Archived posting to the Leica Users Group, 2004/09/25
[Author Prev] [Author Next] [Thread Prev] [Thread Next] [Author Index] [Topic Index] [Home] [Search]You may well be correct when you state that a company selling a product at cost is losing money - but let's get real here for a minute: Leica has been losing money on the R for several years; so apparently they're willing to take some losses. As I said, I may be way off on this, but I think selling the digital R back at cost would definitely make it what is called a loss leader - take a loss on a given product inorder to bring customer into the store to sell other merchandise at substantial markups. ;-) B. D. -----Original Message----- From: lug-bounces+bdcolen=earthlink.net@leica-users.org [mailto:lug-bounces+bdcolen=earthlink.net@leica-users.org] On Behalf Of Eric Sent: Friday, September 24, 2004 7:26 PM To: lug@leica-users.org Subject: [Leica] Re: new 1ds mark II B.D.: >I realize that there are development costs, etc. But I wonder...What do >you suppose would happen if Leica offered that back at cost? That's >right - at cost? Let's suppose that the back COSTS $1500 to produce. >Suppose they sold it for $1500, which would allow any Leica R owner to >get into high quality digital for $1500. And would allow anyone else to >get into high quality digital AND Leica for the $1500 plus the cost of >a used R8...How many R bodies would Leica then sell? How many R lenses? >I'm no business man, but I'll bet they would make allot more money in >the long run selling that thing at cost, bringing new Leicaphiles into >the Leicatent than they'll ever make selling it at 4K plus... If a company sells a product at cost, it's losing money. You can't break eve by selling at cost. There are costs for transporting and storing product. There are warranty costs with fixing bad units. There are personnel costs in selling the product. Leica isn't a large company. If they start losing money on every sale (but make up for it in volume! :), they're going to be in trouble. Ok...so let's give them some padding to account for their costs of selling the product, but don't give them any profit. Next, the dealers need to make a profit. Pretty soon, even without amortizing R&D costs and still without making a profit on the initial investment, the price of each back is going to be over $3k...assuming it costs $1500 to make. Perhaps the digital back could be bundled into a package so that Leica and the dealers make an overall profit, but the package could be cheaper than buying the pieces individually. That's still not going to be price competitive with Canon's offerings. While I'd love to be able to pay $1500 for a back to make my M digital, I don't see it happening anytime soon. And based on the problems the initial M6TTL models had with batteries draining, I'm not going to be the first to get in line to buy a high-tech product from Leica. Their glass is wonderful beyond question. They have not proven themselves to be capable high-tech engineers. I'm hoping that changes. I'll get out of line and let others go first, though. :) -- Eric http://canid.com/ _______________________________________________ Leica Users Group. See http://leica-users.org/mailman/listinfo/lug for more information