How Do You Explain Inflation To Foreign Clients?

[Montauk_Project]

For those of you who do business in Argentina but with clients who come from other countries. . .
how do you explain inflation?
I just sent a client a budget for a job. She worked with us in September 2012. While we try to keep prices down as much as possible, there are some things that we need to pass onto a client.
For us, we need to receive payments via a local bank, so it will enter in pesos.
(can´t use zoom, bank in Uruguay, etc)
Do you explain with the budget, beforehand, any articles that you recomend that concisely explain the situation?
I don´t want to get into a whole political discussion with someone who probably doesn´t even know who the president of Argentina is, just want them to understand why there is a change.
(BTW, we aren´t talking about a huge amount of money).

 

[Rich One]

simple quote your prices to be adjusted monthly by the Congress Inflation Index.

 

[robwerwe]

Basically you just have to tell them the truth that there is 30% inflation because the government are incompetent.
Thus you will be 30% less competitive.

Simples.

 

[goodboyjakey]

I 100% sympathize with you. We have the same problem and we do try and explain the situation with regard to the fantasy rate produced by INDEC and what we experience ourselves.
The problem is further compounded by the lower rates of inflation in the countries we export to. So the customer ends up having to pay more for the goods or go elsewhere which is going to become more and more likely.
We also have to wait 90 days to be paid in our trade which makes life difficult. Being competitive and exporting from Argentina are becoming very difficult goals to achieve.

 

[Farenheit]

Most presupuestos here come with a proviso at the bottom saying the price is only valid for 30 days...write something like that and then you can elaborate verbally.

 

[Montauk_Project]

Thanks--we put in the 30 days already. I learned that 4 years ago when someone asked me for a budget. Never heard back from them, assumed they picked someone else. A year later they called, out of the blue, saying they wanted to do the job in two days time. After that all of our budgets are date specific!

I sent her this article. http://blogs.wsj.com/economics/2013/05/15/argentinas-inflation-dilemma/

I think my mistake was not telling her beforehand--it wasn´t a big difference. Anything that we can control we kept the same, but nafta and union wages have gone up. We don´t have a lot of repeat business since most of our clients come to film an episode for a TV show and then go to film in some other country.

Sometimes I´m worried that telling people about inflation will freak them out. I already have enough problems explaining that I need to go physically to the bank to get a transfered cleared!

 

[PhilipDT]

Just say that all prices are adjusted for inflation. They should understand where you're coming from,but you also have to understand where the are coming from.

If you cuoted them 20000 last September and 23750 now, that may look like the same real money to you but to them that looks like a 12% increase in the dollar price in 9 months.

Basically don't get caught up in trying to justify your increase, explain it briefly as an inflation adjustment. Even if there was no inflation you have the right to ask for whatever rate you want and they'll say yes or no.

 

[Matiasba]

Just a naive question for you that manage dollars -which is the difference between inflation and the increasement of blue dollar? I dont want to mean you Montauk Project earn in dollars, but lot of people here do.
So, the inflation compares with the blue dollar?

 

[fifs2]

Just say that all prices are adjusted for inflation. They should understand where you're coming from,but you also have to understand where the are coming from.

If you cuoted them 20000 last September and 23750 now, that may look like the same real money to you but to them that looks like a 12% increase in the dollar price in 9 months.

Basically don't get caught up in trying to justify your increase, explain it briefly as an inflation adjustment. Even if there was no inflation you have the right to ask for whatever rate you want and they'll say yes or no.

Couldnt agree more...in a market full of discounted offers Bsas stands out for its increasing prices. We set up in 2002 knowing that we had a chance to enter our markets at a low price but stay there in the long term due to premium service...we're successfully doing that and part absorbing the inflationary increases and passing part on to our customers..and relocating some services to cheaper locations. Bsas just keeps shooting itself in the foot....theydance tango and the rest of the world is doing salsa...

 

[Montauk_Project]

I get paid in pesos. When someone pays my company, it enters the Argentine bank in pesos at the official rate. If they were paying me in cash or in Uruguay the inflation would not bother me so much.