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

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Subject: [Leica] Leica prices (formerly M9)
From: pklein at threshinc.com (Peter Klein)
Date: Mon, 13 Jun 2011 22:10:17 -0700

Darn it, Larry. :-)  Looks like I'll never afford an M9. Whatever I can 
possibly afford, the price will have to be jacked up that much higher 
for the cachet to be maintained.  I hope my M8 lasts a long time.

I was under the mistaken impression that a Leica was a photographic 
tool, not just a status touchstone for people who make gazillions more 
than I ever will.  I'm glad Leica is staying afloat. But I guess in 
their scheme of things, I'm not a real customer, just a bottom-feeding 
social climber.

My question is, what about photographers? I guess we'll have to do what 
we always have--buy mostly used, and hope that the bloody collectors 
don't price us out of that market.

(This is just my mildly grumpy way of complaining about the particular 
"reality tunnel" you've described. No personal invective intended or 
implied).

--Peter

- - - - - -
 >    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
 >    it."
 >
 >    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 hopsternew at gmail.com (Geoff Hopkinson) ([Leica] Leica prices (formerly M9))
Reply from mark at rabinergroup.com (Mark Rabiner) ([Leica] Leica prices (formerly M9))