Important Message From Dave About Pricing

(From September 2012 Newsletter)

Hey there,

Dave here. I have something important to tell you. It’s not the most enjoyable message to give you. So here it is. We’re doing a price increase and there are some real good reasons why.

I’ll start with the obvious. All of Saddleback’s designs are built out of really good leather. In fact, it’s the absolute best full-grain cowhide I can find. And high-quality cowhide, like pretty much anything else worth buying, isn’t getting any cheaper. There have been some big increases in leather costs over the past three years and it’s actually really interesting to learn why. Let me tell you about it.

Saddleback buys leather from tanneries, but before leather is tanned it’s called salted hide. A salted hide is just what it sounds like. It’s the raw, fresh-off-the-cow salted hide. Tanneries buy the salted hides from many different sources including hide producers and processors. The price tanneries are paying for salted hides has jumped almost 70% in the past three years. It’s a big deal.

Why has the price jumped so much? Good question and the answer is interesting. There’s a lot that goes into it. Like supply and demand, to start. Cows are raised primarily for beef, not leather. The demand for beef determines the availability of leather, so the price of leather is largely dependent on the demand for beef. Well, we buy American hides and most of the cattle ranching states have been in a big drought these past several years. When farmers can’t feed their cows, they sell them off. This makes for a short term spike in the leather supply and it never lasts too long. But once things settle back down, the price of leather is inevitably higher than it was before. Also, more people are using leather now than ever before. It used to be that only expensive cars came with leather seats and everyone else had cloth ones. Not anymore. And the shoe industry demand is also a big factor, considering they are the largest users of leather. When demand for leather goes up, they don’t just make more cows, they crank up the price of leather. And that’s the main reason you’re getting this little letter.

But it’s not just the price of the salted leather that’s going up. Over the past three years, many essential ingredients the tanneries use to turn raw hides into tanned Saddleback hides have gone up in price as well.

Tannin (one of the main ingredients used to tan leather hides) was used mostly for tanning leather in the past, but recently people are starting to use it for other stuff, like animal feed and rust protection. As the demand for tannin increases, so does the price. Also, tanneries usually split the full-grain hides into a suede leather hide and a top-grain leather hide, and then sell them separately. Essentially, they make two hides out of one. But we buy the whole, intact full-grain hides for our stuff. It’s more expensive to purchase leather this way, but it’s another reason why our bags are so rugged and unique. Our tanneries are also recognized by their industries as some of the best and most responsible around. They do it right, and that’s not cheap. They’ve been investing a lot of money lately in becoming more environmentally friendly and sustainable. That includes things like compliance, water and air treatment, re-processing or environmentally conscious waste disposal. Working with tanneries that do things right costs us more, but I believe it’s worth it. We could definitely pay less, but we’d all end up paying dearly for it eventually.

Other costs have also contributed to the hefty increase in product costs we’ve had over the past three years. We’re committed to paying a fair and competitive wage to all the craftsmen and women who build our bags. Crafting my designs isn’t always very easy work. The leather is really thick, and it takes a lot of training, experience, muscle and skill to work it. We hire the best, most skilled folks we can find and pay them accordingly. I refuse to do business at their expense. It just wouldn’t be right.

Also, I believe one of the reasons people buy Saddleback leather is because we’ve made consistent quality our absolute top priority. It would be real easy for quality to fade if we weren’t real careful about it. That’s why we’re constantly working to maintain and improve a comprehensive Quality Assurance program so that the quality Saddleback has become known for only gets better. Staying up at this level is expensive, but as far as I’m concerned, is there any other way?

All these factors have left us with three choices:

1) Increase retail pricing every time there is a leather cost increase.

2) Not raise prices at this time and lower our quality of goods by using lower quality leather (with more defects), jeopardize our finished product quality by scaling back on our processes, reduce salaries, etc.  

3) Continue to hold off raising prices until we absolutely had no choice and then send a letter out about it.

We chose the last option.

As the cost of business has risen, tanneries, other manufacturers and retailers have immediately passed price increases directly onto the customer. That’s not wrong of them to do that. In fact, it’s the normal thing to do. But it’s finally become necessary to raise Saddleback’s prices to keep in line with the rising cost of materials and the cost to keep making these things well.

Beginning September 28, 2012, the price of most Saddleback designs will go up about 10% to help us offset a portion of our cost increases; we decided on principle to not pass them on entirety to you at this time. I also wanted to give you a heads-up before our price increase kicks in. If you’ve had your eye on something, you still have a couple of weeks to pick it up before the price goes up on September 28, 2012.

Some prices will increase more than others, for example, the price of the Suitcase, the Beast Duffel, and the Classic Duffel. That’s because those bags take a huge amount of time and skill to handcraft in our workshop, and they require the use of whole cow hides that meet our blemish standards. Most cows don’t make it through life without a brand, a bug bite, or a scar from a barbed wire fence (which can weaken the leather). I like some natural scarring and vein marks on my leather. It tells a story and it’s part of what gives my bags character and makes each one truly unique. But too much of a good thing can weaken the leather. So finding a consistent supply of quality hides that meet our blemish standards and are large enough for these bigger designs is a constant challenge. Whole hides also take a lot more time and expense to produce than half hides (split down the spine), which is how most leather is purchased. You might think that two half hides cost the same or more than one whole hide, but actually the opposite is true. Very large hides cost more per square foot than smaller hides. The sailmakers in New Zealand call sewing machines perforating machines (tear along the perforated line) and so the fewer holes (fewer seams/larger pieces of leather) I design things with, the stronger and longer lasting my pieces are. A lot of things go into quality, and that’s one of them.

Anyways, thanks for your patience and support. Everybody here in the shop is working hard to make your Saddleback experience better all the time. We just added a free Skype line for international customers that want to hear our voice. We’re working on lowering both domestic and international shipping costs (negotiating with vendors, etc). We’ve increased production capacity to resolve out-of-stock situations. And we’re now doing free domestic return shipping on any Dave’s Deals leather that isn’t working out for you. Lots of other cool things are in the works too. I’m glad you’re on the inside with us. If you have any questions on anything I’ve covered here please just give us a shout.


Peace to you,

Dave Munson

 

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