New Purchase after Price Increase?

[DerekF]

To my knowledge there is NO Canadian importer of Leica and everything is done through Leica USA. If this is true, my guess would be that the prices here on dealers shelves will increase also.

Ouch. One more reason for the remaining local dealers to rid themselves of new Leica gear, I think. Spending $4,000 on a new Leica really makes no sense unless it's made of gold. (Of course, most sane individuals would question the wisdom of spending even half that amount only on a new rangefinder camera body.. )

On the other hand, one of the only Canadian mail order sites that I've found which stocks new Leica gear is still listing its prices at pre-July 1 levels (which were very expensive to begin with!), so I guess time will tell whether us Canucks are truly in for a similar pricing increase...

 

[sgy1962]

It looks like most of the internet dealers have raised their prices accordingly.

I have not object to a price increase. I don't think it will help sell anything, but Leica's got to do what they feel they have to do.

The one thing I find strange is the new policy here in the states which forbids retailers from selling below MSP. For the life of me I can't understand that policy. If a retailer wants to cut it's profit a bit to stimulate sales, here or anywhere, then how does that hurt Leica or the importer/distributor? I would think the converse would be true -- more sales, which would be good for the manufacturer. No one has been able to articulate the rational behind this policy.

And it is this policy -- just because I believe it is so stupid -- which will prevent me from purchasing any new Leica products. Sorry for the rant.

Anyway, in the last month I came across a small dealer who was liquidating his Leica stock ("because it did not sell") at dealer cost, and I picked up on another body and lens. I have enough now to last me until there is no more film or processing becomes a hassle.

 

[phototone]

The one thing I find strange is the new policy here in the states which forbids retailers from selling below MSP. For the life of me I can't understand that policy.

There is no "law" that forbids retailers from selling below MSP. There is only the requirement that they do not ADVERTISE a price below MSP. Big difference.
Here in the USA it is UNLAWFUL to force a retailer to keep to a price, however the distributor could pull a dealers "dealership" if he advertises below a certain price.
That is why in many camera ads for new equipment (such as found in magazines), you will see "call for price" for many items.

Have you spoken over the telephone to any Leica dealer to get their bottom dollar price?

 

[Matthew]

Maybe I'm not as upset as others because I've got the Leica gear I need for the moment, but the price rise in the US just brings the prices here into line with European pricing. Is there something essentially wrong with wanting your goods to have similar prices in similar economies around the world? Just wait until gas prices here reach the level of Europe's $6 per gallon.

 

[zeos 386sx]

Matthew's idea that Leica is trying to equalize prices worldwide for its products got my interest. In another thread we were talking about the Oskar Barnack Edition Camera and I remembered seeing a price list for the different countries. Using an online currency converter shows Leica's prices for that camera range from 2765 Euros in Malaysia to 3428 Euros in Australia. That is Leica advertising prices for one of its own products. Not much consistancy there.

 

[Matthew]

My assertion that the increase was to equalize bring pricing in line with Europe was just something I'd gathered from the Leica forum. I just did my own price search and found the following approximate prices for a new M7: US $3300, UK $3560, Germany $3800, New Zealand $3600. I found a Hong Kong dealer listing one for $2600, but that's the odd one--don't know about the warrantee, etc.

I may have been wrong about the reasons for increasing prices and even with the new prices the US price is still lower than in most of the world.

 

[zeos 386sx]

It's my understanding that the U.S. and Japan (Asia?) are Leica's largest markets. That may be the reason for the lower prices in those markets.

Why do the Germans have to pay a premium for a camera made by a German company? That must hurt...

 

[sgy1962]

Phototone -- Unfortunately, you're wrong. The dealers are telling me that if they sell below MSP, then Leica USA, the distributor/importer, will no longer sell them new Leica products. Someone who has actually seen the new dealer agreements has posted that this is consistent with those new agreements.

Mathew -- Nothing is wrong with equalizing prices world wide. I would have thought, however, that it would have been a better strategy to reduce prices world wide to the HK level. It's an economic fact that if your goods are priced too high, then they will not sell. That's not the consumers problem; that's Leica's problem.

In my opinion, to stimulate sales in film bodies, Leica should have reduced prices on these items. Even before the recent price increase, Leica's prices had reached the glass ceiling. What you will see is that a more moderately priced film camera, such as the Zeiss Ikon or the used M6 market, will and do sell well. This proves that the demand is still present, but not at $2500+.

I think this would have been a good idea, because Leica will not be relying on it's film body sales much longer. I think it will have some new digital products on the near horizon. By reducing prices, Leica would at least get some cash flow to fill the gap.

