360Photography

Every time a camera is launched, our comment section is flooded with comments saying ‘it’s too expensive,’ irrespective of what the price is set at. Are all the camera makers utterly out-of-touch with reality, or is there something else going on?

I’m going to explain the three main misunderstandings that I see prompting these comments. I’m not advocating for higher prices, nor trying to suggest that manufacturers never get it wrong, but just trying to highlight why cameras are priced the way they are.

A new model is always going to cost more than the outgoing one

Prices decline with time. No matter what your pricing strategy, an older product (particularly in a fairly fast-moving marking like electronics) cannot demand as high a price at the end of their lifecycle as they can at the beginning.

This may sound obvious, but the consequence is that a new model will always look expensive compared with the model it replaces.

The D780 was launched at the same price as the D750, so is cheaper in real terms. But heavy discounting of the D750 makes the new camera look very pricey.

This is the error we most often see: ‘How can they charge $ 2200, when I can buy the old model for $ 1400?’

To which the response is: ‘How can they not?’ If you offer your new model at the price of the outgoing one, then what does its price look like, at end-of-life? Do you then have to match that price with the next generation model? That approach would end up with you giving cameras away within a couple of product generations, which isn’t exactly a winning strategy in an already contracting industry.

Prices decline with time, so new cameras tend to be released at around the same cost that the old one was launched at.	The alternative (launching to match the current market prices) is a pell-mell race to the bottom.

So cameras tend to be released at around the same prices that the preceding model was launched at. After all, camera makers are companies: they exist to make as much profit as they can. Their job is to maximize the amount of money they generate from each product.

The main exception to matching the previous model’s launch price is if the new model has been stripped-down to hit a lower price point or re-positioned to attract a different audience.

Manufacturers will occasional try to re-position a particular model, making it cheaper or more expensive, perhaps trying to make room for a new model.

The lesson in all of this is that you can better interpret a manufacturer’s intentions by comparing the price of a new model to the launch price of the outgoing model, not its depressed end-of-life price.

Of course, sometimes manufacturers will keep old models on the market at a newly lowered price (the Sony a7 II and a7R II, for instance). This makes life a little more complex but should really just focus your attention on what really matters: ‘does the new model offer enough compelling improvements to overlook the older model?’

Your country probably isn’t being ripped-off, even if the US launch price seems cheaper

The RX100 VI was launched for $ 1298 in the US and the equivalent of $ 1450 in Europe. But that’s not the whole story.

The other complaint we regularly see is that the launch price in country ‘X’ is higher than a direct conversion of the US dollar price. There are two main reasons for this.

The first is that US prices tend to be quoted without sales tax, whereas most other countries tend to include sales tax/VAT/GST in consumer-facing communications. As a results, US prices tend to look less expensive simply because the price quoted isn’t the price most people are legally expected to pay. Your local tax level may be more expensive, but that’s more likely to do with your country’s history, style of government and degree of healthcare provision and social support: none of which can be blamed on camera makers.

The second factor is that price competition varies greatly between countries. US prices tend to stay at or near the Manufacturer’s Recommended Sales Price until the manufacturer chooses to adjust it. Countries with more competition between retailers tend to see prices quickly fall away from the initial asking price: early adopters end up paying full price, but anyone buying a few months (or sometimes weeks) later, will get a much better deal.

So, although the launch price in your country may look outrageous, compared with the US price, that doesn’t mean you’ll get ripped-off. The last two times I’ve looked at buying cameras in the US and UK, I found the year-old model I was shopping for to be less expensive in the UK, even with higher local taxes. I’ll concede that this was before the pound plummeted following the Brexit vote: but again, that’s not really the fault of camera makers.

Some things are supposed to look expensive

Marketers have all manner of theories about how to price their goods, and different strategies for maximizing the amount of profit they can make from a specific product. Very few of these have much to do with the costs involved in developing, manufacturing, distributing and supporting that product. Most strategies set the price high enough to make this money back, but there are exceptions even to that.

So there’s little point looking at a product and saying ‘they’ve removed ‘x,’ so it should be cheaper,’ or expecting the price to relate in any way to your estimation of the costs involved.

For instance, a premium pricing strategy holds that it’s sometimes beneficial to price your goods so highly that you end up selling fewer than you could, but at greater profit: the high price and resulting scarcity in itself contributes to the perceived value of the product.

A premium pricing strategy holds that the high price in itself contributes to the perceived value of the product

‘That’s silly,’ you might think: ‘that wouldn’t work on me.’ But it does. Like it or not, you respond to pricing. Read through the comment section of the launch of any Leica product: you’ll see an audience dramatically polarized between ‘it’s not worth that’ and ‘if you could afford it, you’d understand.’ The same goes for luxury items, whether they be Range Rovers or Rolex watches: if they weren’t expensive, they wouldn’t have the same cachet.

This discussion is almost entirely divorced from whether the products themselves are any good (to the degree that any assessment can be entirely rational and dispassionate), it’s primarily a reflection of differing personal responses to the price.

Perceived value is entirely personal and both responses are equally right and wrong: a premium product isn’t worth its exaggerated price to the person who doesn’t care about prestige, scarcity, brand history and reputation or the degree to which something is hand-built, but it is worth it for someone to whom those factors contribute to the item feeling special, or more meaningful.

Is it worth it?

Which ultimately brings us to the question that’s really at stake: not ‘is it too expensive?’ but ‘does it appear to represent good value to me?‘

Again, manufacturers are for-profit companies. They aren’t aiming to offer the product you want at a price you want to pay: they’re trying to price it at the maximum amount you’re willing to pay.

In other words: it’s always going to be a bit more expensive than you’d like.

Articles: Digital Photography Review (dpreview.com)