Archived posting to the Leica Users Group, 2012/05/29
[Author Prev] [Author Next] [Thread Prev] [Thread Next] [Author Index] [Topic Index] [Home] [Search]If you had written that 5 years ago (maybe you did), I would agree with you. I am sure the collectors special editions kept the company afloat back then, or more-or-less afloat, they always lost money and there was much dickery on the stock market trying to keep Leica going. Since the arrival of the M9 the company has had a product that enough people want for them to be profitable, probably for the first time in over a decade. I am an engineer, and given their tiny production volumes I would -not- personally jump to the conclusion that they are ripping people off at their prices. They may be, but given the economy of scale, I would not expect the markup over cost to be as much as, say, a Nikon D800, of which they probably make more in a month than Leica's total M9 production so far. Typically, in high volume production, the production cost of an item is about 10% of recommended retail price. This is certainly the case in hifi and cars, the businesses I know. The rest of the 90% you pay is profit, amortising R&D and production tooling and marketing (probably the largest percentage for big companies) High end products generally cost quite a lot more to build than mass produced items, in terms of the component cost. The production tooling costs are much less, the tooling for production of something like the Nikon D800 will be 10s of millions, whereas the Leica tooling is probably fairly basic, but it makes the manufacturing cost per item very much different. Sophisticated die-casting tools cost a fortune, but result in castings which are inexpensive per part and require very little subsequent machining. It would be entirely possible for the main chassis casting to cost a couple of dollars if mass produced and a couple of hundred in small volume, for example. To put this in perspective, I was involved in a small volume sports car study for a wealthy enthusiast. The cost of just getting an -existing- engine, with modifications to fit his car, through the European emissions tests was ?15,000 per car. There were lots more things like that leading to an overall production cost of about ?2,500,000 per car for a production of 2000 units. The guy was a massively rich enthusiast from the financial sector. He thought he would be able to sell them for ?250,000 each! He had no idea. Anyway, do not assume that the M9 is a rip-off. There is almost certainly far less profit in it than in a Nikon D800. I would not be surprised to find that the S2 was a result of the studies for the R replacement. When likely sales volumes were taken into account, and the cost of making new AF lenses and so forth was factored in, they probably projected a break-even retail price of $15,000 or so, meaning nobody would buy one. They made a huge loss with the R8/9. Doing the costings again for MF digital and the likely sales volume probably made the S2 worth a punt. I wonder if they are making any money with it... The influence of production volume on manufacturing cost is not a factor of 2, more like a factor of 10-100. FD On 28 May, 2012, at 18:42, Steve Barbour wrote: > > On May 28, 2012, at 10:39 AM, Jayanand Govindaraj wrote: > >> In which case they will put some coloured faux leather on it, call it some >> limited edition or the other, triple the price and sell it to Far Eastern >> collectors. They know this game inside out, and it keeps the company alive >> and in the black! If you ask me it is the best way of selling surplus >> stock >> that I have ever seen. Brilliant, actually. > > until it peters out > > > (some people today can't believe that Rome used to be a great empire) > > > Steve > > > > > > >> Cheers >> Jayanand >> >> On Mon, May 28, 2012 at 11:04 PM, FRANK DERNIE >> <frank.dernie at btinternet.com>wrote: >> >>> I don't think it will ever be a collectors item. >>> I think they are putting a toe in the water to see if there is a real >>> market for their B&W camera. >>> Most people want autofocus. >>> Most people want zoom lenses. >>> Most people want to see through the lens, one way or another. >>> The market for M cameras is tiny. The market for a B&W only version would >>> be probably less than 5% of that???? >>> Maybe 1000 is more than they will be able to sell... >>> FD >>> >>> _______________________________________________ >>> Leica Users Group. >>> See http://leica-users.org/mailman/listinfo/lug for more information >>> >> >> _______________________________________________ >> Leica Users Group. >> See http://leica-users.org/mailman/listinfo/lug for more information > > > _______________________________________________ > Leica Users Group. > See http://leica-users.org/mailman/listinfo/lug for more information