forthcoming D3X pro review

Started Feb 5, 2009 | Discussions thread
peripheralfocus Veteran Member • Posts: 4,376
bundled, free, and theories of value

As I pointed out, they could have ameliorated the situation
considerably by taking a more Lexus type approach and bundling high
perceived value things that cost little.

Yes, I see the point that you and the OP were making about the D3X; it may well have been a good marketing decision to bundle NX (or other products) with the D3X. I continue to prefer the word 'bundle' to the word 'free'; it keeps the financial facts clear.

On the larger issue of the D3X's price, and the question of perceived value that you are raising, the cold business reality is that Nikon is making a mistake only if the price results in a failure to sell as many D3X's as they plan to make (significant caveat noted below). At Nikon they call the sales plan "the budget". So if they don't make budget on the D3X, they've blown it.

As it happens, I had dinner and a beer with a senior Nikon DSLR executive a couple weeks ago -- an old friend from my days there. I don't want to get him in trouble by quoting him directly, but he let me know that the budget on the D3X is modest; they aren't making all that many.

Sure Nikon must cover their costs. However, what ARE their costs? A
quick breakdown analysis of a D3x shows that its costs are pretty
close (nearly identical) to a D3, which sells for quite a bit less.
Thus, the D3x price is artificially floated at its current level.

Hmmm. "Artificially floated"? Are we edging into Marx's Labor Theory of Value here, Thom? (Not that there's anything wrong with a little Marx on a Saturday morning.) If Nikon is pricing the D3X based on classical capitalist market theories of value (which they do), they should set the price at the highest level that will still sell the number of units they want to make. If they price it at $5,000 but can only make 500 units a month, and it's on heavy backorder for three years, they've underpriced (undervalued) the product -- they're leaving money on the table. Now I realize you know all this stuff, and I hope you realize I'm just having a little philosophical fun here.

But maybe this brings us around in a circle because it's true that most consumers, no matter how much they profess love of free markets, to some degree have an internal Labor Theory of Value -- they don't like the idea that a product's price is many times higher than its cost of manufacture, based on nothing more than market demand and competitive conditions. They don't seem to mind when it's perfume, or designer clothing, but on things like cameras (and software), a manufacturer can develop a reputation for price gouging, if people think the camera is priced way above its manufacturing cost.

So that's the caveat, I mentioned above. Even if the D3X sells to budget at $8,000, the price might still be a marketing mistake if Nikon develops a real (not just Internet forum) reputation for price gouging. To some limited degree, Canon did develop just such a reputation after years of selling the 1Ds-series at $8,000. So I think I'm paraphrasing one component of your argument about the D3X price here, yes? If so, it's not unreasonable, but it's also not easy to figure out if such reputation damage is really happening with any single product, D3X included. And Nikon has enjoyed much the opposite reputation more or less ever since the D1 intro (D200/D300 and D3 being more recent examples) -- lots of camera for very reasonable prices.

So bottom line, at least for me, is that we won't know if Nikon really made a mistake of any substance on the D3X price until a) we see if they make budget on it and b) we see if there's any real (i.e. lasting) reputation damage. I believe you think it's already evident that Nikon made at least some mistake (yes/no?), whereas I would say, at this point, time will tell.

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CRH
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