Interesting Read: "Pricing Niche Products: Why sell a mechanical keyboard kit for $1668" by Kevin Lynagh

Article: https://kevinlynagh.com/notes/pricing-niche-products/

an interesting read indeed

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Great article. I had no idea. This changes a few things for me. This approach at pricing makes me feel I’m just helping someone get rich since I’m not really paying for time and material, but mostly hype.

I prefer funding a group buy because the designer created something really innovative, but can’t afford to make it without the community’s help. Take my money!

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Read this article a while back. It was a big turn off for me and still is. The document basic outlines “here’s how to target whales”.

To me this seemed to open the flood gates for a lot unsavory elements into the hobby, but I bet a lot of OGs would tell me a lot of this was already around.

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Ugh, so true. I’m going to need a timeout to process this.

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yup I remember reading/discussing this way back when it came out and imo it basically is boiling down a strategy to extract as much money out of people as possible. There’s diminishing returns and then there’s paying lots of money to be able to flex a brand. tbh this whole thing turned me off from keycult and is why I will probably never get a board from them.

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Indeed. I’m much more keen on putting wind behind innovation and quality.

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I have to disagree with everyone saying this was bad for keycult to do - by the time they introduced the post-raffle vickrey auction people were already paying more than double the price on the aftermarket to get one. The article discusses using vickrey as a way to set future prices but it doesn’t seem to me kc has really increased their prices that much. On the other hand, since that extra cash goes to the company instead of scalpers they get to do things like experimenting with in-house machining. I really don’t like the idea that they should be forced to keep their margins razor thin when the demand for their products is so outlandishly higher than the supply. They’ll never be able to increase supply to meet demand if they aren’t taking the money people are trying to throw at their products.

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That’s fair. To each their own. I opt out however, that’s not what I signed up for.

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:man_shrugging: The vickrey auction has always been extremely optional and much more limited in scope than the raffles that make up the majority of their sales. It really is just an option for people who were already considering paying aftermarket prices. I havent bothered joining one of the kc vickrey either, I just think it’s a good option for both the company and people with more money than sense.

And for what it’s worth, these vickrey auctions only get to such absurd prices because the auction stock is so low. The more spots available in a vickrey the lower the end price gets for everyone who wins.

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no one is saying they need to keep the margins thin, it just seems not nice to basically force people put an absolute maximum price on whatever they are willing to pay and then only sell it those who can afford the highest price.

That doesn’t mean their pricing was wrong, if they set a margin they were happy to make and then were selling them for that and the price was double on the aftermarket it means they were either not able to keep up with demand or purposefully chose to limit supply.

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With Vickrey, what is the incentive to increase supply? I would continue to produce low. The only reason the Vickrey price would go down is if people stop wanting it. Personally I think their design is looking pretty dated, but now they are more of a brand.

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Second-price auctions aren’t inherently sinister.

I think it’s ok to find them unappealing, and I also think that the auctions serve a segment of the keyboard community that may be underserved (e.g., people who are between in-stock and commissions).

It’s best not to make too many assumptions (usually!) about supply, motive, etc. Nor should we be quick to assume that a vendor that sells keyboards outside of a GB is not innovating, right? :upside_down_face:

In any case, I just wanted say that this pricing post seemed more like a neutral, insightful discussion of how one might go about evaluating demand for and pricing a keyboard than a primer on how to take advantage of unsuspecting, wealthy keyboard enthusiasts.

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My two cents is that it’s not ideal but Keycult was in essence handing out money to flippers. Considering that their products are not commodities (such as RTX 3080) but closer to being one-of-a-kind they should find a market clearing price (auction). At the same time they still committed to a raffle at a much lower price point. In the end, if they take this money and train on being machinists (which is my understanding) to produce more affordable products down the road, we all benefit.

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My take is it’s just a part of the growth of the hobby.

To be clear, I’m not saying vickrey is part of the growth of the hobby. I’m saying, it was inevitable that some of the more established brands start to look for ways to better understand their market as they grow.

If an established keyboard manu wanted to determine what price would match their manufacturing capabilities and help them hit their sales targets, they would turn to market research. They have the resources to delve into it and come back with a consumer-informed response.

The author’s suggestion seems to be that if you’re trying to make that jump or evaluate your market as a two-man shop, you have other valuable resources at your disposal. Using vickery as a price setting tool or a proxy for demand may be an effective way to help the company guage whether expanding their runs is feasible.

I don’t enjoy seeing demand drive prices through the roof any more than the rest of you, and I’d certainly take the L sooner than ante-up in a vickery auction. But as this hobby grows (as it has so rapidly in the last 18 months), you can be sure that business will play an even larger role and take intetest in this increasingly profitable market.

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Good answer man I agree with 100%! I am no fan of vickrey auctions & would never participate in one. Although in the right hands it can definitely benefit the community at large. Also I doubt the community would go for a vickrey auction by someone unproven or obviously cash grabbing by using scarcity for scarcities sake. So while I am not a fan of vickrey I do also believe it has its place & can be used as a business tool vs being a straight cash grab.

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Also I doubt the community would go for a vickery auction by someone unproven or obviously cash grabbing

We saw just that with the Conundrum IC over at GH. It was a new runner, IC looked great, folks were very excited. Asked about pricing, OP said vickery and he got eviscerated.

I’m sure vickery is just one example, too. There will be other (perhaps less offensive to my senses) means of informing business decisions on a small scale.

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Wow. Very interesting. Thanks for sharing this.

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There are survey based methods to accomplish the same thing as a Vickrey auction does — get a full demand curve. In a lot of markets, survey methods are typically expensive and tedious to do because you have to find your customers and convince them to take a survey.

However, I think such survey methods would work well here because everybody takes one or multiple surveys in products they’re interested in as is!

In the case of already having some product to move, a Vickrey auction is a good tool to use, and the auction is already a second-price auction. If the prices got really high, I’d be inclined to donate some of the proceeds to charity (you can’t really have a price cap or something as that runs into fairness issues).

Running a Vickrey auction for your first group buy is crazy though. Do some market research.

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Party foul. Vickrey pricing for an in-stock item. :face_with_symbols_over_mouth:

https://keyboardtreehouse.com/collections/aeboards/products/constellation

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the only one with instock units remaining is also the only one that costs 2k… hopefully this sends some sort of message to them. I agree that is a despicable implementation of it. However I think if one was to run a groupbuy, and offer a custom material one off option at vickrey prices, alongside 25 normally priced units in the standard material configuration, that would be ok.

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