Price rise threats....

Barry Fitzgerald said:

Member said:

Because selling 5 cameras at a loss is better than 3 cameras at a
small profit? I am betting they know what they are doing ... though
I am sure they have all adjusted for the loss of the important Barry
sales
---------
Ken - A700 Owner..
Some of my work at:
http://gallery.cascadephotoworks.com

Click to expand...

--
Ken the only photographer in the world who wants people to pay
"higher prices"..sigh

Most people are happy to get a deal

As it happens the fall in the pound is offset by the fall against the
euro...as I buy from Euro to pound mostly, it wont make much
difference to me

Get a grip ken, we are in a global doom scenario..sales are on the
way down whatever..jacking prices isn't a good way to help things

I frankly don't care if sony make 50 pence on a low end DSLR..

We all know lenses have a significant mark up..they can just take it
on the chin and live with it ;-)

Click to expand...

Barry.. didn't say I wanted higher prices just that I have a more developed understanding of business and understand that selling more with little or no profit is not better than selling less with a profit.

The land is littered with failed business that assumed they could compete on price only and somehow would make up having no profit on selling more at no profit.

Also you need to realize that the the cost per-unit goes up when you make less, and if you have made them already the carrying cost if they don't sell in the planned time goes up too. Meaning even outside of currency issues slow economies make things cost more too.. the only good news is slow economies lower demand on commodities like oil.

But I am sure the business units of Canon, Nikon and Sony will be in session to evaluate the "Barry business model" of pricing without consideration of profit margin or unit cost.
---------
Ken - A700 Owner..
Some of my work at:
http://gallery.cascadephotoworks.com

KEITH-C said:

I agree William it may well be good advice to buy now for most of the
existing stock but many people were waiting for the price of the A900
to drop.

Sure - some well off amateurs & Pros have already taken the plunge
but the vast majority of the rest , me included, were waiting for a
price drop which now seems extremely unlikely. I think that sales of
the A900 , in the UK at least, will stop dead in the tracks.

The recent Digital Depot clearance sale of the A900 at
small stocks sell out in hours which is an indication of how price
sensitive this particular model is. I am not trying to blame anyone ,
except perhaps greedy Bankers, for this situation - just saying how
depressing it is as a start to a New Year !
--
Keith-C

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This is not evidence of the A900 being price sensitive. This is just indicative of the A900 not having saturated the market and people who were interested in investing in it finding a bargain.

If it were price sensitive, people who wouldn't otherwise buy the A900 would be buying it in large quantities. My guess is that everyone who bought the A900 were already thinking about buying it and just found the best price.
--
Gear:

A700, Sigma 10-20, Tamron 28-75, Beercan, 50 f/1.7, 85 f/1.4 G, Tamron 90mm Macro, Minolta 135mm 2.8, 200mm 2.8, 3600

Hate to get on the Barry-Ken thread, but I have to agree with Ken.

If the current prices are not giving adequate profit, it is expected that the companies will increase the price to the level it needs to be.

Regardless of the economy, this is a business decision. Sony is not a charity, it isn't required to put a camera in every household.
--
Gear:

A700, Sigma 10-20, Tamron 28-75, Beercan, 50 f/1.7, 85 f/1.4 G, Tamron 90mm Macro, Minolta 135mm 2.8, 200mm 2.8, 3600

I agree with Ken :
selling less but with profit

there are always people who will buy because they have the money : look at the medium format camera's . Why is Leica coming with the S2 ? Because there is a market for .
guido

Barry Fitzgerald said:

Ever notice that if the pound is on a roll prices never go down?? I did

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That's because everything is relative. British residents get paid in pounds so if the value of the pound is high then the income of the local populace is high in world terms. In the last few years GNP per head in the UK has been amongst the highest in Europe and even the world due to the strength of the pound but the flip side is that our local costs are equally high. Countries that had even higher GNP per head (like Norway) had even higher prices to contend with.

As the value of the pound slides so our retail prices look more attractive compared to other countries but the relative income of our population slides with it. This relationship exists regardless of boom or bust and whilst this is not an absolute explanation it serves to underline that economics simply isn't that simple and there are lots and lots and lots of factors.

Ken_5D said:

Barry.. didn't say I wanted higher prices just that I have a more
developed understanding of business and understand that selling more
with little or no profit is not better than selling less with a
profit.

