Question: What is a GHS surcharge, what is the surcharge amount for each product line, and how did you determine these amounts? Why didn’t you just increase unit pricing instead?
Answer: The GHS Compliance Surcharge reflects the actual additional direct cost of complying with GHS regulations on labeling and packaging.
It includes cost increases due to multi-color label printing, considerably smaller runs per label size, amortization of obsolete label inventory, tooling and production costs for setup boxes and foam inserts for one ounce to four ounce bottles of surface tension test fluids, and re-printing existing ACCU DYNE TESTTM Marker Pen setup boxes.
The GHS Compliance Surcharge does not include the hundreds of hours I have spent plumbing the obscurities and sometimes illogical requirements of GHS compliance; re-writing SDSs; designing, evaluating, and coordinating the labeling and packaging changes; adapting our shipping box inventory; and re-programming our operating system. Neither does it include the cost of making changes in our website pages and online ordering logistics, the additional labor costs that will result from the changes in packaging, the inevitable approval bottlenecks in purchase order processing, artwork costs, nor an expected decrease in order processing efficiency.
The surcharges will vary from $0.00 for the larger bottles of surface tension test fluid to as much as 14.3% for a purchase of a single four ounce or smaller bottle of these test solutions. Most orders will show a surcharge of about 1.5% to 6.0%. The assessment of actual surcharges is as follows:
1 ounce bottles of surface tension test fluid: $4.35 per 16 bottles (one full setup box) or any part of 16 bottles. Thus, for 1 bottle through 16 bottles, there will be one surcharge levied; for 17 to 32 bottles there will be two surcharges, etc.
2 ounce bottles of surface tension test fluid: $4.25 per 12 bottles (one full setup box) or any part of 12 bottles, as described for the one ounce size.
4 ounce bottles of surface tension test fluid: $4.50 per 8 bottles (one full setup box) or any part of 8 bottles, as described for the one ounce size.
8, 16, and 32 ounce bottles of surface tension test fluid: No surcharge. Our actual increased cost is only about $0.09 per bottle, which is insignificant.
We have maintained prices on ACCU DYNE TESTTM products since the summer of 2007. While our pricing is exceptional, to say the least, for reagent-grade calibrated test fluids, I believe it is fair and reasonable, and do not feel that re-structuring the price charts is in anybody’s best interest. On the other hand, we cannot simply absorb what can be a doubling or more of actual cost on small orders of test fluids, especially since our other costs have crept upwards for nearly 10 years without a concomitant increase in our selling prices.
Considering that the cost increases – and the inevitable need to increase revenue to offset them – are strictly attributable to the imposition of the GHS regulations, I feel that the most honest way to pass along costs is to establish a line item which clearly identifies them as to source. While some of our resale items provide very little in the way of actual profit, the GHS Compliance Surcharges are the only items we invoice which are actually money-losers for Diversified Enterprises.
One final note (and warning): Due to the necessity of packaging small test fluid bottles in setup boxes, there will be one more increased cost on many orders, which will be in the shipping charge. In the past, orders for bottled test fluids were rarely ever subjected to dimensional shipping charges (166 in3 per pound for domestic and 139 in3 per pound for international shipments). Unfortunately, the revised packaging will result in less-dense packages, a good many of which will incur an extra pound or two of dimensional weight levies.