New tariffs are here (for U.S. users) and it seems every manufacturer is dealing with them differently. Some added the tariff as a line item on bills without adjusting MSRP, some added it to item cost without adjusting MSRP, some treated it as a regular price increase, adjusting both cost and MSRP, and several don’t know what they’re doing yet.
You may consider adding the tariff as a freight charge, but the two states that have provided clear guidance already have indicated that sales tax is to be collected on the tariff as it is considered a cost of goods sold, not ‘freight’. That alone is enough to get other states to do the same, whether announced or not.
Also, if I’ve learned anything from the ‘card convenience fee’ debate, it’s that the general public would rather pay a higher price and not know where it goes than pay a lower price and know where it goes because it feels better. This is also true in the car market, where customers prefer to think that a dealership is giving them an overpriced trade-in value for the car they are upside down in than see that they are actually using the discount off MSRP to pay off their bloated 7 year term car note. Anything to keep their monthly payment at $X/month. We offer a discount for paying with check or ACH to solve that issue.
While you may agree or disagree with tariffs as a tool, or whether or not the U.S. should impose the same tariff on countries that they charge on our goods exported to those countries, we need to deal with them. We can no longer take MSRP x a multiplier in many cases to get our cost. This makes updating price lists very difficult.
For us, I’m adding the tariff to our cost and our margin is our margin. I know we need to average 65%-68% markup or 39%-41% margin to pay for materials, overhead, sales and office labor, taxes and still have money left for owners and investment at the end of the month. MSRP doesn’t factor into that equation. I can’t part out the tariffs as though they don’t cost anything when they are sitting on top of a fireplace in my warehouse. If they were being paid like sales tax, once the product was sold, that would be a different story. Manufacturers trying to sell it to us as such need to be called out on the practice.
With regard to Striven, it would be great if there were a Misc Fee that could be added per item, like freight, that could be taxed or not. In addition to the easier price list updates for the immediate future, it could also be used for automatic discounting for sale items, floor models or obsolete inventory. It could be used to add carrying cost to inventory that you need to hold in inventory longer to make sure you have it when you need it, or to reach pricing minimums. It could be used to add a labor fee for processing or packaging. Sure, item groups can perform a similar task, but the process is tedious for something simple like a single charge.
