0 CommentsTurns out that our new bikes are creating quite a stir. In looking at web statistics, doing Google searches, and reading blogs, they are turning up everywhere. Heck, a few products also turned up on Twitter. As we dig deeper and read beyond the headlines, we are getting a slew of different responses to our new bikes and products. Some folks are really aligning with what we are doing. In fact, our early season orders and commitments are about 100% over last years at this same time. Some are value shopping and saying our prices are too high while others are saying they love Salsa and want to buy Salsa, but our prices are too high. Some shops have even said our pricing is too low and purchased a lot of the same products others are saying is too high. Some consumers have already put money down. Well, I thought I'd dig into this just a bit more.
If you've read, or even just thought about, how products are priced, I'm sure you know there are about a million factors that go into pricing a product. We certainly don't have the time to go into every detail here, but I will start with a few of Salsa's guiding philosophies and brand principles.
Our first priority here at Salsa is to produce passionate, high quality, functional, and intentional products. We want to build products that inspire people. Think about other industries. You can buy a camera that does the job. You can also buy a camera that inspires. You can buy a guitar that does the job or you can buy a guitar that inspires. We are not afraid to do things a bit different than the industry is accustomed too. In fact, we enjoy it as long as there is intention, a performance gain and function in what we are trying to accomplish. When we design and manufacture a product, we also want to bring a certain value AND performance into each and every product. These products also have to work for a very long time. Last, but not least, we like to do things with colors and graphics that other folks might not consider. We want an emotional attachment to our products and at the same time acknowledge and expect that some will not like the colors or graphics. That's OK.
One of Salsa's other over arching principles is sustainability. Recently, many folks associate that word with the environment. However, sustainability also applies to partnerships. Specifically, relating to pricing, everyone has to benefit, otherwise long run whatever you are attempting to do isn't sustainable.
You may have noticed that complete bikes are a big part of our future. 2 years ago we had one bike model, last year we had 5 and in 2009 we will have 13. I think you see where that is going.
Complete bikes are hard. Not only do you need to build and manufacture products that people want, you also need to do it on a specific time table and with parts made my OTHER manufacturers. We also know that starting from scratch in the bike world means you are small. All of these things cost money and/or add up to specific costs.
So, let's dig a little deeper and discuss a Salsa complete bike and discuss costs, benefits, intents and pricing.
We've recently been talking a lot about the Podio and it's MSRP. Let's dig into that a bit. Where does the price come from?
1) Material - We specifically chose scandium because of its material properties, it's weight, and it's performance. A 100% scandium frame also bucks the current trend of carbon and/or carbon aluminum. It's intentional. This performance does come at a cost though due to the higher cost of the material AND the custom tooling & tubing that needed to be developed for this bike. I've looked and I'm not certain anyone is doing what we are doing with flat chain stays and seat stays, with exception of Cervelo on the carbon side. The performance of the Podio is unreal (at least in our opinion). We believe that the performance of this model is superior to comparable aluminum or aluminum/carbon models from our competitors.
2) Details - If you take a close look at the Podio and move beyond the material, you will see details like the stays called out above. You'll see the custom seat tube that is tapered down to fit a 27.2 post for comfort. You will also see other details that are a bit different than other mfgs. How many brands are doing high end road bikes with a standard headset? Why did we do that? Well, frankly we like standard headsets because of versatility, color options, fit and the fact that you can install a higher quality headset in your bike.
3) Finish - We spend a lot of time working on graphics and finish. We know some folks don't like what we are doing. We also know for a certain segment of the bike buying population, they love what we are doing and have a strong positive response to our graphics. Also, we are trying to bridge the gap between custom and production by providing painted to match stems (on some models), painted to match forks and spec details that really compliment each other. These details cost more but it's those details that really make a bike complete and finished. I will say that this is trend that other big manufacturers are figuring out.
4) Bike Spec - Wow, this is different and a big learning process here in Salsa land. It's funny how when you hang parts on a frame, that a bike becomes a commodity and folks often time miss details only to focus on a specific part or aspect of the bike while ignoring other stuff. Also, think about this. I'm personally working on 2010 (It's 2008) bike spec and planning production and providing forecasts. For Salsa, to get the intended performance and durability that we want, this means that at times we need to pay more because the only other option is to use a cheaper part. Take for example the El Mariachi 1x9. Many folks are now doing a dedicated 1x9. Do you know we pay a little more than everyone else to get a better crank set that is actually drilled for an inner chain ring in case you ever want to put an inner chain ring, front derailleur and shifter on your El Mariachi? In the end, this costs more, but our belief is that when you buy a Salsa bike, you could ride it as is for many, many miles and years. We also acknowledge that at times folks want to build a lighter, heavier, cheaper or more expensive version of our bikes, that is whey we build and offer frame sets as well.
All that means nothing if folks don't buy our products. I also think that at times we need to call out some of these details a little bit more or a little differently than we've been doing. Our bikes and products are intentional. This intention costs money. We need to toot our own horn a bit more regarding our design, features and intent (but I think we are improving here too).
In the end, it is our job to make products people want. We've clearly hit a few home runs this year and we've also barely gotten on base with others. That's the challenge and the fun part of business. You've got to take some risks to get reward.
So....What am I getting at? I know folks think that some of our pricing is too high. I first want to acknowledge that we hear you and will review prior to making our first shipment and sale on each and every model. I'm making no promises. I also want folks to know that we intend to build special products for specific purposes and that means at times you will need to pay more.
This post could turn out some mixed emotions and responses. I expect to learn a few things. I'll do my best to moderate.
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