arise.