Now I know why the M8 price increase

B

Ben Z

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I just received one of my two free filters. Kudos to Leica for shipping the one they have, and for getting it out quickly (I placed my order on Sept 1st and today is the 14th). But it came FedEx International Priority, and just for kicks I went to the FedEx website and priced out sending the same package from Solms to here...it came to $59.55!!. Now, I know Leica probably has a special rate with FedEx, so let's say they get a third off, that's still $40. Add to that their cost of the filters, let's say they have a 100% markup (normally filters have a huge markup but these are a low-volume item), that's $50 ea. And they'll be sending my second filter separately whenever they get it in stock, another $40. That's $180 just in out-of-pocket costs, then add the cost of labor to process the orders and wrap them up...I'm going to be conservative and say it amounts to $200 per camera, just for the IR/magenta snafu. Then there's the cost of several firmware upgrades and transfering the duties from Jenoptik to whoever they have doing it now. And finally the cost of servicing all the cameras that were sent back either for the recall, and/or Sudden Death and/or other various problems like rangefinder alignment. I can easily see $1000 per camera in unanticipated costs. Not that it should make any difference to customers as we all have our own problems and budgets, but it doesn't look to me as if Leica is trying to take advantage of the M8's popularity to rake in more profits.
 
Ben Z said:
....but it doesn't look to me as if Leica is trying to take advantage of the M8's popularity to rake in more profits.
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Why wouldn't they if they could ? It's a business not a church.

Roland.
 
God forbid a company tries to make money on the product. If the oppurtunity to make more money is there...take it!
 
Excuse me but where did I make any commentary as to whether or not they have a right to increase profits? All I said was that from what I can calculate, their current and anticipated price increases don't appear to be increasing their profits beyond offsetting the unforseen expenses of filters and hardware/firmware upgrades.
 
A grim reminder:

"Following the ad hoc announcement of Leica Camera AG, Solms, of February 17, 2005, stating that the Company expects a loss of half of its registered share capital in March 2005, the banks have partially terminated their credit lines. The remaining lines still cover the current liquidity requirements. The Company’s Board of Management has entered into negotiations with the banks on a solution that will carry the Company until the time of its Extraordinary General Meeting on May 31, 2005, at which capital measures are to be proposed to the shareholders"
 
I'm taking my next $5000 camera investment (if that is the right word) and spending it on a Nikon D3. If Leica had had their s**t together on the M8, they would have had this first investment and probably a second by this time...
 
... and not to mention the costs in re-tuning all those lens sent back for back/front focus adjustment, and if the senders choose to have the 6 bit coding, that euro 99 is just about to make the whole affair even cost wise, if not, another throw away for Leica. no wonder they have halt production for the large aperture lens and went for the summarit.

retailers do not need to reflect 100% the price increase, they can cut their profit margins (and they do have a huge margin) and absorb some of the increase, it depends on demand.
 
AusDLK said:
I'm taking my next $5000 camera investment (if that is the right word) and spending it on a Nikon D3. If Leica had had their s**t together on the M8, they would have had this first investment and probably a second by this time...
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Dave raises a very interesting point.
The latest leaps forward by Nikon and Canon can only be seen as ominous commercial signs for Leica.
Yes, shooting a rangefinder is a different kind of experience, as we all know. But digital camera technology is moving very fast these days, and it's hard to see that as helping Leica or the M8.
 
Canon and Nikon have been ahead of Leica technically since at least the 80's. They sell to a different market, although it obviously overlaps. What almost brought Leica to their doom was their late entry into serious digital and the fact their first move was with the R system, which has a much smaller appeal than the M system. Despite buying an M8 I have no intention of selling my 20D, but by the same token I have no intention of "upgrading" it either. "Live view" to me is utterly redundant with an SLR, and since I only use the LCD for camera settings, I don't care if it's 3" or 1.8". The 20D is already as noise-less as I need. For some people the latest bells and whistles are always "needed", but we're at the point now with digital that advances in image quality between generations are quite small compared to what they were just a few years ago.

That said, the market will decide whether Leica's price increases will be accepted or not. A 30% price hike could stand up to a 30% sales volume decrease, depending on how tightly their manufacturing costs are tied to volume, without "killing" the company. So it remains to be seen whether the true market for the M8 is guys like us for which $500-1000 is a major affair, or guys who blow that much in an evening out with friends every Saturday. As someone pointed out, dealers have the opportunity to cut their profits and give discounts. Likewise, Leica can always give rebates. Those prices aren't set in stone.
 
"but we're at the point now with digital that advances in image quality between generations are quite small compared to what they were just a few years ago."

Ben,
I think there is still alot to be done with digital noise, especially at high ISO settings and that is where the action is moving. One of the things I like best about digital is that I never have the "wrong film" loaded. Just up the ISO and you're good to go from desert sunlight to arctic night with a twist of the wrist. But Digital noise takes alot of the joy out of that twist. Imagine a digital camera whose noise profile was as quiet at 6400 iso as at 100 iso. Now that would be amazing!

/T
 
summilux said:
retailers do not need to reflect 100% the price increase, they can cut their profit margins (and they do have a huge margin) and absorb some of the increase, it depends on demand.
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You MUST be joking! You call 15% a huge margin? The reason why why we see so many posts about neighborhood camera stores going out of business is because the profit margins on photography equipment are so LOW.
If a store sold nothing but new equipment at these margins and all their customers paid with credit cards, they wouldn't even be able to cover their overhead! Stores are staying in business by selling used gear, which as a better margin.
I know these things because I work in the industry.
 
Tuolumne said:
"but we're at the point now with digital that advances in image quality between generations are quite small compared to what they were just a few years ago."

Ben,
I think there is still alot to be done with digital noise, especially at high ISO settings and that is where the action is moving.
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Yes, but it's moving much slower and in smaller increments than in the past, that being my point.
 
Ben Z said:
Yes, but it's moving much slower and in smaller increments than in the past, that being my point.
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Well, I don't know how slowly it's moving. Nikon is making some pretty amazing claims about the ISO performance of their new D3xxx cameras. It remains to be seen if it's true. But even "small" changes have a big result over a tradiitonal Leica camera time frame. Major new advances seem to come every two years in the dSLR world. In four years, which used to be a fraction of the life cycle of a traditional Leica film camera, you see two upgrade cycles for a dSLR where something significant has changed. That's a tough target for a small company like Leica to chase.

/T
 
Uncle Bill said:
How much of this price increase is due the weakening US Dollar?
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The weak dollar simply makes the camera more expensive for Americans over and above the price increase since the base price is in Euros.
 
Tuolumne said:
But even "small" changes have a big result over a tradiitonal Leica camera time frame. Major new advances seem to come every two years in the dSLR world. In four years, which used to be a fraction of the life cycle of a traditional Leica film camera, you see two upgrade cycles for a dSLR where something significant has changed. That's a tough target for a small company like Leica to chase.
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Assuming they are chasing it, and there's some compelling evidence they aren't. Among that, they made the M8 10mp and 1.3x crop (without a fast framing rate to qualify it) at a time when the top-end cameras in the >$2500 market were already 12-16mp and 2 of them already full-frame, and the M8's high-ISO noise was already behind Canon at least, and then it was discovered it has to have IR filters on all lenses, and then it was discovered that wide-angles need coding or added software correction for cyan drift...and yet, Leica went on to sell something like 20,000 of them so far.
 
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