1H - 2021 Price Increases

Hey all – so, some unfortunate news, but I wanted to be as transparent as I could around the price increases everyone will see across Inovelli.com and Amazon USA (I can’t speak for Canada or Aartech as their tariffs are different).

This hurts a lot as one of the core values I started the company on was having the best valued products (along with best customer support and best products from a hardware/firmware standpoint). We still believe we have the best value products regardless of the price increase, but it’s still a tough pill to swallow as being a fellow smart home owner, it’s never fun to pay more for the same product.

Below I’ll go into the background and our plan to bring the prices back down if and when we can.


Background - 2020
2020 was, as you know, a crazy year. We took on a couple new products, grew ~400%, which all caused inventory issues. On top of that, the tariffs came back (we luckily received an exemption in 2019 that lasted a year) into effect on September 20, 2020 to the tune of 25% for our switches and bulbs (a whopping 28.9% for lightstrip, which we were supposed to get before the tariff kicked in, but the manufacturer failed to do so).

We tried our best to eat those costs as we are competing against competitors who are charging low $20’s for a switch (not even sure how that’s possible tbh) who are gaining on us from a firmware side. However, as you can imagine, that really impacted our margins and opportunity to invest in more inventory (hence out of stock) as well as new headcount for customer service and other strategic positions.

Finally, from attracting an investor standpoint, having our margins take a hit without offsetting them, really caused us to be undervalued. This hurts when you’re trying to not give away the farm when negotiating a deal when you know you’re worth way more than what’s on the table.


Moving Forward
So where does that leave us moving forward as far as pricing? I still firmly believe that we shouldn’t pass on the entire tariff to the customer as most companies do. It really isn’t fair to the customer and it goes against everything I personally stand for (the company as well). However, we’re not registered as a charity, so we can’t keep eating all the costs, especially if we want to grow.

So, rather than the full 25%, we’re increasing prices across the board by an average of about 15% (some higher, some lower, some are the same). I made sure to keep our flagship switch (Red Series Dimmer) to only an 8% increase as we’re slowly creeping up on Lutron prices (still $10 less, but I’m not happy about it).


Gameplan to Lower Prices
My promise to you all is that once tariffs go away, we will bring down pricing and re-evaluate how to improve costs. In the meantime, here’s what we’re looking into in the meantime:

  • The manufacturer is exploring Thailand as an option (the costs to make the product will increase, but there will be no 25% tariff).
    • So far, this is looking good as the increase in costs are less than the increase in tariff costs.
  • Exploring a Gen 3 switch that may break out neutral and non-neutral as well as strip energy monitoring. This should save us a couple of dollars per switch.
    • Problem with this, however, is that it will require capital to create the switch which we don’t have right now.
  • Bulk manufacturing with partners (ie: we’ll be working with one of the worlds largest alarm companies starting at the end of Q1 – this will open up bulk manufacturing opportunities for their distributors) as well as white-labeling our switches to large companies (who play in a different sales channel)
    • This will allow us to purchase more and get pricing down – every penny counts.

So, we are actively looking at ways to offset the price increases so we can bring the prices back down, however, in the meantime, I wanted to at least give some context as to why you’re seeing prices go up.


Tariff Info
Just in case you wanted to follow along on when these expire (and let us know if we don’t catch it), feel free to check the HTS codes below. If you know anything about tariffs or are a professional in the industry, if you see anything out of the norm, please let us know – we’d sincerely appreciate it! We do have a company that helps us, but the more eyes the better.

