70-200 2.8 IS II vs. 85 1.2 II for Portraits?

DPReview007 wrote:

Fog Maker wrote:

If they however update it they will run into some serious pricing issues-

for a non super tele - where its now is the absolute limit

The price on the 5D III has dropped almost 500 Euro in a year

which should be a good indicator that Canon can't keep up this madness

Part of the reason why Canon and Nikon prices are both dropping is that the Yen lost 15% of its value this year. These companies account in Yen, and simply pass on a large chunk of the gains to customers to be competitive. We can look forward to more discounts on photo gear this year!

Pricing is a bit more complex than that. While the Yen may have lost 15% of its value (accepting your figure, I haven't checked it) that has both an upwards and downwards impact on prices. Upwards because Japanese companies have to import most of their raw materials and fuel. And possibly downward because of currency exchange value (depending on the currencies involved of course).

However the price you pay is not simply Canon's or Nikon's manufacturing cost. Once the goods arrive in the USA, or Europe or wherever, import duties are added and at that point all accounting is no longer in Yen but is converted to the local currency. To that base price is added the importer / distributor's margin for warehousing, distribution, marketing, training and service costs. Then to that is added the dealer's profit margin and finally, if applicable, sales tax.

Most photo manufacturers also buy forward as a hedge against currency fluctuations and in the case of Canon prices are fixed for at least 3 months in advance to provide some stability to the market.

It would be nice to think that a 15% drop in the value of the Yen would result in an equivalent drop in prices but sadly it doesn't and realistically we should not expect to look forward to  discounts due to that reason.