Click to expand...

You are assuming that if the prices were not raised, then the camera makers will sell at a loss. That is far from it. Practically all of the DSLR cameras being sold are hugely profitable. They have a built-in profit margin of hundreds of dollars each. Take, for example, the A700. It is several hundred dollars more than the A350, but the sensors are the same size and therefore same cost to make. Even if you take into account the differences in their bodies and mechanicals, the A700 is still more profitable than the A350 by a few hundred dollars per camera. The change in exchange rate only means that the profit margin will shrink. It does not mean that the camera makers will suddenly lose money. If they raise prices, and sales plummets, then they may be stuck with a warehouse full of unsold merchandise. Clearing that merchandise at a later date at fire sale prices, or perhaps even burying them in a landfill would result in a loss of money.

Therefore, manufacturers often resist raising prices when exchange rates fluctuate for fear of hurting sales volume.

Ken_5D said:

The land is littered with failed business that assumed they could
compete on price only and somehow would make up having no profit on
selling more at no profit.

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Certainly there are companies that go out of business because they kept losing money. However, raising prices is not always the answer. GM, Ford and Chrysler are losing money now. Does it mean they should raise prices to compensate? LOL

Ken_5D said:

Also you need to realize that the the cost per-unit goes up when you
make less,

Click to expand...

Certainly. That makes it wise for the camera makers to keep volume up by not raising prices.

Ken_5D said:

and if you have made them already the carrying cost if
they don't sell in the planned time goes up too.

Click to expand...

Agreed. This is why it is often unwise to raise prices. If one company raise prices, another company may benefit.

Ken_5D said:

Meaning even
outside of currency issues slow economies make things cost more too..
the only good news is slow economies lower demand on commodities like
oil.

Click to expand...

Yes. And lower oil prices reduce the influence of countries like Russia and Iran.

Ken_5D said:

But I am sure the business units of Canon, Nikon and Sony will be in
session to evaluate the "Barry business model" of pricing without
consideration of profit margin or unit cost.
---------
Ken - A700 Owner..
Some of my work at:
http://gallery.cascadephotoworks.com

Click to expand...

Canon has cut prices on the 50D and 40D, showing that there are lots of built-in profit margin for these cameras. Sony has resisted cutting prices on the A700 since its introduction. It is one reason that the A700 is outsold by both the 50D and 40D. OTOH, the Sony A350 is among the best selling Sony DSLR cameras mainly because of its low price. If Sony were to raise the price of the A700 and A900 because of currency exchange rates, then it is basically asking consumers to look elsewhere.

My prediction is that whatever price increases are implemented won't stand up for long. Competition and lackluster sales will bring the prices down in a hurry, perhaps in the form of rebates just so the camera makers won't lose face.

I agree with this. A difference of + $150USD on a $3k USD DSLR is not going to stop all sales. However, a significant price rise on the supporting equipment (i.e. lenses) would stop sales. This is not what has happened in the US with the Sony system. In fact, almost all of the upper end lenses are cheaper by a large margin than what they were even a year ago. The market for Sony is no where near saturated and they are under pricing in China in an effort to globally expand the Sony DSLR brand. It remains to be seen how effective they will be, but overall Sony seems to have done a reasonable job so far at holding or lowering prices while growing market share.

This is not to say that prices will not go up, but I doubt it would be at a rate higher than the Canon/Nikon price hikes.

Cyrus84 said:

This is not evidence of the A900 being price sensitive. This is just
indicative of the A900 not having saturated the market and people who
were interested in investing in it finding a bargain.

If it were price sensitive, people who wouldn't otherwise buy the
A900 would be buying it in large quantities. My guess is that
everyone who bought the A900 were already thinking about buying it
and just found the best price.
--
Gear:
A700, Sigma 10-20, Tamron 28-75, Beercan, 50 f/1.7, 85 f/1.4 G,
Tamron 90mm Macro, Minolta 135mm 2.8, 200mm 2.8, 3600

Click to expand...

Barry Fitzgerald said:

Member said:

Once again, the UK or Europe are not the only "world". Price are down
in other countries.

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--
Great, so I will have a party when I no longer live in Europe then!

It really depends on how much they increase prices relative to Canikon..

I wouldn't advise going above their increases..we still have some way
to go for sony to get competitive on some lens prices

As it happens europe is the largest market for DSLR's, so it's an
important battle ground

Click to expand...

