Indeed, we live in interesting times…
Dear Fringe Fam,
I wanted to write you a little note to let you know what is happening with Fringe Sport, our pricing, and more. There will be no politics in this email, although I will speculate on what I think is happening and what I think will happen.
If you don’t want to read, the skinny is that we are raising prices on almost everything.
The price increase is not happening today, but soon. And when we can, we will give you a warning when we are about to raise prices on things. But in all cases prices are going up.
Grab what you’ve had your eye on today.
There is this old story about a Chinese curse. The curse is “May you live in interesting times.” And we do live in interesting times.
I‘ve been running Fringe Sport for 15 years now. And for 15 years, we have been Improving Lives through Strength. It’s a passion and cause that is near and dear to my heart.
I genuinely believe that we are helping people, every single day. I believe in the life changing power of Strength. I believe in our customers, our employees, and I believe in YOU.
From the very beginning, I thought our secret sauce was:
- Great Products
- Great Prices
- World Class Customer Support
An area that is a current challenge is “Great Prices.”
While I deeply believe in the three-part formula of Product-Price-Service, the reality is that a company MUST make a profit. If a company does not, it ceases to exist. This might take a while (especially if the company is backed by heavy investment), but it will happen eventually.
A simple formula for profit is: Price - Cost = Profit
If the Price is above the Cost, a company makes a Profit. If the Profit is high enough, the company can invest in growth- better designs, more employees, more inventory, etc.
If Cost is greater than Price, then there is no Profit. And as mentioned above, the company sooner or later ceases to exist. The company goes away. All the employees must find something else to pay the bills. The customers lose warranty support, and innovation. And the market Price tends to get higher since there are fewer competitors driving the Price down.
While “the market” sets the Price, increasing Cost tends to drive up the market Price. Or to put it another way- when the Cost increases, the Price increases.
That’s what is happening now. Tariffs are raising Cost for all companies in our space (and all companies generally.)
Even companies that loudly boast “American Made” are sustaining higher Cost and pushing higher Price.
If you would like more information on why “domestic” manufacturing is more expensive due to tariffs, I made a video on my personal YT account that discusses this a bit at the end of the video. Again, no politics there. Just realities on the ground.
So what is happening right now?
We (citizens of Earth, but specifically here in the USA) have entered a chaotic “Trade War” environment. What this is doing is:
- Raising Cost
- Adding Uncertainty
Raising Cost:
We are raising Price(s) to compensate for raising Cost.
Fringe Sport is profitable and growing. And THANK YOU to all our customers for showing us that what we are doing resonates with you!! I am grateful from the bottom of my heart that my life’s work and the work of our team has value! Seriously. I have invested 15 years into Fringe- and I am fully committed to many more years of serving YOU.
But we must remain profitable to continue to serve you. To continue to innovate. To continue to provide Great Products and World Class Customer Service.
I bootstrapped Fringe Sport from my garage. We do not have deep pocketed private equity investors behind us. We have been profitable for 10 of the 15 years of our existence. That’s ok. *Most* of those unprofitable years were early on when I was figuring out the business model.
We’re generally not “wildly” profitable though- I have friends who run tech companies and whew, their margins would knock your socks off. Good for them!
But back to the point, we need to preserve profitability so we can continue to serve you!
So we have already raised many Price(s) to compensate for the initial tariffs that rolled through. We gave you, our customer, a warning on most of them- a few preorder products we did increase price without a warning. We are going to do better on those in the future.
We will be raising prices again.
We are trying to minimize the number of rounds of price increase, but see below for “uncertainty.”
Adding Uncertainty:
New rounds of tariffs were just announced last week and more this week.
This creates a difficult environment for us. We design products for you, and we have a target price in mind when we do so. Fluctuating Cost makes it super hard to design for a price point.
And a HOME RUN product at $99 is probably a stinker at $249.
Plus, it is hard to forecast demand if we don’t really know Cost, and therefore what the Price must be.
Back to that HOME RUN product at $99. If we are able to sell that product at $99 and make Profit, we might sell 100 a week. If we have to sell it for $249, we might sell 10 a week. We have to commit to our orders 3 or more months in advance. And we genuinely could have a 10x variability in sales, based on Cost/Price.
To play off the above example, where we could sell 10 a week or 100 a week- if we want to order a month’s worth of inventory at a time, that is a difference of ordering 43 units or 430 units.