 

[zeos 386sx]

According to their press release, Leica has 42 million Euros tied up in inventory. They want to reduce that inventory to get cash out. I haven't heard anyone give a good reason why raising prices/stabalizing prices/whatever helps to do that.

However, I have to believe that this move is tied to that inventory. Is it possible that the creditor banks or auditors are insisting on this as a requirement of the restructuring agreement. There was mention about Leica's inventory not being properly valued.

Market realities don't seem to be setting the prices for Leica's products. Maybe the legalities surrounding its restructuring are doing it...

 

[Matthew]

Does anyone know the actual costs of manufacturing a Leica M? How much money is made by Leica off each sale? I've heard that each camera takes ten hours to make, but have never seen anything official about this. What about materials, labor, etc.?

If the goal of the company is to reduce excess film inventory to build funds for anticipated digital releases, then certainly increasing prices doesn't seem to make much sense.

 

[Nikon Bob]

If it is anything like the industry that I work in, the cost of raw materials, power to manufacture and taxes in general have a far greater influence as cost factors per unit than does labour costs. There is no arguing that labour costs contribute, but it seems that there is a fixation on that one area alone in relation to what it costs to produce a product. The quick fix would be to move to a country that has lower overall costs and that is being done in great numbers already. Only Leica would know the actual cost of building per unit and the profit they derive from sales.

Bob

 

[zeos 386sx]

Hermes has already recommended moving production to the Far East. I think Hermes would rather see Leica Solms just do repair work and design.

I was a bit surprised by Spichtig's emphasis that "production and logistics" reforms "would not endanger 'Made in Germany' manufacturing".

There seems to be a serious push-and-pull going on among Leica's investors concerning this aspect of Leica's future.

By the way, there are a number of new press releases on the Leica website.

 

[JNewell]

a far greater influence as cost factors per unit than does labour costs

I really don't know, but I wouldn't be surprised if labor costs were a bigger factor in Germany or France? Not bashing anyone, just a hunch based on what I read in financial periodicals.

 

[phototone]

Phototone -- Unfortunately, you're wrong. The dealers are telling me that if they sell below MSP, then Leica USA, the distributor/importer, will no longer sell them new Leica products. Someone who has actually seen the new dealer agreements has posted that this is consistent with those new agreements.

Well then, Leica/Solms is breaking US law. A manufacturer cannot force a retailer to sell at a fixed price.....they can only force a retailer to not ADVERTISE below a set price.

We may see a lot of "demo" bodies sold. I would guess that a dealer that gets no sales wouldn't be interested in being a dealer any longer anyway.

 

[zeos 386sx]

Well then, Leica/Solms is breaking US law. A manufacturer cannot force a retailer to sell at a fixed price.....they can only force a retailer to not ADVERTISE below a set price.

If the U.S. distributor was breaking U.S. law by attempting to force U.S. dealers to sell at full retail then the U.S. distributor, not Leica/Solms, would be breaking U.S. law.

I find it hard to believe that Leica/Solms would attempt to force its U.S. distributor to break U.S. law. What would be the point? Leica has already shot off one of its feet by being slow to take up digital. Is it trying to shoot off the other foot by putting the Leica distributor in one of its major markets out of business?

None of this makes sense.

 

[Nikon Bob]

I really don't know, but I wouldn't be surprised if labor costs were a bigger factor in Germany or France? Not bashing anyone, just a hunch based on what I read in financial periodicals.

I think that you may find that everything is more expensive not just labour. I just meant that as a component of overall costs in a given local that the lobour component may be smaller than say the others. And there are definately cheaper places than North America for labour also. I am just saying that you have to look at all costs and just not fixate on one. When we in North America finally succeed in ridding ourselves of all those costly manufactuing jobs those cheaper products won't mean much if you have no income. There is such a thing as too much of a good thing.

Bob

 

[egpj]

I thought that the cameras would be cheaper in Germany. After all they have to pay importation taxes to ship into other countries. Strange.

 

[Nikon Bob]

I think you can find a lot of instances where goods produced in one country are as cheap or cheaper in another country even after trans ocean shipping. Just one of the mysteries of modern trade and taxes I suppose, but puzzling in an illogical sort of way.

Bob

 

[peter_n]

I believe that phototone is correct. Price fixing is illegal here in the US and I think it is in the EU as well. The Leica instruction may have to do more with the offer than the sale. Adorama has had a peculiar link in the description of many Leica bodies that reads something like "click here to get our special price" - you click on the link and submit your email address in a form and you get an emailed price that is a few hundred dollars less than the advertised price.

 

[phototone]

I thought that the cameras would be cheaper in Germany. After all they have to pay importation taxes to ship into other countries. Strange.

There is no importation duty on cameras to the USA. We have no local "camera" industry to protect anymore.