Archived posting to the Leica Users Group, 1997/08/03
[Author Prev] [Author Next] [Thread Prev] [Thread Next] [Author Index] [Topic Index] [Home] [Search]>>The high price further drives down sales volume, forces more service cutbacks, resulting in either another round of price increases, or panic-driven rebate programs.<< Chuck the CPA, Lower profit margins certainly can and do result in service cutbacks (as well as R&D cutbacks and other cutbacks) however, no economic theory will support lower demand resulting in higher prices. The price only stays high if the demand continues to be high in spite of the lesser service, quality, etc. Now why would demand stay high for an inferior (to Contax) product? Also, I seriously doubt the rebate program is the result of any sort of panic. Do we know any other well-known camera manufacturers who have rebate programs (might be easier to name those that don't) These rebates are simply a function of the change in exchange rates between the DM and Yen and others. The DM was 1.35 to the US $ two/three years ago. It is now 1.85 to the $--almost a 50% devaluation vis a vis the $. At $2795 (ignoring dealer mark-up for simplicity) Leica was getting 3,773 DM three years ago, at $1995 they are getting 3,690 DM now. As far as the Germans are concerned the price hasn't changed in three years. If they are less efficient, the margins go down (and perhaps service etc., ),but not because their prices are too high, but because they have not raised their prices to maintain historical margins.) The same holds in Japan where the Yen has gone from 90 to 120 to the $. I'll bet the Japanese cameras have actually increased in price during that period. If we don't like the price/quality/service make-up of this Leica product we shouldn't buy it. If we continue to buy it, we are responsible for ultimately determining the price. Bill another CPA - ---------- > From: Chuck Warman <cwarman@wf.net> > To: leica-users@mejac.palo-alto.ca.us > Subject: Re: SHOW ME THE MONEY! aka $3,340 > Date: Sunday, August 03, 1997 9:50 AM > > Lemme see if I've got this right: > > Leitz's low sales volume squeezes their profit margin, compelling them to > offer inferior service and overpriced (though superb) products. The high > price further drives down sales volume, forces more service cutbacks, > resulting in either another round of price increases, or panic-driven > rebate programs. > > What's wrong with this picture? > > Chuck the CPA