M8's true cost?

[marknorton]

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There are two types of photographic items - tripods and bags - where even this die-hard internet buyer goes to a store. I find it impossible to gauge how these will be without handling them. I could buy them online but we don't have the same return-on-a-whim culture that you do in the US.

 

Fortunately I have a photo dealer near me (for those in the UK: Morris Photographic, Chipping Norton) who specialise in bags and tripods so it's easy to go hands on - and may explain why I have so many bags. My partner has shoes, I have photo bags.

[jaapv]

There again, Mark, Europe differs from the USA. In our small country with 15 million inhabitants there are at least eight authorized Leica dealers, none of them more than a two hours dirve away for me.

[Guest tummydoc]

 

As far as margin... while I'm sure Leica wouldn't really like me to share this info I can tell you that it is certainly not what you'd expect. The camera retail business has very slim margins all around. As I say, we aren't selling ipods and Xboxes here. There are no quantity breaks or incentives like in the consumer electronics business. I can say this, on Nikon and Canon lenses that we sell, our maximum markup on any lens is 10%.

 

Several local camera dealers told me the same thing but I can buy the same Nikon and Canon lenses from B&H (USA, not gray-market) for 15-20% less, even before sales tax comes into the equation. Obviously those companies must give quantity breaks, though perhaps not at quantities small camera stores are prepared to buy. Whether or not Leica offers such quantity breaks is moot, because even for a giant like B&H their potential sales volume for Leica is tiny compared to Nikon and Canon.

[carstenw]

Something I find very difficult to understand is why in the US market price increase is 500 USD and in European market 600 Euros (830 USD)

 

Maybe the American market is more sensible to price increase, but making the European consumer paying for the bad situation of the US Dollar it's not the solution IMHO.

 

I was talking a couple of days ago with the owner of "La maison du Leica" in Paris and he was very upset for the price rise.

 

Well we'll see what happens!

.

(sensible means reasonable in English; yes I know, that is different than French, German, and perhaps Spanish; sensitive is the right word)

 

It may not be nice to raise prices in Europe more, but it may still be a solution for Leica. The American market is hyper-sensitive to price levels, to the point where crossing certain thresholds can kill product sales. Just look at American ads, where prices are usually the primary focus, whereas in European ads it is lifestyle. Europeans perhaps complain a lot, but in the end if they want something, they are more willing to pay a lot, in general. The States is a really large and important market for many European companies, and killing off the sales with too-high prices is not possible.

[ArtZ]

(sensible means reasonable in English; yes I know, that is different than French, German, and perhaps Spanish; sensitive is the right word)

 

It may not be nice to raise prices in Europe more, but it may still be a solution for Leica. The American market is hyper-sensitive to price levels, to the point where crossing certain thresholds can kill product sales. Just look at American ads, where prices are usually the primary focus, whereas in European ads it is lifestyle. Europeans perhaps complain a lot, but in the end if they want something, they are more willing to pay a lot, in general. The States is a really large and important market for many European companies, and killing off the sales with too-high prices is not possible.

 

Oops, sensitive!

 

I'm not so sure about that. I would agree with you concerning Russian and Chinese people. Most of my friends are well off (sollicitors, engineers, show bizz...) and when they see me with my M8 they think it's a lot of money for a camera.

 

When I came back from holidays, I was invited for lunch to a very "chic" restaurant in Paris. A couple of very well known lawyers and their son. I had taken some pictures before at Musée de Branly and I wanted to take some pictures of Enguerran (my friend's son). Both of my friends love photography and they're good amateur photographers. When they saw the M8, they loved it. They would like to buy one... until they new the price.

 

Maybe in Germany is different but I can tell you in France people are price sensitive.

.

[carstenw]

Sure, here too. Most of my friends think I am nuts. But the fact is that luxury items sell easier in the middle layers of European society than in the middle layers of American society. The upper layers may be another story.

[Printmaker]

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The American market is hyper-sensitive to price levels, to the point where crossing certain thresholds can kill product sales. ... The States is a really large and important market for many European companies, and killing off the sales with too-high prices is not possible.

 

Let me take a moment to thank my Europian brothers and sisters. With the dollar vs euro at such a low point. Leica is obviously subsidizing the American market right now. This might have something to improving their economies of scale and generating cash flow. However, at some point every company has to make a profit. We Americans may complain but we should be paying around $5,500 to $6,000 for the M8 to be on par with the rest of the world and to let Leica make a fair profit. But at $6,000, Leica will be selling a lot of Canons and Nikons because even $5,000 is over the price point of most nonpro American photographers. Most pros think twice before purchasing a tool with such a limited purpose.

 

So, thank you for supporting our habit!

 

Tom

[carstenw]

You are welcome *grumble grumble*

[Philinflash]

While the final assembly of the M8 is in Germany and hence in the Euro zone, a great deal of its content is sourced outside of the Euro zone; it is paragon of the application of international technology. Therefore, it might be difficult for the those of us who do not have access to Leica's books to divine the extent to which foreign exchange dynamics influence the street price of the M8.

 

My guess would be that Leica's retail pricing policies are driven more by marketing considerations than by costs.

 

Philip Kozloff

[Eoin]

Personally speaking, I thinks it's appalling that goods manufactured and sold in the EU are more expensive than the same goods exported and sold stateside. Furthermore goods manufactured in Japan and exported to both zones still show this difference. For so long now I've watched with envy how our American brethren seem to have more bang for the buck than we do for the euro. Not surprising one is tempted even more now that the $ to € is 1.40 to trawl the B&S forums for that little gem that here you'd pay an arm & leg for.

