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🗓 04/05/2022 👤 Daniel Kundt

Why KoRo is now lowering many prices

Around 600 products will now be offered at a lower price, while the price of around 350 products will increase. The overall range will therefore be slightly cheaper on average. You can find out why we are doing this and how it fits in with the current market situation, in which many things are actually becoming more expensive, here.

Why KoRo is now lowering many prices

Frequent price adjustments for fair prices

Price adjustments are part of KoRo's normal business operations. Unlike many retailers, who often want to keep prices constant for as long as possible, we at KoRo like to maintain a high degree of flexibility here. This means that we review our prices at regular intervals and adjust them in line with current market conditions. The aim is to offer our customers the best possible price-performance ratio at all times. For example, if raw materials become cheaper, we can pass this advantage on directly to our customers. We also don't have to factor in possible price increases in the future in advance, giving us the freedom to only increase prices when we really have to.

You can also use our price graph on the product detail page to transparently track the various price adjustments in the past at any time. Transparency and fairness are among KoRo's core corporate values!

The current price adjustment is therefore a completely normal thing, but we would like to take you behind the scenes again this time. Especially as we are reducing most of our prices - which may seem a little unusual in the current market situation, where many foods are becoming more expensive.

How pricing works at KoRo in principle

We have already explained in detail how we set prices at KoRo in the past, so take a look here for the details. The underlying clever formulas were devised by the two mathematicians at KoRo. As a non-mathematician, I'll briefly summarize what the most important factors for our prices are:

  1. The basis for the sales price is our purchase price or our production costs. If our procurement costs increase, the selling price will logically also rise.
  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 procurement costs, there are of course other costs associated with selling the products (e.g. logistics costs - no, the shipping costs unfortunately don't cover these), costs for Paypal, Klarna and the like, rent and, last but not least, my salary - and that of my colleagues. We therefore define minimum margins that we have to achieve with the products in order to continue operating KoRo.

These factors are then used to determine the prices of our products (→ Details).

Where is the current price adjustment coming from?

In the current market environment, we are actually observing rising procurement costs (factor 1) and rising competitor prices (factor 2). This would tend to indicate that our sales prices are also rising. Why are most prices nevertheless falling?

KoRo has become bigger and bigger over time thanks to steadily rising sales figures. Even though we are still a comparatively small fish in the German and European food market, we can still realize some economies of scale. For example, the proportion of fixed costs (e.g. rent, insurance, personnel costs) per individual order naturally decreases the larger we become (business administration students learned this in the first semester under the term "fixed cost degression") and larger quantities also allow us to negotiate more favorable contracts, e.g. with payment and shipping service providers, and usually also achieve lower prices from suppliers.

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

We therefore have opposing effects: On the one hand, rising raw material prices and changing competitive prices, and on the other, 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). This results in a slight price reduction across the entire product portfolio, which we consider to be good news for our customers in view of the overall rise in food prices.

A look into the crystal ball: What will the next price adjustment bring?

Our mission to offer the best possible price-performance ratio for all products will not change in the future. Our tight margin calculation makes it necessary to review prices regularly, especially in the current difficult market environment. We will therefore also price in changes in procurement costs in the short term in future, as well as savings in our cost structure. Of course, this also depends on the further development and growth of KoRo. In this respect, it is currently difficult for us to predict when the next major price adjustment will be and how it will turn out overall.

Special feature outside Germany: VAT adjustment

Outside of Germany, there are also price adjustments due to VAT/sales tax.

What VAT in your country has to do with our price adjustments

We currently always calculate prices based on the German VAT rates. In concrete terms, this means that in some countries our products are slightly cheaper, while in others they are slightly more expensive than the national average. We want to adjust this and are now calculating according to the country-specific VAT rates. Of course, we have always paid taxes correctly in all countries, only the prices for end customers were not previously calculated on the basis of local taxes. There were very simple reasons for this: First and foremost, we want to meet the high demand for our products before we adjust the prices. In other words, we simply converted the prices from the German store into the respective currencies.

Thanks to the continuous expansion of our team, we now have sufficient capacity to adjust our calculations, which now also include competitive prices for each country individually - as we can now also take competitor prices into account. What does this mean for you in concrete terms?

Above all, it means that prices will be distributed more fairly, because in some countries our products were significantly more expensive than the national average and therefore not accessible to all customers - although this is one of our top priorities. From now on, prices will rise slightly in countries with high VAT rates, including Denmark and Sweden, for example. In countries such as France and Italy, prices will remain the same on average, with the only changes being product-specific, as VAT can vary greatly for different products. For example, drinks are taxed at a reduced rate in some countries and at the full rate in others.

We would like to illustrate this with a product example, our organic Matcha Mizu. Based on a German VAT rate of 7% and a net sales price of €12.15, this results in a sales price of €13. In France, on the other hand, the VAT rate is 10%. Until now, we have not taken this difference into account in the price, but in future a rounded price of €13.5 will be calculated based on the tax rate (+3.85%). Here is an overview:

  • France: + 3.85 %
  • Netherlands: + 0 %
  • Italy: + 7 %
  • Spain: + 3.85 %
  • Sweden: + 11.5
  • England: - 10 %

In our second example, organic cranberry juice, the situation is somewhat different, as the taxes can vary greatly from country to country. Here the tax rate in Germany is 19%, whereas in France it is only 5.5%. The price in France drops accordingly.

  • France: -11 %
  • Netherlands: -9 %
  • Italy: + 6.7 %
  • Spain: -7 %
  • Sweden: -2.2 %
  • England: - 3 %

You can track the price trend for each product under the "Statistics" tab. Please note, however, that for technical reasons we can currently only display the price development within the German store in the respective national currency of the selected store. We are working on displaying the price development for each country in the future.

Outside of Germany, the price adjustment therefore includes the "market-related" adjustment of the prices, as well as the adjustment of the correct VAT, which can lead to very different results depending on the product.

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 using our contact form.