[isaacc7]

I know. That's precisely why I referred to the camera world as an "elite boutique." People who are willing to pay prices that are much higher than they really need to be (and who don't see a problem with it) are the ones who encourage corporations to price their products too highly. In so doing, they both make those products unaffordable (or, at least, a very irresponsible purchase) for many other people (the same is true of the modern housing industry, automobile industry, restaurant and services industries, etc.).

See, that's the definition of subjective value. Words like "unaffordable," "too highly," or "irresponsible purchase" are just ways of saying that you don't value the camera enough to pay the price. Subjective value means that other people value things differently than you do, no need to claim some sort of nefarious plot. Yes, people that pay the prices for camera gear are encouraging companies to make things they like. That's as it should be. Nobody knows the price that cameras "should be." Companies try to guess what people want and price their camera to make some money. Clearly, none of the camera companies are gouging since none of them are unduly profitable. I think what we're dealing with here is a case of your subjective value is lower than a lot of the camera buying public

[monochrome]

How much did a Spotmaticcost new when it came out? How much would that be in today's dollars? I doubt that it would be much more than what the current k-01 goes for, and that doesn't include the ongoing costs of film and development.

A Spotmatic SP body-only cost $190 in 1964, which is about $1,395 in 2012 dollars. A K-01 body-only MSRP is $749.

[monochrome]

How much money would you and I be willing to PAY for a subscription-only Firmware update to upgrade your K-5 to Focus Peaking? Ot for that matter any other upgrade, assuming it could be done via Firmware.

[isaacc7]

A Spotmatic SP body-only cost $190 in 1964, which is about $1,395 in 2012 dollars. A K-01 body-only MSRP is $749.

Considering the lack of ongoing expenses, that's quite a bargain as compared to the Spotmatic! Even the k-5 is a tremendous bargain. Overall, I'd hasten to guess that in raw numbers, the photography hobby cost has been cut in half for typical users. Heavy shooters would save even more. That's not even considering the time spent in processing, or waiting for processing that every single roll of film had to go through. N wonder people are willing to "spend more" for the camera, even if they really aren't.

[isaacc7]

How much money would you and I be willing to PAY for a subscription-only Firmware update to upgrade your K-5 to Focus Peaking? Ot for that matter any other upgrade, assuming it could be done via Firmware.

I wish that more companies would use the kickstarter method of funding things. If they aren't sure that they'd recoup their cost, put it out there and ask for the money up front. If they don't raise enough money, nothing happens. If they do, everyone is happy!

[Welfl]

I do think you're overlooking an important factor when trying to compare prices from then vs. now. R&D is unquestionably more expensive now than in the 70's and 80's. Can you imagine a company sticking with a camera model for 4 years now? Especially the pro models?

I agree that R&D is unquestionably more expensive, but I wasn't overlooking it. It is always on my mind. In my estimation, the increased cost of R&D should be more than offset by the dramatic decrease in both labor costs and taxes in those poorer countries, not to mention by also using lower-quality materials (at least as far as lenses go where Pentax is concerned, even though they do a great job with those lower-quality materials). I also think that companies that have been in business for decades most likely have separate R&D budgets. One would think they would keep more money in those budgets than in any other, and that they would be continually adding additional money to those budgets, even if a little at a time, so that they are rarely, if ever, devoid of cash.

I can't think of a photo company that is wildly profitable. So even if, as you contend, camera prices are somehow bucking the price trend in electronics, the companies don't seem to be reaping the rewards of it.

I wouldn't know about that. I've not heard one way or the other. I will have to take your word for it.

R&D and the faster product cycle add considerably to the costs of cameras. The added costs raise the lower bound of what price a company can sell a camera for and be profitable.

I wrote the following in another thread the other day:

I guess it depends on ones point of view and business philosophy (I actually once practiced what I preach, much to my boss's/dad's initial frustration; but he later reluctantly admitted that I attracted a lot more loyal customers -- and profits -- because I sold them more for less). Pentax is definitely still making a profit on the K-5, even at $999 (since it is obviously profiting on the K-01 at $749 [since similar assembly-line costs and a similar amount of materials are involved]). That means that it was making well over $600 additional profit on each and every K-5 when it was initially priced at $1,599. Pentax may have made a lot of money on each unit at that higher price, but it certainly didn't sell as many as it would have at $999 or even $1,099. If we want Pentax to become a lot larger -- in order to compete with Canon and Nikon -- then it needs to sell lots of high quality cameras at reasonably lower profit margins than a few high quality cameras at much higher profit margins. [source]

My point about film processing costs wasn't concerning the camera companies directly, but for the price consumers are willing to pay.

