In my experience, reducing the volume of water added to these cheaper kits is one way to increase the "density" by not diluting the ratio of Total Dissolved Solids (TDS) as much as the manufacturer directs. However, this can easily be taken too far - I have sampled another winemaker's "experiment" in which he took a 7L kit designed to make 6 gallons of wine (similar to the kits in Joe's post above) and added only enough water to make 4.5 gallons. The final result was a dry but syrupy red wine - the taste was ok, but the texture was all wrong because it was still too concentrated.
I reduce the water addition for these kits to a total of 5.5 gallons initially (instead of 6 gallons), expecting to lose some in racking, and usually end up with a little over 5 gallons of finished wine. I think that is the right compromise of dilution and value - reducing the initial volume to 5 gallons would be too much, IMO. But hey, it's your nickel, so do what you want.