NOTES:

  • There are 4 Lists that were created specifically for China – our products fall on different lists (known as the 301 Duty Lists) – all these lists come with an automatic 25% tariff. Some also include additional tariffs
    • List 1 - 4-1 Sensor, Paddles, Lightstrip Accessories (Connectors)
    • List 2 - Switches
    • List 3 - Lightstrip, Extension Cord (Lightstrip)
    • List 4 - Light bulbs (they fall on 4B, which has an exemption – so only the original tariff applies = 2%)

Switches & Paddles: HTS Code - 8536.50.7000 (Overall Tariff = 25%)
Bulbs: HTS Code - 8539.50.00 (Overall Tariff = 2%)
Lightstrips: HTS Code - 9903.88.03 + 9405.40.8440 (Overall Tariff = 28.9%)
Extension Cords: HTS Code - 9903.88.03 + 8544.42.9090 (Overall Tariff = 27.60%)
Accessories: HTS Code - 8536.69.4051 (Overall Tariff = 25%)
Sensors: HTS Code - 9027.50.4050 (Overall Tariff = 25%)


Price Differences
Here are the price increases that will show where we were and where we are now:

SKU # Description Current New % Change $ Change
LZW30 Black Series - On/Off $27.97 $33.00 18% $5.03
LZW30-10 Black Series - On/Off (10pk) $250.00 $310.00 24% $60.00
LZW30-SN Red Series - On/Off $34.97 $38.00 9% $3.03
LZW30-SN-10 Red Series - On/Off (10pk) $325.00 $360.00 11% $35.00
LZW31 Black Series - Dimmer $31.97 $35.00 9% $3.03
LZW31-10 Black Series - Dimmer (10pk) $290.00 $335.00 16% $45.00
LZW31-SN Red Series - Dimmer $38.97 $42.00 8% $3.03
LZW31-SN-10 Red Series - Dimmer (10pk) $350.00 $395.00 13% $45.00
LZW36 Red Series - Fan/Light $69.97 $70.00 0% $0.03
LZW42 RGBW A19 Bulb $32.97 $25.00 -24% $(7.97)
LZW45 Red Series - Lightstrip Kit $64.97 $70.00 8% $5.03
LZW60 Black Series - 4-1 Sensor $34.97 $35.00 0% $0.03
Paddles Switch Paddles $3.97 $5.00 26% $1.03
Paddles (Fan) Fan/Light Paddles $3.97 $5.50 39% $1.53
12" LED Strip Lighstrip 12" Extension $7.50 $9.00 20% $1.50
6" LED Strip Lighstrip 6" Extension $5.00 $7.00 40% $2.00
L Shape L-Shape Connector $4.50 $6.00 33% $1.50
T Shape T-Shape Connector $6.50 $8.00 23% $1.50
Bypass Aeotec Bypass $14.97 $15.00 0% $0.03
Extension Cord Lighstrip Extension Cord $4.50 $6.00 33% $1.50
Average 15% $2.02*

*Average calculated by taking the 10 packs and breaking them down to a per unit price. So, sum up all the individual SKU’s and then add in the 10pks at a per-unit price, then divide by 20 (# of SKU’s represented). Thanks @Chris for the suggestion to add in $ changes.

As you can see, we tried to keep Red Series down as it’s our best sellers. Lightstrip is much higher as we originally priced them without the tariff (as we were promised we’d get them prior to Jan 1), but unfortunately they did not get here in time. We actually broke even on our pre-order sales.

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Are these price increases already in effect? Or is there time to place an order before we see these?

Great question – the prices you see on the site are the increased prices.

Ouch. Glad I got an order in yesterday :slight_smile: But that red dimmer 10pk is going to have to wait.

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Never excited to pay more. But I totally get it. My personal point of view here is that you guys are STILL reasonably priced. So NO business lost here! Just a little slower. Again I really appreciate the open and direct communication.

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I just wanted to say thanks for doing .00 prices (IE $8.00 rather than $7.99). I don’t know if this will hurt on a marketing side, but it’s unusual and appreciated.

Given that, I would also suggest put a column in your post for $change as well as %change. For items like the Red Series Dimmer, it’d soften the mental blow to see the difference is only $3.03. $38-$42 seems like a big jump, but $3/switch is not bad at all.

Some assorted commentary/discussion:
I know I’m already an Inovelli fan so my opinion is only somewhat relevant, but I still think the products are a good value. Zooz may be selling $20 switches but I think they have a different target customer- they compete more with GE/Jasco than Inovelli IMHO. Inovelli’s main/only competition IMHO is HomeSeer, because you guys are the only two going for ‘let’s pack the switch full of features’ designs, and you guys have a good bit more capability despite still (post-increase) being cheaper.

