After receiving several questions on Instagram (in response to our reels about the crowdfunding), and seeing two of my business peers (and friends) announce their business closures last week, it's time to talk about pricing and sustainability.
I've always been dedicated to running Outlaw with integrity and transparency, because I believe the more I can be real with you about our business (that's the business that you, an Outlaw customer, and we, the Outlaw team, have built together), the more you will understand the bigger scope of business.
Not only does my transparency help us in explaining our position, but I believe it helps every other small business. I have received several private messages from other small business owners thanking me for my candor and "telling it like it is."
It's a hard time for EVERYONE I KNOW.
We want to stay in business forever.
If you want Outlaw to keep making Outlaw goods, please invest now: https://wefunder.com/outlaw.soaps
Love & Appreciation
I want you to know that every decision we have made - at every level of our company - is because of a deep love, appreciation, and honor for our Outlaw gang. We, company-wide, talk about how our Outlaw customers have made us better people.
You help us see beyond transactional relationships into the meaning and connection made possible by the tools of our modern age.
There's the side of the business that we see on our Profit & Loss Statements and Balance Sheets.
But there's also a truly magical and significant aspect of Outlaw's impact: I believe we (that's ALL of us) have created something new and special, together.
Nothing can take that away.
But... What HAPPENED?
As I mentioned, two of my friends and business peers have announced their business closure in the last 7 days.
People are so surprised when a beloved and seemingly successful business announces their closure.
Behind the scenes, in all likelihood, the owner has desperately tried everything to save the business from closing. Many small business owners face bankruptcy (not just business bankruptcy - personally guaranteed loans can force a personal bankruptcy and cause entrepreneurs to lose their homes), in addition to the heartbreak of laying off long-time employees, explaining losses to investors, and the personal shame of facing "failure."*
My dear personal friend and Outlaw supplier (Stacia & SmartyPits) went through this almost one year ago: Costs went up, buyers wouldn't accept the price increase, and there was no way to bridge this gap.
Bridging the Gap: It's Not So Easy
Why have costs gone up?
Why is it so hard to increase prices?
What's different now than it was, say, two years ago?
This is not a political post. I can tell you that the EIDL, the PPP, and ERC absolutely saved jobs and saved businesses... for a time.
For those of us lucky enough to get this aid, it was an absolute Godsend. We entrepreneurs don't get to collect unemployment. I believe it costs less in the long run to have a huge bailout than it would to have to rebuild the businesses from scratch.
That said, many small businesses (including Outlaw) used this and other available financing tools (we brought in investors) to keep prices low, even as costs increased. We rationalized it because certainly supply and labor costs would go down eventually, and it was better to keep customers than lose them.
In addition, privacy changes in Apple meant the costs of marketing to new customers went up by 50%+.
This meant that retaining customers was THAT MUCH MORE IMPORTANT, which meant all of us (including Outlaw) were even more resistant to raising prices.
Outlaw actually did test some price increases in late 2022, but the results were catastrophic - sales fell off a cliff. We decided to make some size and price adjustments (for example, our solid colognes went from 1 oz to 0.5 oz, and we cut the price by $6/tin), but we dropped prices back down for most of our products, rationalizing that something would change... and something DID: more costs!
Shipping costs went up, both in terms of getting products to customers and getting supplies to us. Customers, used to free shipping from Amazon, struggle to rationalize $8 in shipping on an $8 bar of soap (I totally get it!). Our internal freight costs (suppliers to us) more than doubled from 2020 - 2023, further pushing up supply costs.
Labor costs also went up. In 2020, warehouse workers made $10 - $13/hr in Reno. Now, starting wage is $18+/hr, which is $200 more per person, per week. We have struggled to stay competitive, but we're very blessed with dedicated folks (and we have an employee stock program, which most employers don't offer).
Still, we were too anxious to raise prices. Russ and I don't make a lot of money, so we understand the overall financial squeeze. We didn't want to make our products out of reach for our customers. (I mentioned how much we love Outlaw customers)
But as the pandemic eased last year, customers started going back to stores and stopped shopping online. Economic changes (inflation & end of aid programs) meant people had less money to spend on things like our product.
This is just what it is. This is a fair and reasonable economic adjustment to an unprecedented situation. I blame no one. We all are just doing the best we can with the tools we have.
Ok, So Here We Are.
In his book Just Listen, Mark Goulston says we need to move from "'Oh F#@&' to 'OK'" as quickly as possible:
1. Yes, sometimes you gotta swear about effed up situations.
2. Then you have to accept the reality as it is today.
3. Then, with that acceptance, you can say, "Ok. So here we are."
4. Then you can work on fixing the problem.
After the initial "OH F#@&," I came up with a plan:
1. Keep doing the things that we're really good at, which are evocative, real-life inspired scents in high-quality products, but do it in a way that makes sense for the business AND for Outlaw customers (quality + transparency + profitability)
2. Add services built on what we're good at, but offered a higher price point, so we could reach a new customer base, and sell fewer products to fewer people (profitability + enabling growth for others)
Doing the Best We Can
We're all doing the best we can.
We're going to continue to do the best we can.