I know. I understood that from the start, but I replied the way I did because our (your and my) original photography costs should not have anything to do with the prices that camera companies charge.

I'd also argue that the new Nikons and canons are now occupying the price points that Hasselblad, Mamiya, Rollei, Linhof, Sinar, etc. used to in the film days. If you go back and look, I think you'll also find that those cameras and systems could have bought you a car as well back then.

Yes, those companies were the self-defined "elite boutique" set of the old days -- just because they said so, not because there was any particular justification for it --, and they were very rare among the general population. The 35mm SLR cameras of the past were priced like the mid-level and high-end P&S cameras today (and hundreds of millions of people around the world owned them), even though they (35mm SLRs) are actually the direct ancestors of modern dSLRs, not P&S cameras; therefore, dSLRs -- at least mid- and medium-high-level dSLRs -- should not have entered the "elite boutique."

The current crop of high end products from the likes of Phase One, Hasselblad, etc. could possibly still be cheaper than what they used back in the 80's when you take things like workflow, time, and materials into consideration as well. Total cost is the key from a purchaser's standpoint, especially at the high end where it is presumed that the cameras are bought to make money.

I agree; but lots of products have been sold since the beginning of time that people use in order to make money, things such as telephones, light bulbs, lawn mowers, pickup trucks, vans, scanners, desks (and even cheaper cameras at newspapers and on web sites), etc., etc., etc., but the companies that sell them don't price them with the idea that the buyer might make a profit using them.

[Welfl]

I'm not an Apple fanboy, but it's only fair to point out that most other tech companies do this, too.

I believe you. I just don't have any experience with those other companies.

[luftfluss]

I believe you. I just don't have any experience with those other companies.

Microsoft, the key component makers like Intel, AMD, etc... they purposely reduce or disable features on products to provide differentiation.

[monochrome]

Considering the lack of ongoing expenses, that's quite a bargain as compared to the Spotmatic! Even the k-5 is a tremendous bargain. Overall, I'd hasten to guess that in raw numbers, the photography hobby cost has been cut in half for typical users. Heavy shooters would save even more. That's not even considering the time spent in processing, or waiting for processing that every single roll of film had to go through. N wonder people are willing to "spend more" for the camera, even if they really aren't.

Lenovo T410 $1199
Lightroom = $149
CS5 $1299
Canon Photo Printer = $849
My time "developing" all my images @$300 / hour (my gross revenue rate in my real job) >> $15,000

That buys a lot of film.

[Welfl]

See, that's the definition of subjective value. Words like "unaffordable," "too highly," or "irresponsible purchase" are just ways of saying that you don't value the camera enough to pay the price.

Actually, I based my "irresponsible purchase" comment on the number of people during this past week who have written (in so many words) here at PF that their present budgets were not really sufficient to allow them to buy a K-5, even at $999, yet they went ahead and did it anyway -- and they are now awaiting the wrath of their spouses when their spouses find out. I know all sorts of people who bought stuff that they could not afford and later had that stuff repossessed. Millions of Americans foolishly bought houses they could not afford in recent years (houses that are -- without rhyme or reason -- three, four and five times higher than they were in the 1990s, just because the government and banks made the loans so easy to get), and they had to abandon them. As a result, there are now millions of empty houses on the market, and too few people who are willing to buy them. My point is that lots of people do make irresponsible purchases, and the "irresponsible" part is not just a matter of a subjective opinion. I'm sure no one went to the poor house for buying a camera that emptied their bank account for a month or so, but some of them may have been irresponsible for taking money away from the necessities.

Subjective value means that other people value things differently than you do. ... Nobody knows the price that cameras "should be."

Maybe this is a business philosophy that is no longer practiced, but I remember in the "old days" (late 20th century) that most businesses seemed to use a relatively standard percentage ratio when pricing their products. I probably have the exact number wrong, but it seems that 30% (give or take) over cost was the standard markup that companies used. Yes, that was certainly a subjective standardization, but it seemed to be one that was almost universally agreed upon (there were exceptions, of course, like Hasselblad, Mercedes, etc.). Whenever I have written "too highly," "outrageously high," etc. I was referring to that (apparently former) standard, not just to my own personal subject beliefs.