Hopefully moving production to Thailand will help things… would also be a selling point for some people that prefer to avoid Chinese-made hardware when possible.

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Not to mention you can actually update an Inovelli switch without jumping through absurd hoops, generally speaking. I just replaced my only Homeseer switch with a red series dimmer yesterday.

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Silly question - Do the tariffs still apply if final assembly is performed in the USA? Just wondering if doing something like Element Electronics is doing by (apparently) bringing in assembled PCBs and components and doing the actual assembly in South Carolina is a way to avoid the tariffs?

In case there’s any confusion, I’m not suggesting that @Courtney_Inovelli also be tasked with assembling thousands of switches before shipping them. :rofl:

Silly question #2 (that will probably be shot down by the liability lawyers) - Could you sell all of the parts from China to customers here as an unassembled kit and avoid the tariffs???

I appreciate the upfront nature of Inovelli as well. Also, like @Chris I appreciate using whole $ values. It always drives me crazy to see things that are $x.99… I know the psychology behind it, but it still bugs me.

Inovelli products still strike me as reasonably priced, as a premium product, which is how I see them.

Lol! Don’t wait too long, those things are here today and gone tomorrow :slight_smile:

Thanks man – we appreciate it and no problem on the communication. It’s what we’d want as customers too, so it’s the least we could do – hopefully next update will be good news lol!

Ha! I think I finally found @Nathan_Inovelli’s alternate account. He’s been pushing whole number pricing for a while now. I never understood it bc when you add taxes/shipping, it’s no longer a whole number, but to each their own :slight_smile:

Thank you for this – it turned out to be about a $2.02 average increase. That does soften the blow a bit and puts it in better perspective!

Yeah, that’s definitely some good perspective. It’ll be an interesting time for us to figure out the pricing model when we start targeting mass market, when they haven’t heard of us before. Luckily we’ve had branding carry us thus far and we’re in a niche market, so it’s helped as we go head to head against Zooz/GE/HS. Let’s just hope the momentum continues when we open the flood-gates and are priced higher than the WiFi/ZigBee equivalents out there.

Definitely!

Crazy, I didn’t realize this about HomeSeer. What types of hoops did you have to jump through? Genuinely curious as to maybe put it in our marketing.

Not sure – definitely something to look into. I’m sure there will be some tariffs on the individual components, but I’m not sure what those would be. I think this is definitely something we can look into.

Or yeah, maybe just have @Courtney_Inovelli do it. She has small hands lol.

I’m not sure we’re all ready for this lol (actual picture from a support ticket)

We appreciate it, thank you :slight_smile: – I feel like my marketing world has been turned upside down knowing there are flat pricing champions out there! Kidding aside, glad you guys like it – hopefully it will make things easier from a rewards point perspective.

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You need to buy this 30 dollar piece of software. And it uses these encrypted binary blobs that don’t work anywhere else. And they’re trying to onboard additional manufacturers which locks down updates for other brands too. I refused to participate and waited for a better switch with scene support to hit the market. I’ll likely sell the switch and use the return to buy another of your switches.

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I hope so. This is a risk for you guys going mass market- right now your brand means a lot to enthusiasts because you cater to enthusiasts better than anyone else. Your challenge will be to convey value to people who know nothing about HA.

It’s a HomeSeer-specific thing. Most switches use standard .hex or .otz binary files. HomeSeer dimmers use .hec files- it’s an encrypted format that (AFAIK) can only be flashed with HomeSeer itself or a firmware utility they charge $30 for. They are the only manufacturer I’ve seen that does this. It usually doesn’t cause a problem as they don’t do many firmware updates (last one was in 2018) but it has caused some pain for users.

I would be curious what counts as ‘assembled’.
If you want to build your own airplane, you have to do at least 51% of the build to be considered a ‘homebuilt airplane’ (and thus you can do your own maintenance). The other 49% comes from pre-built assemblies.
You can build your own gun (firearm) too- the main frame piece of the gun can be up to 80% machined before it stops being ‘machined parts’ and starts being legally considered a ‘firearm’. Thus, you can buy 80% machined parts and finish it yourself with a drill press.

