lens pricing: economics and engineering

[ilya80]

Originally Posted by WMBP

Nobody has responded to my question about whether Zeiss lenses are worth the money. Are they THAT much better than Pentax (or Tamron or Sigma) counterparts?

Zeiss are unique lenses, lenses with character AND history. However their prices are also based primarily on what people are willing to pay, I imagine.

JFYI, manual focus Zeiss series (ZK, ZF, etc... ) are produced by Cosina, the same company who manufactured a lot of cheap low-spec glass among its products.

Ilya.

[tr13]

OK, here is simple economy of lens production.

1) Very large portion of lens price is just production profit, and is not related to any production or R&D costs.
2) R&D is in fact not very meaningful in total lens price. R&D guys work on fixed salary and company spends almost nothing compared to other parts.
3) Two main manufacturing costs - glass and custom lens parts.

Lets dissect them.

a) "For limited glass is much better and it is hand made". No, it is not so. Glass is almost the same, price is the same for same sized glass. And they are made on same manufacturing lines as cheap 18-55 lenses glass.
b) "Hmm, then custom lens parts must cost more". No, they cost the same or even less sometimes. For plastic lenses especially.
c) "So, cost must be the same". Again, no. It is not possible in current economic.
Here are the reasons :
1) Marketing. People believe that better always must have bigger price. Whole life they find many confirmations of this theory.
2) Marketing again. You need to separate different lenses, and for most people world is kind of one dimentional with price being measurement of such dimention. See 1) :-) And people will have hard time buying worst same priced lens.
3) You must live on something. So, you must have positions with big profit.
4) Failure to sell particular lens. Normally initial production costs - setup, etc. are covered by first few thousands of selled units. If you can't sell enought, this part becomes more important.

So, here is simple question with simple answer and conclusion.
Can we have much better lens (lets take 17-70/4 without SDM) for same price as cheap 18-55 zoom, and with same small, but positive profit for Pentax?
Yes we can! ( :-) ) With same number of produced lenses all other costs involved will take no more then 5% of production costs. And this is really insignificant.
How to fix this? Only working solution is that you must educate people and tell them that knowing prime cost and knowing real profit is much better then endless talks about demand-offer models and marketing gimmicks. And I really hope that future US ecomonic disaster could open your eyes on this simple fact.

[Pigeon]

Originally Posted by tr13

a) "For limited glass is much better and it is hand made". No, it is not so. Glass is almost the same, price is the same for same sized glass. And they are made on same manufacturing lines as cheap 18-55 lenses glass.
b) "Hmm, then custom lens parts must cost more". No, they cost the same or even less sometimes. For plastic lenses especially.


And I really hope that future US ecomonic disaster could open your eyes on this simple fact.

Actually you are wrong. Fast lenses use larger glass elements with higher precision of manufacturing. They use special glass and they use a lot of it. These lenses really heavy. The same right for the frames. Why do you think these lenses have better resolution and lifetime if they manufactured on the same lines?

Does the economic disaster in Russia improve price of Pentax lenses?

[Rich_A]

I'll offer a slightly (okay, totally) non-scientific / economic explanation...

The cost I'm willing to pay for a lens is directly proportional to the width of my smile when removing it from my bag.

Case in point. Every time I twist on a Limited lens, I just feel a little ray of sunshine in my heart.

[tr13]

Originally Posted by Pigeon

Actually you are wrong. Fast lenses use larger glass elements with higher precision of manufacturing. They use special glass and they use a lot of it. These lenses really heavy. The same right for the frames. Why do you think these lenses have better resolution and lifetime if they manufactured on the same lines?

Does the economic disaster in Russia improve price of Pentax lenses?

At first, we have no economic disaster :-) We are on a balcony of realtime opera spectacle, looking at you.

And as of glass prices. Read my statements carefully.
Larger glass cost more, but not much (slightly more then weight increase).
If it was the case then 70-300mm lens must cost much more then 18-55mm, as I disassembled both, I can say that first have more then twice amount of glass :-).
"Higher precision of manufacturing" is just nonsense. On today automated lines glass is made not by hand and tolerances are pretty tight (only really crucial medic and large space related optics require high rejection rate). Same for "special alignment" of mass-produced lens. Most of this can be heard from people who never disassembled any lenses.

And as for special glass. Yes, price is higher, but not very much. It is still glass, but with added elements that change refraction.

[Class A]

As some have already indicated some of the pricing can be explained by the "Gucci principle". Why do you have to pay that much for an FA Ltd? Because it is expensive.

If it weren't expensive, it would be less attractive to many. You find this principle in many markets, the high-end audio market being a good example. Some amplifiers are sold for perverse sums of money, not because they contain valuable parts or have been handcrafted in low volumes. Although all of that is true as well, they are sold for insane prices because some people are prepared to pay the price. In fact, if the price were lower some people wouldn't consider the product and shop somewhere else where they can spend more money.

It is quite normal for a company to sell different products at different profit margins. The higher priced the product the bigger the margin typically is. The higher price is not just justified by higher production costs but is also a result of the company seeing an opportunity for a higher margin. Add to that that everyone in the chain between factory and customer gets a share that is proportional to the sales value and that explains the huge differences in product prices.

Now, I'm not saying that every manufacturer of a high priced product applies the "Gucci principle" to the max and/or that customers prepared to pay a lot of money for quality products are dumb. There are certainly high quality products out there which are offered for a fair price. But I also don't buy the story of expensive prices being justified by production costs alone for every expensive item there is either.