This means that usually, everything will be OUR USUAL EXCEPTIONAL OUTLAW AWESOMENESS. Providing exceptional EVERYTHING is who we really want to be as a company.
This also means sometimes our new cologne might ship a week late if we can't get supplies in time, or we might ship our Frost Trail bar soap with a white sticker on a Mountain Hideout box if we can't get the Frost Trail boxes in time (hey, I literally just learned Adobe Illustrator this month, and it was not without a learning curve).
This won't always be good enough for you, for us, for anyone.
And in those times, I ask that you give us some grace.
Shantel is the messenger (and the nicest person around), not the source of the problem.
We'll do everything we can to make things right, as long as it doesn't mean compromising the overall health of our company. Most of us would do the same for our family (however we define family).
The Price Increases
In an effort to avoid being yet another statistic, Outlaw is strategically increasing prices.
If you want to invest in Outlaw AND get Outlaw goods in the future, we just added a $500 gift card perk if you invest $500: https://wefunder.com/outlaw.soaps
(Anyone who has already invested will get this and any new perks)
Here are some of the changes we're implementing in the coming weeks:
First: Made-to-Order vs Ready-Made
These days, in order to efficiently use our inventory and avoid product sitting on shelves, most of our colognes are made-to-order. This means that when you order a cologne, we make ONE of them, just for you.
Moving forward, we will be keeping stock of our most popular colognes and charging more for our made-to-order colognes.
This means that we can keep offering colognes like Lust in the Dust, Hair of the Dog, and Mountain Hideout... but they'll cost a little more.
Second: Subscription Adjustments
Over the years, people have subscribed to our products at different price points:
- Sometimes there's a sale which temporarily discounts the prices of the soaps, and inadvertently also discounts the subscriptions.
- For a time, we were offering free shipping for subscriptions, and as the price of shipping has increased, we kept those subscriptions on free shipping.
- On certain occasions, because of human error, one of our customer satisfaction folks have adjusted the price of a subscription intending for it to be a one time discount, but that discount just keeps processing.
Because we do not see the aggregate effect of these orders over time, these issues go unnoticed. Subscription pricing issues are a perpetual money-losing machine.
This week, we will be reaching out to subscribers and making prices consistent across-the-board. Some subscribers may see an increase in prices. Some subscribers may see a reduction.
SUBSCRIPTIONS ARE AN IMPORTANT PART OF OUR BUSINESS. We don't want to piss off our subscribers.
If you're one of the people who gets an increased price, please understand that we've been subsidizing your subscription -- often for many years, and often because we recognize your name and know you've been a long-time customer.
If you get an increase, we hope you'll see this as an opportunity to offset the cost of our subsidy, rather than just an increase in cost.
We're encouraging EVERYONE to subscribe to our Scent Soundtrack Subscription, since that's the latest and greatest.
Third: The New Sexy Thing
We're going to be offering a scent creation opportunity, where people (including you) can craft your own fragrance with the intention of creating your own product line.
This is the thing I'm MOST excited about, because I want Outlaw to be a force for GOOD in the world. I want to use what we know of how to create incredible, evocative, interesting scents, and put them into high-quality, natural products.
And then I want people (including you) to take those products and make a BOATLOAD of money from them.
This isn't cheap... but it's not as expensive as you might think.
Details on this are coming soon.
Fourth: Pre-Orders are the Future
You may have noticed pre-orders on our Rain in First Light Cologne and many of our natural body washes, and especially on our First Test Flight Cologne Sample Set.
This enables us to collect orders before we get supplies (in many cases), and make exactly the right number of products, so we don't have expensive inventory sitting on our shelves.
Other Things
We're also working on other things like artist and brand collaborations, but these take money to get started. So far, our crowdfunding campaign hasn't been successful enough to kick anything off.
Wholesale and bulk ordering is also another avenue we're working on. In concert with the New Sexy (above), we're launching a wholesale portal where stores and customers who want to sell Outlaw goods at farmers markets, etc, can order in larger quantities at a discount.
We Want Outlaw To Survive
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows the great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat." - President Theodore Roosevelt
If you're not already in business for yourself, maybe someday you will decide to embark on this wildest of adventures. It is truly amazing. Especially if you hang on long enough to see the world change around your business -- to experience historically unprecedented events and know that you're part of it all, not in the bleachers, but in the arena.
We have been so lucky to have so many supporters and so few detractors.
Even investors, who people warned me would be angry, critical, and money-focused, have been outstandingly supportive in this hard time. They have offered no criticism, only gentle encouragement, compassion, and wise counsel. Most of them have also been in the arena. They know how it is. No one questions how hard we have worked to stay in the arena.
Despite all the challenges, it has still been a real honor to build this business, which has become such a touchstone of connection for thousands of Outlaws worldwide.
I have no regrets, only intense gratitude for all the people whose lives have intersected ours through this unique company.
We hope to do this for years to come. With your help, we will.
Again if you haven't invested, please do: https://wefunder.com/outlaw.soaps
* I hate using this word because it reduces so many years of SUCCESS to the single blip on the timeline, but this is how many of us see it.
