Whilst we are still digesting the true meaning of the #leave vote, one thing has become obvious to us this morning.
The majority of our costs are in US Dollars. We periodically set our GBP prices based on the cost of acquisition of USD and we always run a small float of USD to ensure smooth operations of our business.
The last time we set our GBP pricing the exchange rate was approximately 1.65 ... Today we are looking at that being 1.35
When we work on such tight margins (such as 10-15%) we have to follow currency markets quite closely. We tend to err on the side of caution, but also try to refrain from knee jerk reactions to small market fluctuations.
Today we have seen a marked decrease in the value of the GBP and at the same time see market conditions and uncertainty which will mean the GBP continues to remain deflated for a long time to come.
As such we are reluctantly preparing a round of emergency pricing increases for domain names. These will come into effect within the next 48 hours and reflect the current cost of USD. We will monitor currency fluctuations closely and if the GBP recovers in the short/medium term then we will adjust the pricing accordingly.
We pay a large amount of money to the US each month in relation to software licenses and support contracts as well as bandwidth through our transit relationships with the USA. As a result we will be carefully reviewing the real cost of the weak GBP in relation to these costs and will take a view as to the cost of hosting packages, IP Transit costs and similar over the next few weeks and months.
Suffice it to say that we hope the markets will rationalise and the GBP will recover making any drastic increases unneccessary, however we feel it prudent to advise customers now to expect increases in costs once the dust has settled. We had never believed the result of the vote would be to leave, and are somewhat saddened at the result of the referendum. We can now only wait and see what this will really mean for the UK and the remaining European Common Market as a whole.
Managing Director / FidoNet Registration Services Ltd
President / Fido LLC
Friday, June 24, 2016
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