Archived posting to the Leica Users Group, 2011/06/13

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Subject: [Leica] Leica prices (formerly M9)
From: lrzeitlin at (Lawrence Zeitlin)
Date: Mon, 13 Jun 2011 23:06:08 -0400

have you ever been to a sale at an antique shop?

They tend to work the same way as Leica - they up the
prices to make the stock sell better.

- - - - - -
In marketing speak this is called "inverse price elasticity." Normal price
elasticity implies that when the price of a product is reduced demand and
sales go up. Certainly this is the case for most consumer items. But there
is a group of products where the prestige of the product is more important
to the consumer than the actual quality. Included in this group are
cosmetics, wines, designer clothes, jewelry. fine arts, antiques, and of
course Leica cameras. The main determinant of prestige is price. The more
expensive the item, the better and more prestigious it is deemed to be.
Raising the price often acts to increase the perceived value, and, at least
for affluent consumers, increase the demand.

Years ago I consulted with a several firms in the cosmetics industry. The
ingredients of lipstick, no matter what the price, are mostly the same, a
stiff greasy base, pigments, and scent. With the exception of the case, the
contents of a tube of lipstick cost about a nickel to make. Yet the retail
price of lipstick varies over a 100 to 1 range. And in department stores the
expensive brands far outsell the cheaper ones. "It costs more but I'm worth

My son in law owns a wine shop in an upscale suburb of Washington D.C. He
tells me much the same story about the relationship of wine quality to
price. Is a bottle of wine really worth the cost of a Leica M9? Some sell
for as much.

My wife sells paintings in a New York Gallery. When a painting doesn't sell,
the owner marks up the price. Visitors to the gallery say "That painting
only cost $3000 a week ago. Now the price is $4000. I better snap it up
before the price rises again."

Ans so it is with Leica. There is precious little objective evidence that a
Leica is a better camera than one substantially lower in price. (See the
current Pop Photography comparison of the Fuji X100 and the Leica X1.)
But the higher Leica price adds prestige to the product and increases demand
among those who feel that "they are worth it."

Viva inverse price elasticity. It has kept Leica alive.

Larry Z

Replies: Reply from jayanand at (Jayanand Govindaraj) ([Leica] Leica prices (formerly M9))
Reply from mark at (Mark Rabiner) ([Leica] Leica prices (formerly M9))