Vrai & Oro, a two-year-old L.A.-based jewelry brand, decided to adjust the prices of all its products last week when the price of gold went up. It has set all product prices at a consistent 60% margin. While 40% of the price covers the cost of raw materials, the rest goes toward overhead and profits.
Against the angst-filled protestations of her team, founder Vanessa Stofenmacher chose to explain the new pricing model to customers through a blog post and email, rather than sneakily releasing a new collection with new prices. Her instincts proved correct, because customers had an overwhelmingly positive response, even it meant they were paying more. Many said they were used to feeling duped by marketing, so it was refreshing to get a honest look into a company's business decisions. The day after the brand made the announcement, it saw its biggest spike in sales ever, Stofenmacher says. ES