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.