I'll add my two cents worth here.

Towards the end of 2013 I wanted a semi hollow guitar, but couldn't afford one. I'd heard about kits, and so got a cheap ES-335 kit off of eBay. I put in as much effort as I could, but it still wasn't quite right. The scale length was about 10mm too long using the predrilled bridge post holes, and it sort of intonates up to around the seventh fret. Looks pretty. Dog to play. But what can you do, it's eBay.
In the course of working out how to build the first kit I stumbled across this site, the forums really, and found something pretty unique: a group of kit builders putting together good gear from good parts, and a guy that made sure good kits were supplied. So when I got some spare cash together, I ordered a TL-1 and an IB-5, and was impressed with the service, the speed, and the quality.
I got inundated with work, and so the TL-1 sat half sanded for a few months, but is now underway. And it's awesome. Very happy

TL;DR: You're not competing with the crappy kits of the world, these are actually good bits of gear, and not too dear. A small price rise is the way it has to be. I think there's an opportunity to sell a complete range of upgraded parts as well, along the lines of the Emerson prewired rigs, and some tools like radius sanding blocks.