I think what we're dealing with here is a case of your subjective value is lower than a lot of the camera buying public.

That could be. I'm still surprised that I paid $397 for a tiny Nikon CoolPix E4300 P&S in September 2003. A few months earlier I had paid $2,600 for a 15" PowerBook G4 laptop. I still think I wasn't in my right mind when I did that. I paid $1,699 for a 27" iMac in 2010, and I have no regrets, because it was originally $2,299.

A Spotmatic SP body-only cost $190 in 1964, which is about $1,395 in 2012 dollars. A K-01 body-only MSRP is $749.

Did you use the Inflation Calculator to come up with those findings? One thing that we might tend to forget when calculating inflation is that most people's incomes (i.e. "income inflation") has not kept up pace with price inflation. It's not even close in some cases.

How much money would you and I be willing to PAY for a subscription-only Firmware update to upgrade your K-5 to Focus Peaking? Ot for that matter any other upgrade, assuming it could be done via Firmware.

I don't know how much I would be willing to pay, but I would be glad to have that option. Considering most of the work has already been done on the focus-peaking software itself, and it only remains to adapt it to the K-5's specific architecture, I would think $5 would be a reasonable amount. I'm basing that on the prices of tens of thousands of pieces of shareware on the market. At $5 per download, times several thousand downloads (theoretically), that would be a nice little profit for Pentax (with zero overhead costs that I can think of). Or, at the very least, Pentax wouldn't lose any money.

[isaacc7]

I guess it depends on ones point of view and business philosophy (I actually once practiced what I preach, much to my boss's/dad's initial frustration; but he later reluctantly admitted that I attracted a lot more loyal customers -- and profits -- because I sold them more for less). Pentax is definitely still making a profit on the K-5, even at $999 (since it is obviously profiting on the K-01 at $749 [since similar assembly-line costs and a similar amount of materials are involved]). That means that it was making well over $600 additional profit on each and every K-5 when it was initially priced at $1,599. Pentax may have made a lot of money on each unit at that higher price, but it certainly didn't sell as many as it would have at $999 or even $1,099. If we want Pentax to become a lot larger -- in order to compete with Canon and Nikon -- then it needs to sell lots of high quality cameras at reasonably lower profit margins than a few high quality cameras at much higher profit margins. [source]

That is a very simplistic way of looking at production costs and profits. There isn't any reason to think that costs are constant throughout the life of a product. There is every chance that prices decrease as initial fixed costs are erased. Over time, the overall cost of producing another item starts to approach the marginal cost of producing one more item. This holds true throughout the industry. Since no one makes a product that is so superior to the competition, they have to lower their prices as everyone else does in order to move the product. At best, I'm guessing the profits are the same. What is more likely is that profits toward the end cover manufacturing costs as they get hammered by competitive products.

I know. I understood that from the start, but I replied the way I did because our (your and my) original photography costs should not have anything to do with the prices that camera companies charge.

You're still missing my point. Camera companies can charge more (nominally, in real terms they are charging less, but never mind) for the cameras because the overall purchase price has been reduced so much. There is more demand for cameras at these prices because it is still less than what they spent back in the old days. If demand for photography products has stayed constant over the years (I'm pretty sure it has increased overall actually) then the total price that consumers are willing to spend on the hobby will have stayed about the same too. It used to be that a serious photographer would spend more on film and processing than the camera, now almost all of the cost is in the initial camera purchase. That's why camera prices could go up in real terms, even though they haven't.

Yes, those companies were the self-defined "elite boutique" set of the old days -- just because they said so, not because there was any particular justification for it --, and they were very rare among the general population. The 35mm SLR cameras of the past were priced like the mid-level and high-end P&S cameras today (and hundreds of millions of people around the world owned them), even though they (35mm SLRs) are actually the direct ancestors of modern dSLRs, not P&S cameras; therefore, dSLRs -- at least mid- and medium-high-level dSLRs -- should not have entered the "elite boutique."

Once again with the "shoulds." Nobody knows what "should" be the case in camera manufacturing. You are talking in nominal terms again. In real terms, modern cameras are less than they were back then.

I'll say this though, those cameras were not self-defined elites, they were primarily aiming at the professional markets in a variety of fields ranging from portraiture to weddings, to landscape. Did you ever work in the camera industry? I sold gear from 8 years during the transition from film to digital. Hasselblad, Rollei, Mamiya had their own cost structure and demands that were far different from the mainstream. Yes, you don't think they "should have" cost what they did, but the volumes they sold in and the quality expected coupled with the demand from the end users determined the sales price of the cameras. As it turns out, the prices were as the should have been.

