Wooting 60HE price increase
July 13, 2022
-
Calder Limmen

Why we have to increase our Euro price

The Wooting 60HE Euro price will increase by €10 starting the 18th of July due to the further devaluation of the Euro.

I have attempted to postpone the price adjustment for a longer while, but if you've been following the EUR/USD exchange rate, then you know that the EUR is not going to recover to historical prices any time soon and this is severely impacting our profitability in the European Union.

We are heavily dependent on the USD for purchasing/manufacturing. These costs rise or drop equal to the EUR to USD exchange rate. We're now at 16% cost increase in comparison to the launch of the Wooting 60HE and the current EUR retail price is not able to cover this exposure.

To clarify, none of this information is relevant for the United States and the ($) USD price remains $175.

Let's break this down.

Costs in USD

We pay all our manufacturing partners/suppliers in USD. It's the international currency for trade and accepted (nearly) everywhere. Even when we have an opportunity to purchase (for example) IC parts in EUR, it's nearly always a conversion from the USD price.

When we sell our keyboards within the European Union, we sell and receive payments in EUR, which in turn is used to make all the purchases from our suppliers for our European store. The base currency of this store is EUR and we do not receive more or less based on the USD exchange rate, it's fixed. This means, we cover the differences in the EUR/USD exchange rate.

In addition, when you pay with a different currency on the European store (e.g. GBP) you pay for the EUR equivalent and we receive it in EUR from our payment processor (minus an exchange fee). Even when you use USD.

On October 1st 2021, when we launched the Wooting 60HE, we could purchase 1 USD for 0.86 EUR. Today, that's 1 EUR. This means our product cost has risen by 16% in comparison to when we launched. It is at the moment not unimaginable that the EUR will price below the USD.

Misunderstood VAT

The EUR prices include Value Added Tax (VAT). This means that we collect consumer taxes on every sale and need to pass it through to the government. Unlike in the United States, the tax is already part of the product price.

The VAT rate in the Netherlands is 21%. The Wooting 60HE - US ANSI model is priced at €180. We effectively only receive €148.76 per unit and €31.24 goes to the government.

When you purchase the Wooting 60HE outside of the European Union (EU), we deduct this VAT amount at checkout, because we do not need to collect VAT for countries outside the EU*.

EUR vs USD prices

When we launched the Wooting one we matched our EUR to USD price to keep it simple and overcome some technical hurdles. For example, the Wooting one was 140 EUR or 140 USD. It wasn't until the Wooting 60HE that we launched products with a different EUR vs USD price. At the time of launch, it was a minor difference of "5". It didn't completely cover our exposure, but we could accept a lower margin on our EUR prices.

Now that USD exposure has blown out of proportion. Let's see how the 1 USD = 1 EUR rate holds.

The Wooting 60HE - US ANSI:

European Union Price

  • 180 EUR incl. VAT (21%)
  • 148.76 EUR excl. VAT (21%)
  • -> equals 148.76 USD

United States Price

  • 175 USD excl. taxes
175 - 148.76 = 26.24 USD difference

26.24 USD is an astronomical difference (~15%) and is with every sale taken from our bottomline. I had tried to compensate for the difference by discontinuing the discounted or free shipping options at certain cart values within the European Union. But it's getting out of hand and we sadly need to increase the product price.

The new price

The Wooting 60HE - US ANSI:

European Union Price

  • 190 EUR incl. VAT (21%)
  • 157.02 EUR excl. VAT (21%)
  • -> equals 157.02 USD

United States Price

  • 175 USD excl. taxes

175 - 157.02 = 17.98 USD difference

17.98 USD is still a notable difference (~10%) but that's also the reality of doing business as a European company and over a longer term the EUR will recover to a point that will lessen the gap.

In the European store there are also ISO model options for which you can choose to add ABS, PBT, or no keycaps. These will also increase with €10 as followed:

  • ISO - No keycaps: €160 -> €170
  • ISO - ABS keycaps: €170 -> €180
  • ISO - PBT keycaps: €180 -> €190

What about the other products?

We're not increasing the price of the Wooting two HE or any of the accessories for now. We wish to keep the Wooting two HE under the 200 price mark and can accept a lower margin. In addition, we had already increased the Wooting two HE Euro price a few months back for similar reasons. The accessories have a minor impact and we rather keep it simple.

*This is not always the case. We need to collect VAT for sales to the United Kingdom in certain circumstances and other countries are also moving this type of VAT scheme.

I hope this gives you some more insight in how Wooting runs <3

Calder Limmen
Calder Limmen
Co-founder and CEO
Twitter

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