Par dollar, price gouging and competitive balance
This is a little off topic from my regular posts but it is relevant. For those of you south of the border you likely don't follow the Canadian/US exchange rate (for that matter who is our Prime Minister?). Canadians follow it closely, because the great majority of goods we purchase come from the US so the exchange rate affects our cost of living (plus Canadians have a perverse need to follow all things American). Over the past year or so the US economy has gradually declined while the Canadian economy has been booming, the exchange rate difference has been gradually getting smaller and just recently it has been hovering around par ... for the first time in over 30 years!
For the average joe that likely doesn't mean much until you consider what the average American pays for goods vs what the average Canadian does. A Toyota Prius (20,950 vs. 29,500, 40%), Mac Book Pro 17" (2,799 vs 3,099, 11%), Adobe CS 3 Bible (49.99 vs 59.99, 20%), flight from Buffalo to LA vs flight from Toronto to LA (almost exact same distance) (239.60 vs 1,258.20, 524% ... cough) . So my Canadian dollar is worth the exact same as the American dollar when I go to the bank, the NAFTA (free trade) agreement means these goods cross our borders with no tariffs, yet Canadians are getting hosed.
The other reason for this post is that unlike most Canadians I happen to have the majority of my income paid in US dollars since I mostly do contract work for American companies. In the past this has been great for two reasons. First, with a weak exchange rate I could get paid a good rate in US dollars and then convert those US dollars to Canadian currency and see a decent gain (sometimes over 30%). Secondly, when needed to I could discount my rates to land a deal, knowing that the exchange rate difference would help cover off any discounting I had to do. Now that the exchange rate is par, I have effectively taken a decent pay cut (factored with the price gouging I'm getting killed) and I have to be much more competitive to secure US deals since I can no longer easily undercut the competition.
So where is all this going. First, it's just a rant because I'm ticked off at getting so blatantly price gouged. Second, an at par exchange rate is a huge wake up call for people doing business with American companies. We need to be much more competitive and offer much more than a good price in order to stay in and land deals. Third, the large cost differential means substantially higher costs, so I need to focus even more on being super competitive, pick the right jobs, offer the right services, and keep clients super satisfied.