--
You can start a new "Barry" crusade against pricing then.

A lot of international trade is paid in USD. The USD is some 10 % up against the EUR from when it was at its lowest, but still way down from its peak.

The GBP on the other hand is down 30 % or more against the EUR, and therefore even more against the USD. That would translate into a considerable price rise, but not in the euro-zone.
There the rise should be lower, although it has started.

Anastigmat said:

My prediction is that whatever price increases are implemented won't
stand up for long. Competition and lackluster sales will bring the
prices down in a hurry, perhaps in the form of rebates just so the
camera makers won't lose face.

Click to expand...

--

Exactly

Those calling for price increases are simply blind to reality and their brand, which is amazingly silly, unless you happen to be a shareholder.

It never ceases to amaze me how some folks are so into brand loyalty, they want them to make mega profits. Sony like Canikon will have to be very careful with price increases, you wont be seeing across the board increases, just one some areas.

Sony can bash up the zeiss and G lenses for all I care ;-)

In this financial market, only a very foolish company would wholescale whack up prices on everything. The sales just won't take it. It will be the retailers who will probably suffer the most, as if they are not under enough pressure. They may attempt to absorb some increases, or simply drop lines that don't sell so well, or deliver decent margins

Ken is entirely wrong, I fully understand business, esp since I have had my own one. But you cannot ignore the state of the market, and terrible economy.

It can be fatal to charge too little, and it can be just as deadly to overprice, and price yourselves out of the market...

Barry Fitzgerald said:

Anastigmat said:

My prediction is that whatever price increases are implemented won't
stand up for long. Competition and lackluster sales will bring the
prices down in a hurry, perhaps in the form of rebates just so the
camera makers won't lose face.

Click to expand...

--

Exactly

Those calling for price increases are simply blind to reality and
their brand, which is amazingly silly, unless you happen to be a
shareholder.

It never ceases to amaze me how some folks are so into brand loyalty,
they want them to make mega profits. Sony like Canikon will have to
be very careful with price increases, you wont be seeing across the
board increases, just one some areas.

Sony can bash up the zeiss and G lenses for all I care ;-)

In this financial market, only a very foolish company would
wholescale whack up prices on everything. The sales just won't take
it. It will be the retailers who will probably suffer the most, as if
they are not under enough pressure. They may attempt to absorb some
increases, or simply drop lines that don't sell so well, or deliver
decent margins

Ken is entirely wrong, I fully understand business, esp since I have
had my own one. But you cannot ignore the state of the market, and
terrible economy.

It can be fatal to charge too little, and it can be just as deadly to
overprice, and price yourselves out of the market...

Click to expand...

Sony has been trying to price you out of the market for years

The thing is, its not just stupid brand loyalty. I don't care one iota more for Sony than I do for Canon. I like to see them do well, but that's about it.

I think people forget the giant infrastructure required for a giant like Sony. The cameras only cost so much in parts, labor and whatever. But Sony needs the "profit" to pay for overhead like the designers, management and all sorts of other things, like shipping/warehousing etc.

So that shrinks the profit quite a bit, and beyond that, I think it is part of the Sony decision making to not compromise on certain things. If they lower the price because it is a bad economy, they then risk having to lower their prices in order to sell cameras all the time.

And while you might have run a company, I don't think is quite the same experience as running Sony.
--
Gear:

A700, Sigma 10-20, Tamron 28-75, Beercan, 50 f/1.7, 85 f/1.4 G, Tamron 90mm Macro, Minolta 135mm 2.8, 200mm 2.8, 3600

Ken_5D said:

Barry Fitzgerald said:

Ken_5D said:

Because selling 5 cameras at a loss is better than 3 cameras at a
small profit? I am betting they know what they are doing ... though
I am sure they have all adjusted for the loss of the important Barry
sales
---------
Ken - A700 Owner..
Some of my work at:
http://gallery.cascadephotoworks.com

Click to expand...

--
Ken the only photographer in the world who wants people to pay
"higher prices"..sigh

Most people are happy to get a deal

As it happens the fall in the pound is offset by the fall against the
euro...as I buy from Euro to pound mostly, it wont make much
difference to me

Get a grip ken, we are in a global doom scenario..sales are on the
way down whatever..jacking prices isn't a good way to help things

I frankly don't care if sony make 50 pence on a low end DSLR..

