Thursday, September 11, 2008

Xtracycle talks about pricing and going open source...

I rec'd the comment below from Xtracycle and thought it deserved to be a post on its own rather than buried in the comments section. It's great that the company has taken the time to talk about important issues like pricing and I'm excited that they are going open source with their cargo system standard.

"Greetings from Xtracycle.

Wev'e gotten some feedback lately regarding the raised pricing on several of our products, as well as a window into some of your inspired discussions about this. First and foremost, we want to say, thanks for your thoughts. We definitely strive to balance all the factors that go into the pricing of goods: materials and manufacturing costs; buying in huge quantity to drive down price vs. managing cash flow and keeping quantities low; compensating our suppliers and our team well; building in opportunities for distributors/dealers to make a living selling our stuff as well.

Perhaps you've heard the adage from the bicycle industry: "What's the best way to end up with a million dollars selling bikes? Start with two million." Bicycles, like most commodities, suffer from a great deal of externalized pricing, whether it's the artificially low (now rising) cost of fuel, the artificially low (now rising) cost of Chinese labor, the artificially low (now greatly rising) cost of raw materials, or the fact that the bike industry has never had enough self respect to ask for what the products are worth to grow the market share of bicycles to cars. Seeding a revolution in transportation and quality of life won't be free. It will however, be way cheaper than owning a car.

Todd's right that we've put nearly 10 years into carving out the niche for longbikes in the broader bicycle market. It's been a wonderful, if at times, fiscally challenging journey, and we're not making a profit yet. Never fear, no one's getting rich off of Whatchamacollars (or FreeLoaders or Footsees or Pea Pods). We're not opposed to making money, mind you, but it's been proven out over 10 years that the reason we do this is because we love the product, the lifestyle, and the opportunity to present a true transportation alternative to the world. It has been our number one goal to keep the Xtracycle as affordable as possible while making sure that our products are well built, long lasting, well designed, and attractive.

What I'm clear about from some of the latests discussions is that our customers need more information about why our new products are useful and what value they offer. We trust that each person will decide for themselves what products will help to expand their Xtracycle lifestyle. We'll be adding that content to our webstore in the weeks to come.

Furthermore, we're excited to announce that we are officially open-sourcing the Xtracycle Long Tail Standard to encourage other players to make Xtracycle-compatible platforms and accessories. Surly has been a fantastic lead partner, and has aptly demonstrated a concept not altogether understood by the bike industry at large: that collaboration and partnership, built on trust and passion, lead to great solutions and a shift in the bike industry at large.

By "open source," we mean that you don't have to pay licensing fees or royalties, or get permission to make a product that works with our system. We want to lift those barriers to encourage a fertile environment for ideas, innovation, and partnership.

We're looking at sharing our standard right now with independent US fabricators of Xtracycle compatible SnapDecks, fabric bags, new Footsies, etc. Wanna play along? We welcome your input, your products, and your thoughts about pricing. We will publicize the Xtracycle LT Standard developer kit on our website and within our online communities (Facebook, Myspace, Flickr, Rootsradicals Yahoo group, etc.) in early October, so keep an eye out.

Will these items be Walmart cheap? No way. Likely they'll be competitively priced with our products, but in buying them you can feel great about supporting creative individuals and a movement dedicated to innovating something truly new and valuable within the bike industry.

Will there be Xtracycle knock offs in years to come, competing with us on price and quality? More than likely. Such is the way our economic system works. We feel that competition will only help us to refine our offerings and to better meet your needs, so as nice as it feels sometimes to have built an amazing platform and community, we realize that in order to be truly excellent at this, we have to give it away."


Clancy said...

I am excited about the openess of Xtracycle. This will help create many great products for a great platform.

I see in the new interactive catalog, there is a kickstand -Kickback. Price on this seems reasonable. Now when will it be available?

GhostRider said...

Xtracycle, I think it is great that you've "opened the doors" to the LT standard...I envision a wave of really badass aftermarket parts!

And, naysayers be damned -- charge whatever the hell you want, because it is totally worth it!!!

Anonymous said...

Thanks, Xtracycle. You've made the world a better place.

And props to Vik for the post!

grrsh said...

Absolutely the right move for Xtracycle. The emergence of new (large) players in the market like Kona and Fisher threatens to fragment this cool new trend... almost before it gets going. This is the best thing they could have done to accelerate this market. Let's just hope that the big boys see it that way too.


I see no time to get xtracycle in Brazil, will be a paradigm shift, import is very expensive, reaching twice the value be purchased in USA. I look forward in traveling even with MTB.