My point here- I’d be curious what level of completion is necessary to be considered a ‘finished consumer product’. Perhaps if the switch came without the plastic paddle it might not count as a finished product? Perhaps if the switch was 3 separate parts (PCB assembly, outer casing, plastic paddle) sold as 3 separate SKUs that might change its tax status?
And/or, those 3 parts are easy to put together. Maybe hire someone locally to assemble them and you can say ‘assembled in USA’ on the box?

It’s hard. I like the honesty of flat pricing. At the same time, I recognize the psychological effects of it. If the product is $7.99, even I see $7 and not $8 until I look closely. But it is easier to think about whole numbers…

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Did the price increases affect shipping too? The website still says free shipping to the US on orders over 59.94 and I’m being charged $8 with $84 in my cart… :slightly_frowning_face:

@rgreuel - yeah we decided to increase to $100. I thought I cought it everywhere, but looks like I forgot.

If you already ordered, shoot me a PM and I can reimburse you for the $8.

Sorry for the mix-up.

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First time posting here… long time lurker. I have a couple older innovelli switches and plugs. Had a reminder set to check the 10 pack of red series dimmers in mid February.

I appreciate the transparency but am definitely disappointed. I’d been holding out for red series dimmer 10-pack availability and now the price of the 10-pack is equivalent to the individual unit price from several weeks ago — which feels kind of like a raw deal after waiting.

I really like the innovelli products and designs — but all my boxes have neutrals, so it really comes down the value of the design for 2x the price compared a basic zwave switch on the market. I will still be a residential customer though not at the scale I expected at these price points.

Best wishes

Yeah, I completely understand :confused:

It depends. If the components are also listed then it wouldn’t make that much of a difference. Also if the cost to assemble is greater than what the tariffs are its probably not worth it (i’m guessing its cheaper to have them imported fully assembled). There’s also issues with warranties and liability if you’re the one doing the assembly, vs. being able to go back to original manufacturer. If they did the plastic molding for the switch itself here and just had to do a final solder or something then maybe that would skirt the HS if it could just be classified as electronics components.

These things are always tough, especially when it’s completely out of your control. Even at $42 I still think the red dimmers are a great deal. I really like the inovelli products, but it’s this community, the transperancy and the way that you listen to customers that really makes me love Inovelli. Our lighting automations are some of the favorite things we have in our smart home. The ability to control smart bulbs, regular bulbs, customize notifications it’s unlike anything else I’ve seen in the market.

Also what kind of Jetson world do we live in that we can push firmware updates to our light switches. Not just one firmware update in 10 years or firmware updates because the product was unfinished when shipped. The firmware updates you guys have provided gave new functionality and new options to your users for free. The option to have multi clicks or super fast response was the best updates that instantly resolved so much WAF adoption issues. Most companies would have rolled that into version 2.0 and made consumers buy new products. Instead you listened to your customers and supported the community. I know some people value dollars over these intangibles, but also know there are a number of us that appreciate the community you’ve built and the ties to overall smart home community.

I have a few more switches to replace at some point in the near future and they will definitely be red dimmers regardless of this change.

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Wonderful transparency (and insight into a manufacturing business, which is always interesting).

I wish I had ordered my full basement’s worth of switches before this increase, but even though I’m not excited to be paying more I’ll still be buying. You’ve got a good product and great engagement with the community.

When you do get some more money to invest in new product (which I hope my purchase will be a small part of), I hope you’ll work on an in-wall multi-button scene switch (like 5 or 6 buttons) with status lights. Even though I’ve been doing automation for 8+ years and have much of the lighting scenes fully automated, there are still areas where we just want simple, hard-wired manual control of multiple scenes without whipping out the phone. We get by with the config buttons on our current Inovelli switches to trigger scenes, but something more elegant/intuitive (that I can put labels on) would be great.

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