We all know lenses have a significant mark up..they can just take it
on the chin and live with it ;-)

Click to expand...

Barry.. didn't say I wanted higher prices just that I have a more
developed understanding of business and understand that selling more
with little or no profit is not better than selling less with a
profit.

Click to expand...

You start from a position that makers have small margins on stuff anyway...this is not always the case.

In your own mind maybe..but you have constantly supported higher prices on sony lenses, even when they were clearly doing damage to potential sales, and completely uncompetitive in some areas. Sony has addressed "some of those areas" but not all

You also supported resale price maintenance, which is a deeply flawed, and illegal in most countries...as well as very damaging pr wise to any company engaged in that area

Ken_5D said:

But I am sure the business units of Canon, Nikon and Sony will be in
session to evaluate the "Barry business model" of pricing without
consideration of profit margin or unit cost.

Click to expand...

I live in the real world, where clearly the free market economy does not work well (you don't need to be a genius to see government intervention buying out banks as that), which is a self defeating strategy anyway..they caused most of the problems!

Leaving that aside..there are other factors..companies will absorb some of the loss of profits (maker and retailer), possibly reduce costs and overheads..so you won't see a 30% increase in prices..not unless somebody is very daft..

The market simply wont take strong price increases, sales are poor, retailers are folding all over the place..the strongest companies will increase prices on some areas, but not too much, and maybe reduce them in other areas

Cyrus84 said:

And while you might have run a company, I don't think is quite the
same experience as running Sony.

Click to expand...

And this means?

Do you run a global company or Ken?

What you folks forget is something called "costs" and what happens is companies will reduce them..

We are in bleak economic times, and all companies will be looking at this with great care. Simply stating you want sony to make more profits is one thing, but how they get there is another. Wholesale prices are only one part of that...

These large companies have big costs and overheads..and it is very likely they will continue to slim them down. Of course this has another significant impact..it puts more people on the unemployment line..which in tern means they don't spend that much least of all on luxury stuff.

Sony will surely have to absorb some of the possible price increases

Barry Fitzgerald said:

Cyrus84 said:

And while you might have run a company, I don't think is quite the
same experience as running Sony.

Click to expand...

And this means?

Do you run a global company or Ken?

What you folks forget is something called "costs" and what happens is
companies will reduce them..

We are in bleak economic times, and all companies will be looking at
this with great care. Simply stating you want sony to make more
profits is one thing, but how they get there is another. Wholesale
prices are only one part of that...

These large companies have big costs and overheads..and it is very
likely they will continue to slim them down. Of course this has
another significant impact..it puts more people on the unemployment
line..which in tern means they don't spend that much least of all on
luxury stuff.

Sony will surely have to absorb some of the possible price increases
--

Click to expand...

--
Sony should hire you to solve all their problems at all levels

Barry Fitzgerald said:

KEITH-C said:

It seems that in the UK & the Euro area price rises will be
introduced shortly due to the deteriorating currency exchange rates.
This will probably mean that sales of the A900 will grind to a halt
with other models being less affected although overall sales will be
down significantly.

This is a tragedy for the consumer & manufacturer alike. If this
situation continues for too long a period then some companies ,
already in trouble, will crash. Canon is probably in the strongest
position with perhaps Nikon second. Sony could keep going in this
market but will they want to ?

This could not have happened at a worst time for Sony's launch of the
A900.

Click to expand...

Might be me, but I have seen prices on the up in the last few weeks
(not just sony of course..all makers)

Maybe the £ v yen??

On the other hand the Euro is very strong v the £..so there are some
deals to be had too.

Click to expand...

I think that Sony won't be "rising" prices in UK, but adjusting them to the strongest Euro zone, in order to avoid dumping (a Spaniard doesn't have to pay taxes from something he bought in the UK)

People from the "third" world have more experience about this adjustments and we are some how better prepared for endure this crisis situations...

--
Pako Dominguez
-----------------------
http://www.phototeka.net

All this talk about 'economics' being a complex subject is really a lot of bull...! Economics boils down to screwing as much profit as possible from every possible situation with the least expenditure - why is almost everything now made in China?.
Currency exchange sites show the GBP at €1.04 today.
The Jessops' site offers the SAL50F14 at £195.00 = ~ €204.00

Lowest price I've found here in Italy for the same lens is €399.00, so I tried to buy it from GB Jessops. NO GO, you have to be resident in GB to pay by CC.

