Regarding Price

We received a bold email from a person whom we will call [Mr. X] regarding the seemingly high price of the Q-Widget, and while the email seemed respectful, my first instinct was to ignore the message. I ultimately found it necessary to respond. I’m glad that I did.

Hi, Please excuse my boldness at this question. I use QLab for every show I do and have just finished a [59] show season. Last year I did sound for [Band XYZ] and had over a hundred QLab cues on top of normal radio mic and orchestra mixing. Your product looks great and I certainly would like such a device but am honestly quite shocked at the price. Were they half the price I would stretch to purchase one. I cannot justify the current asking price. Do you sell many of these? I know know many people in the industry that use QLab and I promote the software to many groups, as I also teach, because it is worthy of it but know no one who would justify this price. Once again please excuse my boldness at the question but I am interested in how many you are able to sell? Thanks.

This was my response:

[Mr. X],

I’ve taken some time to think about your email and have struggled with whether I should take time to respond. Indeed your question is bold, and I intend to boldly answer. I intend no ill-will toward you, but feel it necessary to make my point. I hope that this email gives you a glimpse into a manufacturing business’ operation.

First and foremost, the Q-Widget is a product of a business – not a hobby. My company is in this to provide a solution to a need, make people’s lives better, and make money while doing it. A business does not succeed without profit. It seems ever increasingly wrong for a business to make a profit, but I do not succumb to this. I believe it is within every man’s right to create beneficial products and services resulting in profit. I do not believe in socialism. I do not believe in economic equality. I do not believe in rewarding laziness.

Though I am not a charity, I do believe in giving back to charity out of profits, which I do. 10% of monthly net profits are donated to charity.

While I will not divulge specifics about our costs, I will tell you that at half the price, as you think we should be able to charge, we could not cover our hard costs, much less sustain the company. There is more to component cost in product pricing. There is labor, production tooling, ongoing support and updates, advertising, and overhead such as website, bank fees, utilities, accounting, office space, etc… There is also research and development costs to recoup and put into new products. And lastly there is profit margin.

It is often said, as a general rule, that manufacturers (not distributors or retailers) should aim for a minimum 5x markup over cost.  We are nowhere near this recommendation, and in fact feel that there is great value in the Q-Widget at the current price.

Ongoing support and development for firmware and driver updates is expensive – and it is very difficult to keep software and hardware compatible for so many different computer hardware and operating systems. Our support is 24-hours a day, 7 days a week because of our international market. Our product development team works hard for firmware and drivers to meet customers’ needs. We even go to great lengths to customize firmware and drivers for customers’ specific needs upon request.

Furthermore, the Q-Widget is designed for hard-working professionals. It uses the highest quality components, designed to NEVER fail. A great deal of engineering work went into the product to ensure 100% responsiveness. One missed cue on a show and the negative publicity would be devastating. The Q-Widget is not built with cheap labor – it is built by professionals who care that the end product is of the highest quality and workmanship.

Then there is the issue of competition. There is one other product on the market that I consider competition to the Q-Widget, a product that I believe is inferior to the Q-Widget, that sells for a similar price. Why would a business person price a product below market value?

As for sales – again I will not divulge specifics. I can tell you that we sell more than we ever expected to. We have repeat buyers. We have buyers who build demo systems to “sell” to their company who later buy multiples for use in all their venues. We sell multiples to schools – private and public. We sell internationally. Just this morning we sold 5 more units to a repeat customer in Finland. We sell to businesses and individuals alike. We have raving fans who evangelize the Q-Widget through Facebook and Twitter. There is no shortage of buyers for the product at its current price. If we lowered the price, we would perhaps sell a few more, but at the expense of being busy just for the sake of being busy. At the current price point we have a good balance between profitability and demand.

I’ve hopefully not offended you, and perhaps expanded your understanding.

Widgeteering Studios, LLC

Mr. X sent us a nice reply indicating his appreciation for the response, that he meant nothing negative in the inquiry, and that we would see an order from him in the next month or two. It seems that open communication and honesty really are the best policy.