When suppliers announced they were raising the price of muriatic acid last fall, many retailers reluctantly followed suit.
“For the last couple of years I was charging my customers
less than what we really should’ve been charging,” said
Diane Carlson, owner of Blue Sky Pool Supply in Los Gatos, Calif., back
in October. “But now I’m going to have to mark it up
— I don’t have a choice.”
As with a number of commodities, chemical prices are subject to
basic principles of supply and demand. If supplies fall or demand
spikes, an increase in price often follows. In the above example,
muriatic acid supplies were still plentiful, but a jump in demand
(particularly from the oil industry) caused manufacturers to raise
their prices by 15- to 20 percent.
On a broader scale, this recent episode has brought to the
forefront ongoing questions about whether it’s advisable to
boost retail prices when suppliers raise theirs. Is it better
business to swallow the higher costs, or do chemicals fall into the
category of products that consumers need regardless, and thus
warrant premium rates?
Taking it a step further, any discussion of chemical prices must
also address price-matching, and how retailers deal with customers
who request a discount because, as they often claim, “I can
get it for less down the street…or online.”
What goes up (and a few reasons why)
Retailers across the country report a steady rise in chemical prices over the past several years, with estimates ranging anywhere from 10 to 20 percent.
As expected, the most abundant and best-selling chemical —
chlorine — is also subject to the most frequent and
substantial price increases, and for a number of reasons.
First, raw materials will always impact pricing. For chlorine
products, that means keeping a close eye on the markets for caustic
soda and urea.
Plants that manufacture chlorine also churn out caustic soda in
what is known as the chloralkali process. This process produces
roughly the same amount of each product. Because they are made
together, if the demand for one is greater than that of the other,
the result is a change in pricing.
For example, some industries like paper and automotive rely heavily
on caustic soda. When those markets fluctuate, they cause uneven
demand. So prices tend to vary in order to keep production
In other words, a slowdown in automobile production could very well
spur higher chlorine prices (because demand for caustic soda has
fallen, less is being produced, and thus less chlorine is being
Urea, an organic compound, is used in the manufacture of cyanuric
acid, which is in turn chlorinated to make dichlor and trichlor
But urea also is a key ingredient in fertilizers. As might be
expected, the world’s largest producer — and exporter
— of urea is China. So consider that a rapidly developing
China will have more domestic consumption, which places greater
demand on its urea production, thereby raising prices.
Fuel and shipping rates represent another root-cause of price
fluctuations. Any significant rise in gas prices will necessarily
affect the transport of goods, including chemicals. But there are
In fall 2011, chlorine manufacturers warned that shipping rates
could soar if U.S. railroad companies passed along billions of
dollars in safety upgrades that had been mandated by the federal
government. In fact, freight carriers have expressed support for a
federal proposal that would in essence allow them to transfer much
of the added cost of shipping hazardous materials to the
manufacturers, according to the American Chemistry Council.
Chlorine makers may subsequently see their shipping rates climb as
much as $1.14 billion a year, the council said.
The result could be substantially higher wholesale prices, or
simply a shift in production to overseas facilities — neither
of which is optimal for end users in the pool industry.
To absorb (or not to absorb)
At Fiesta Pools and Spas in Tulsa, Okla., assistant manager Nancy Thompson recently saw a $2 increase in the cost of a half-gallon bottle of biguanide sanitizer. The price had remained relatively unchanged over the past several years, she says, so the jump was noticeable.
As a general rule, Thompson chooses to absorb chemical price hikes.“It has to take a pretty healthy hit,” she explains.“I’d rather sell more at a slightly lesser [margin].”
But when percentage increases reach double digits, Fiesta makes modifications. Thompson says her store typically will meet customers in the middle of the price spectrum — if her costs rise by 10 percent, for example, Thompson could bump retail prices by 5 to 7 percent.
In addition, Fiesta usually waits until the end of the year —
or at least until swim season is over — before altering its
“I’m a consumer, too,” she says, “and I
wouldn’t want to get shafted like that. It’s just not
fair when they’ve been spending a certain amount all
Management at Townley Pool and Spa in Little Rock, Ark., similarly tries to hold the line on chemical pricing, says assistant manager Bobby Hill. But maintaining the store’s bottom line is equally important. And in the end, retail prices often will increase at a rate similar to their suppliers’, just not as fast.
“We have let it slide for a year, but it does affect
us,” he explains. “So if they go up a certain
percentage over two years, we’ll go up by that same
percentage at the end of that two-year period. For the most part,
it’s usually a small enough increase to where customers
don’t really notice.”
By and large, retailers appear willing to absorb chemical price
increases until they reach a certain point. After all, few, if any,
brick-and-mortar pool stores can afford to sell even commodity-type
products at anywhere close to cost.
“Unless they’re going to the big-boxes, customers are
probably going to another pool and spa retailer — and
nobody’s saying they’re willing to take a loss just to
get their business,” says Chris Lombard, sales manager at
Splash City in Sioux Falls, S.D.
“You have to base it on what your expenses are,” he
adds. “We’ve gone times without raising them, but when
you get hit with those increases you almost have to do it.
It’s become kind of a necessary evil.”
To match (or not to match)
Jonathan Dale, like other retailers in his area, keeps an eye on
the competition’s chemical pricing — springtime
espionage, he calls it. The assistant manager at Dover Pools in South Dover, Del., is
prepared to price-match with his fellow specialty retailers as well
as big-boxes, provided it’s a comparable item.
“We don’t get undersold. If it’s apples to apples
on a certain product, we’re going to match it,” Dale
says. “So we do what we can, and our customers understand
that. Even if it’s the Internet, if I can at least come
close, say within a few dollars, people appreciate the
Other retailers say they are unwilling to consider meeting an
Internet-found price because there’s no service attached to
Or, in many cases, the products simply aren’t comparable.
For Kathy Jurgens, keeping chemical prices low is just one way she
stays competitive. Instead of haggling when customers question her
pricing structure, the co-owner of WCI Pools and Spas in Ames, Iowa, takes the
opportunity to sell her store’s differentiating services,
such as complimentary water testing, and an 800 number that
customers can call with chemistry questions.