Same story with Sony sites - you can't buy on line in GB (where the price is a bit lower) if you are resident in another EU country.

Apart from differing VAT rates, Sony, like all other manufacturers, has the whole thing neatly sewn up so as to rake in as much as possible... Otherwise, why do their products ALWAYS cost a helluva lot more in Europe than in the USA? It's not a question of markets, it's all to do with speculation.
Jobrywadd

Anastigmat said:

You are assuming that if the prices were not raised, then the camera
makers will sell at a loss. That is far from it. Practically all of
the DSLR cameras being sold are hugely profitable. They have a
built-in profit margin of hundreds of dollars each. Take, for
example, the A700. It is several hundred dollars more than the A350,
but the sensors are the same size and therefore same cost to make.
Even if you take into account the differences in their bodies and
mechanicals, the A700 is still more profitable than the A350 by a few
hundred dollars per camera.

Click to expand...

You're talking purely about FVC's, Factory Variable Costs i.e. the costs of the raw materials of building exactly one unit. The overall cost of the operation is something else altogether - production lines need to be designed, built, purchased and maintained, development costs of the products themselves will be massive in a highly technological and ever changing environment, massive distribution and shipping operations need to be in place, vast quantities of market research and evaluation undertaken nearly constantly with teams of business strategists, multi-national setups need to be in place administer logistics, customer services, after sales care, massive teams of buyers and salesmen need to be in place to keep the raw materials constantly flowing in to feed those production lines and to generate the interest in the wholesale and retail sectors to take the products coming off the other end, teams of accountants and auditors then need to bring in, enter and crunch the numbers surrounding all those incomings and outgoings.

All of this, every last bit of it, has to be paid for from the few hundred dollars of a camera or lens sale here and there. A camera may cost £50 to actually produce but to suggest that if you then sell that at £250 you've made £250 profit is just breath taking in its shortsightedness. It is NOTHING like that.

And that doesn't even consider the retailer element. Let me tell you, I used to work for a tyre importer. The import division was a wholly owned subsidiary of the manufacturer and we bought a particular line of tyre at about £9 per piece from our factory. We generally sold to the wholesalers, or to the largest retailers, at around £13-15 per piece. By the time it got sold to the public the cost was around £90 for that particular line (which of course includes VAT so £76.60 to the retailer). So we, as the manufacturer, made around £3 at the factory and average £5 at the distributors, total of £8 profit per tyre for the manufacturer. Oh and the £5 profit the distributors made was again purely on a direct cost of sale basis - that £5 also had to pay for our office with all its inherent costs, 10 salaries, a warehouse, two forklifts, several company cars and so on and so on and so on.

Anastigmat said:

Canon has cut prices on the 50D and 40D, showing that there are lots
of built-in profit margin for these cameras. Sony has resisted
cutting prices on the A700 since its introduction.

Click to expand...

Speak for yourself. I looked seriously at the A700 in April and was around £900. For the last two months at least it has been around £550-600. In my books that's a price reduction - and not a small one.

Ken_5D said:

Because selling 5 cameras at a loss is better than 3 cameras at a
small profit? I am betting they know what they are doing ... though
I am sure they have all adjusted for the loss of the important Barry
sales

Click to expand...

No comment about the subject of the camera prices rising, but just that we all know that corporations always know what they are doing and do the right thing. Some other companies that have proved that is so: GM, Chrysler, Ford, AIG, Citigroup. Lehman Brothers, Bear Stearns, Fannie Mae, Fannie Mac, etc., etc., etc.

--
Henry Richardson
http://www.bakubo.com

Ken_5D said:

The land is littered with failed business that assumed they could
compete on price only and somehow would make up having no profit on
selling more at no profit.

Click to expand...

Darn, I distinctly remember reading in 1999 when the internet boom was going strong that a company could get rich by selling all of its products at a loss, but make it up in volume. Are you saying this doesn't work? I recall talking with a co-worker at the time wondering if we should start an internet company together and sell $1 bills for $0.85 each and make a fortune!

--
Henry Richardson
http://www.bakubo.com

Your vision remains to be seen.

I wouldn't worry at this point in time.
--
http://www.CarlGarrardPhotography.com