Tim,
I can understand your irritation concerning companies blaming cost increases all on materials. I dislike this as well. I've got a stack of letters from my vendors that all say the same thing - "the cost of materials has gone up and now we're passing this on to you. " It's kind of understood that it's not just the cost of the raw material itself - it's the cost of transporting it, the labor to work it, electricity to run the machines that tool it etc. Fuel and energy prices have increased astronomically and this also affects the "material cost. " For the sake of simplicity, price increase letters are not broken down into a complex matrix showing where every increase has occurred.
I suppose it would be more accurate to say, "stuff is getting more expensive to produce" - because it's more than just raw material costs. For the last three years, through April, we're at 9. 7 % for average inflation, however in the manufacturing sector I bet the average inflation is much higher.
KORE isn't trying to "mask" anything - really. All of the raw materials we use have increased by well over 10% during the last three years. Some parts we buy have gone up in cost by over 50%. The cost of doing business has also multiplied. Thanks to the Chinese, "Raw material surcharges" have been applied to almost every part I buy. Up until last month we were simply absorbing it. If KORE couldn't maintain the volume it does, we would have to raise prices something like 45% - because of the cost of finished product, materials, whatever way you slice it.
Three years ago, as a new business trying to get a very unique product on the market we sold a lot of parts at well below our actual cost - sometimes we even gave stuff away. We did this because without huge amounts of capital, there's no other way to get momentum. How do you convince someone that Rolex-quality performance suspension is what they need when all they've ever used or seen is Timex-quality stuff? You get some product on the market and start listening to people talk.
The decision to raise prices is a hard one to make. It angers and offends a lot of people - absolutely the last thing we want to do to customers or potential customers. I've received nasty emails saying KORE is "bending people over" etc. - implying that it's pure greed that drives price increases. I don't think companies raise prices out of greed; they do it out of necessity. Do you think that the guys at AFE woke up one day and said, "let's raise prices 30% because we want to play golf all day and drive around in Ferraris?" Probably not. I'll bet they raised prices in order to stay in business.
Over and Out,
Kent Kroeker
Attention: TDR Forum Junkies 
For a truck that spends 90% of it's time on the road, though, the PACE is the way to go.
