As the headline suggests, the Wyze honeymoon may be over for the upstart startup. Prices are going up. Again. But that’s not necessarily a bad thing, given the unsustainability of their current, er former, business model.
Due to world events, we are seeing huge cost increases on almost every material used to make smart products. The cost increases are mainly driven by silicon chips, but also include memory, plastics, metals, packaging, and more. We expect the cost of these key components to continue to rise over the next year. We are not the only company facing this challenge, but we pride ourselves on setting radically low margins, so it has been especially hard on us. As a result, prices on some Wyze products, including Wyze Cam v3, will increase starting on May 18th.
Beyond laying blame on increased component pricing, I assume they and their investors believe they have reached a critical mass that allows them to safely increase pricing without damaging the brand. Indeed, additional revenue will likely help improve the brand. For example, the reddit tenor has been changing, with many expressing quality control and customer support concerns — the sorts of things a financially healthy company can afford to correct.
Some of the incoming price adjustments bring parity with retail partners… as it’s generally a bad idea to so deeply undercut one’s allies. Increasing Wyze Cam v3 direct sales from $20 to $24 (plus shipping) to, now, $33 (including shipping) is more in line with Home Depot’s $39 and Amazon’s $33. But the potential change that interests me most is the Wyze Cam Plus subscription, given a well-placed source who indicates an overseas benefactor has largely bankrolled video storage and processing expenditures to this point (as part of a broader push with Wyze to gain access to the lucrative American market). So, at some point, I expect to see that fee increase as well. The only marketing misstep here could be ongoing variable pricing:
This may be something that has to happen again later depending on the material costs and availability but we’re going to make sure we give you the lowest prices we can.
Generally speaking, consumers are accustomed to prices decreasing over time. As such, I’d have advised they estimate those higher expenses now and put that stake in the ground. Their cost will still be highly competitive and that pricing headroom allows them to generate additional revenue in the short run and help offset potential errors in their estimates longer term, while avoiding consumer confusion and repetitive outreach declaring yet another price increase (or two).
(Photograph credit Allison Sheridan)