Volatile Australian dollar triggers pricing review

“Traditionally, the market would be very slow and steady, but these days things move rapidly and having a one or two cent drop in a day is not unusual,” Cochrane said. “That’s what makes it hard to deal with.

“It [hedging] comes at a cost but we’re not gamblers on what currency is worth.”

Cochrane said the most important thing for resellers was to be mindful of the duration and terms they offered customers.

“Last month, Citrix put its pricing up and we will see other vendors follow,” he said. “Resellers will get burnt if they don’t state how long pricing is to be available to customers for – particularly in a large project situation where products are being rolled out over several months but pricing has been set at the start.”

Synnex managing director, Kee Ong, agreed pricing would have to be reviewed but pointed out products had to be sold at the going market rate.

“Cost is one factor but the price isn’t always linked… we look at the market price then go backwards to determine the cost and make sure that the impact is minimum,” he said. “We have things like hedging mechanisms and also use our global strength to get a better rate from our vendors. There are lots of mechanisms involved which influence costs significantly.”

Dicker Data sales manager, Chris Price, said it bought in Australian dollars, meaning any exchange risks between the Australian dollar and the US were dealt with by its vendor partners.

“Our key vendors do report in US dollars, so this will result in price increases starting immediately,” he said. “But it’s such a competitive market that you can’t just pass on higher prices – you have to set the most competitive prices you can.

“It’s a different story in a buoyant market with exchange variations, but we’re seeing a slowdown in demand and you have to get every cent of business you can. All distributors will hold pricing as long as they can until it starts to affect profitability.”

Price also argued a variable exchange rate could be a good way for resellers to close customer orders early.

Westpac’s Cavenagh predicted the Australian dollar exchange rate will fluctuate for the next few months. How the market fares in light of the interest rate cut will play a large part in how the dollar performs, he said.

“In three months time the dollar could be $0.75 or back over $0.90; my instinct is it will go back up but in this current market climate there’s more risk and room for error,” he said. “This caught everybody by surprise – but it’s the nature of today’s market.”