[marknorton]

That's why, of the 12 lenses I've bought in the last 15 months, 2 were 30% discount lenses, 1 was secondhand off ebay and the remaining 9 came from Hong Kong. Sadly, that source of supply has pretty much dried up.

[bayerische]

Really? It induced you to buy one straight away

 

Well, I was interested in the M8 from the beginning, naturally since I was a M user, however when all kinds of "problems" arouse, I wanted to wait. I planned on buying one in USA, due to the great advantage in EURO-USD, and "smuggle" it trough the Finish customs. I would have saved aprox 700euro in buying the M8 in the USA. Man! My airplane ticket would have been FREE! However, when I heard of the increase in price the whole idea of buying overseas was not that attractive anymore. So I phoned my local Leica dealer right away, and I was lucky to get a cancelled black M8! I ofcourse paid 4200euro instead of the aprox 4950USD price that would have transformed as of current into aprox 3520euro...

[Philinflash]

.... Leica is obviously subsidizing the American market right now.

...

 

Tom, I don't think Leica would even make the camera if it weren't sold in the US. Without the potential numbers of units that might be bought there, the economics won't work out. This goes for many other high-end made-in-Europe products like some of the stuff we drive.

 

Philip Kozloff

[luigi bertolotti]

I think that a significant part of the industrial cost of M8 body is in US$ : Kodak CCD by sure, and electronics components from Far East are tipically priced in US$ no matters the country of origin (I know this well directly from my business... I bought components and subassemblies from Hong Kong, Taiwan, Japan, Korea... in Europe they sell in dollars); I wonder if it's the same for the shutter assembly too... does someone of us know where it come from ? I do not remember to have read something about, but this forum is full of knowledge... surely someone knows it.

[jlancasterd]

I wonder if it's the same for the shutter assembly too... does someone of us know where it come from ?

 

I believe that the shutter is made by Seiko - and that it's basically the same unit as that for the R8/R9

[ho_co]

Mark Norton's "Anatomy of the M8" thread showed that the shutter is made by Copal. Leica must have stayed pretty closely tied to that company since the development of the CLS (Copal-Leitz Shutter) in the R3. (Possibly also a variant of the shutter in D200 et al?)

 

Hey, compadres of the euro: Let's not hear complaints about what you pay for Leica.

 

Once I buy this supposedly 'cheaper in the US' equipment, it costs me quite a bit more to visit Venice or Sofia or Madrid and use it than it does you, in both time and money.

 

So count your blessings that you live where you do, and leave me the pleasure of feeling that I got a bargain on my Leica lens because I paid in dollars, okay?

 

--HC

[luigi bertolotti]

...hmmm...Copal... this explains why so many Leicaphiles hereby insist on how fine would be to have the old cloth shutter on M8... ... another piece of Leitz history that has gone away forever...

[jaapv]

Personally speaking, I thinks it's appalling that goods manufactured and sold in the EU are more expensive than the same goods exported and sold stateside. Furthermore goods manufactured in Japan and exported to both zones still show this difference. For so long now I've watched with envy how our American brethren seem to have more bang for the buck than we do for the euro. Not surprising one is tempted even more now that the $ to € is 1.40 to trawl the B&S forums for that little gem that here you'd pay an arm & leg for.

 

Our governments pocket about 20% VAT.The USA is different....

[Printmaker]

Give us 2 years to clean house and another 2 to repair our fences. Then the dollar will be back strong as ever. Until then, be patient with your long lost cousins- after all we're buying your products. Does it really matter if Leica makes a 30% profit on Europian sales and only a 20% profit on American sales? What is important is that the company survives and continues to make great cameras and lenses. Hell, I know I'll want a M9 a few years from now.

 

Tom

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Hallo,

Look here: Leica M

[ho_co]

Howard- the contactual situation is different in Europe. It is very hard for a dealer to sell below list=price - he risks losing his dealership.

 

Jaap--Thanks for the reminder! The poster I was trying to answer was confusing "list price" and "minimum advertised price."

 

Several people here have mentioned how Leica priced in the US in the 60's, 70's and 80's. I worked for Leica for about ten years during that period, and today have contacts in the company. In those years, Leica had a "list" and a "net," i.e. dealer cost. The company didn't do a good job of protecting its markets. Some dealers did apparently get price breaks that others didn't. We salesmen were told by the company that that didn't happen, but other sources confirmed the practice.

 

Since then, Leica has greatly changed its pricing policies. Today there's still a "list" price, but no one speaks of it. Instead, there is a "MAP," a 'minimum advertised price.' Leica cannot legally refuse to sell to someone for selling at any price that the dealer sets. However, Leica can contractually bind a dealer not to _advertise_ below a certain price.

 

Thus, I might legally advertise an item at $100, but then sell it for $90 when you walk into the store. Of course, I'm not that dumb. If I know that no one else is advertising the item for under $100, I have no incentive to cut the price to make the sale. It's kind of a backdoor way to get the same control without breaking the US law.

 

That's my understanding of how those matters work today; but my personal knowledge dates to the 60's, 70's and 80's.

 

To my knowledge, the personal purchase price mentioned by several above as 50% off list for a camera and normal lens is no longer applicable. Instead, there is a much lower percentage reduction off MAP, and on some particularly desirable items (Digilux 2 immediately after its introduction comes to mind) the company sets a special employee price--not a relation to any fixed price, but just a "Yes, for personal use, your price is $xxx." That figure is usually higher than the standard calculation of personal purchase price.

 

I don't know how well the company is doing, but I know they have made major improvements in rearranging the pricing structure to give smaller dealers a better shot at closing the sale, and I applaud their management for that fact.

 

--HC