What happened to micro 4/3 pricing?

Started Apr 18, 2013 | Discussions thread
Eamon Hickey
Veteran MemberPosts: 3,141
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no "Gillette model" in the camera business
In reply to Sunny Caribe, Apr 18, 2013

Sunny Caribe wrote:

Recently Panasonic made an announcement about their strategy which I found illuminating. the wording of it is available online but the gist of it was that, like the majors, their strategy lies in offering new and innovative bodies at or near  their cost while making their profits on lens and accessory sales.

I'd be interested to see the statement you're referring to, if you can provide a link. If Panasonic said that, it would surprise me. It's not a recipe that works in the camera business, and it's certainly not the strategy that Canon and Nikon are pursuing.

This is just my reasonably well informed theory though. But it fits the facts and there are many parallels in the electronics world. Printers are one example. We've become accustomed to buying the latest and greatest high resolution multi whizz bang device for a few hundred dollars and are perfectly content to shell out a quarter or a third of the purchase price to refill it with dead simple colored liquids several times over its lifetime.

Many businesses do indeed work as you describe -- it's what's called the "Gillette model" where you sell the equipment (the razor) at cost in order to make money on the consummables (the blades, which must be constantly replaced by the user). The printer business also works that way, as you point out.

But the camera manufacturing business doesn't work like that. For many decades the ratio of lens to body sales has been about 1.5 lenses per body worldwide. (This information has been published annually by CIPA for years.) And the total value of lens sales annually is lower than the total value of body sales (usually around 75-80% of body sales). In other words, there are no consummables in the interchangeable-lens camera business. In order to make money in it, you must also make money on your camera bodies.

When film was the recording media, certain aspects of the photography (not camera) business did work on the Gillette model, because film is, of course, a consummable. The consumption of film was, in fact, the underlying profit engine of almost all camera retailers in the U.S. in the 1980s and 90s -- they did indeed make little or no net profit on the hard goods in their stores. They made money on film developing -- gobs of it. Profit margins in the range of 90% before labor costs.

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