That’s a huge difference!
We need to accurately know how many units are selling/going to sell at the price at which they will sell.
And this uncertainty makes it difficult to run the company and forecast.
Don’t worry about Fringe, though- we are up to the challenge.
Not all companies are. We have already seen a wave of failures. Many came just after the pandemic. Companies went from having the best sales and profit of their existence to completely broke in a shockingly short period of time.
Cough, cough, Tru Grit.
And we have recently seen another wave of failures, e.g. Kabuki.
We are about to see a new wave again.
Fringe will not be one of those. We are here to stay- for you, for our customers, for Strength :)
Back to the main point- raising Prices.
As mentioned above, we are going to be raising prices. But we are trying to do as few rounds as possible- to add stability/predictability for you, and to ensure that we order the right amount for us.
We are certainly going to have some misses- but as always, we will do our best.
So why are you writing this post?
Fringe Sport has ALWAYS been grass roots. I wanted to build a company that I would love to be a customer of.
… And I am a difficult customer ;)
I am friends with many many many of our customers, and I love that many of them are proud of Fringe Sport, and of me.
I still have friendships with people who came to my garage 15 years ago to buy kettlebells from me.
Most of our competitors just raise prices with no warning.
They can of course do what they want.
But I think this kinda sucks.
It takes SO LITTLE to share an update letting you know that price increases are coming. And it can help you to budget and plan.
AND
I used to be a big fan of GoRuck. Jason, the founder used to do big blog posts early every year. I read every one. I really felt a part of the company or the movement.
I would invite you to feel the same about us. If this blog post gets a positive response, I’ll write more like it.
PS, if you comment on this blog, I may not be able to reply to everyone, but I read every comment. If you'd like a direct reply, feel free to send me an email at peter@fringesport.com. I invite you to share your thoughts with me- whether positive or negative.
Know that I feed off positivity.
And I do think that you, our treasured customer, are part of the Fringe Fam, and part of our journey. Thank YOU, again.
Now for a few questions I often get asked:
Why do you manufacture in China? Why not build product in the USA?
Short answer is that we do both! We manufacture in China and in the USA. If we manufacture a similar product in each location, the China product tends to be a higher quality product for 1/3-1/2 the cost- which allows us to deliver to you a better product at a lower price. And we have done many, many, many tests with you, our customer. You have voted with your dollars that you prefer a higher quality product at a significantly lower cost.
Can you move more production to the USA right now?
We are doing a few pilot projects in the USA right now. We are looking at building our Mammoth belt squat in the USA. This will bring the Price to you from $249 (pre recent tariff increase) to $499, probably.
The project is a pretty easy one, but working with US manufacturers has been VERY slow. Not making a political or value judgment, just sharing reality with you.
Once we get these in house, we will offer them side-by-side with the ones built in China and see what the market wants! It will be an exciting experiment.
Don’t you have inventory on hand? Why raise the Price now, when you only have to pay the tariffs on new imported product?
This goes back to us needing to run a profitable company to stick around for you and our employees. And also to managing uncertainty.
We “turn” our inventory as fast as we can. In fact, you’ll note that we have one of our new hot products- the Dane 2- on preorder now. In other words, we have no Dane 2s in stock. So all preorder Dane 2s will sustain a Cost increase due to the tariff. Not a Price increase though- if you already gave us your money, we are “honoring the deal.”
In other words, yes, we have some inventory on hand.
But we need to know how much product to order. And if we wait to raise Prices until we get hit with the new tariffs, demand might crash, leaving us with a lot of inventory on hand, a cash flow disaster… and potentially even a big solvency issue.
Additionally, I am a steward of this company for our customers, our employees, and me as owner. A few of those unprofitable years I mentioned above… were recent.
Are you going to drop prices if the tariffs go away?
Yes.
But, as I mentioned, “the market sets the Price.” And I also mentioned uncertainty and stewardship above.
Another “reality on the ground” or “applied economics” fact is that higher prices tend to be “sticky”- prices go up faster than they go down.
I would point you to the pandemic. We had to raise prices in that period to get productions from our factories. Once supply rose to meet demand, we lowered prices.
It did take a while, though!
This has been a long post - it took me hours to write, even though I edited it very lightly.
If you have read this far, thank you. You can make me smile by lifting something heavy today.
YOU are who we do this for.
LHLH- Lift Heavy Lift Happy,
PK
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