I agree; but lots of products have been sold since the beginning of time that people use in order to make money, things such as telephones, light bulbs, lawn mowers, pickup trucks, vans, scanners, desks (and even cheaper cameras at newspapers and on web sites), etc., etc., etc., but the companies that sell them don't price them with the idea that the buyer might make a profit using them.

Missing the point again. People that buy specialized things to make money with them will be willing to pay more if they see the potential profitability. Companies cater to professionals in every field. It wouldn't take too much digging to find light bulbs, lawn mowers, pickup trucks, scanners, desks, and even pencils that are made for industrial and professional usage. Yes, they cost more to make, but the reason that they are made at all is because there is a demand for them. It is the intersection of cost+profit and demand that determines what things cost. There is no such thing as what things "should cost.

[Welfl]

Microsoft

I would (and usually do) believe anything negative about Microsoft.

[isaacc7]

Lenovo T410 $1199
Lightroom = $149
CS5 $1299
Canon Photo Printer = $849
My time "developing" all my images @$300 / hour (my gross revenue rate in my real job) >> $15,000

That buys a lot of film.

But your computer is a general use device, you would own it regardless. Pricing your labor at your hobby the same as your job isn't really all that realistic. But even still, would you spend more or less time in a darkroom? Unless you re actually giving up income in order to do your hobby, I still think you're coming out ahead with digital

[isaacc7]

Actually, I based my "irresponsible purchase" comment on the number of people during this past week who have written (in so many words) here at PF that their present budgets were not really sufficient to allow them to buy a K-5, even at $999, yet they went ahead and did it anyway -- and they are now awaiting the wrath of their spouses when their spouses find out. I know all sorts of people who bought stuff that they could not afford and later had that stuff repossessed. Millions of Americans foolishly bought houses they could not afford in recent years (houses that are -- without rhyme or reason -- three, four and five times higher than they were in the 1990s, just because the government and banks made the loans so easy to get), and they had to abandon them. As a result, there are now millions of empty houses on the market, and too few people who are willing to buy them. My point is that lots of people do make irresponsible purchases, and the "irresponsible" part is not just a matter of a subjective opinion. I'm sure no one went to the poor house for buying a camera that emptied their bank account for a month or so, but some of them may have been irresponsible for taking money away from the necessities.

I'm going to avoid the house thing as that's a really big mess, cameras are so much simpler Any pool of purchases of any product by consumers will have a certain percentage of them turn out badly. That's the nature of buying things that one wants. It isn't clear what Pentax could do to make end users more responsible...

Maybe this is a business philosophy that is no longer practiced, but I remember in the "old days" (late 20th century) that most businesses seemed to use a relatively standard percentage ratio when pricing their products. I probably have the exact number wrong, but it seems that 30% (give or take) over cost was the standard markup that companies used. Yes, that was certainly a subjective standardization, but it seemed to be one that was almost universally agreed upon (there were exceptions, of course, like Hasselblad, Mercedes, etc.). Whenever I have written "too highly," "outrageously high," etc. I was referring to that (apparently former) standard, not just to my own personal subject beliefs.

You seem to be under the impression that things that are higher priced automatically have more profit in them. Economies of scale, different labor costs, support, and R&D all eat into overall profits. Bigger companies can be more efficient, smaller companies will have to charge more per item to get back to the percentage of profitability that larger companies have. Companies like Hasselblad, Leica, Sinar, and even Apla were hardly awash with cash. Different products with different markets have to charge different amounts in order to achieve the profitability that they need. There's a reason that Leica has gone bankrupt several times and why Hasselblad has been bought out, they didn't make enough money despite charging more than other companies.

Did you use the Inflation Calculator to come up with those findings? One thing that we might tend to forget when calculating inflation is that most people's incomes (i.e. "income inflation") has not kept up pace with price inflation. It's not even close in some cases.

You don't need to account for incomes when adjusting nominal values. We all know what $200 is worth to us today no matter how much or little we make. The inflation calculator is about equalizing nominal costs, not purchasing power. The accuracy of these calculators is a whole different kettle of fish.

[Welfl]

That is a very simplistic way of looking at production costs and profits. There isn't any reason to think that costs are constant throughout the life of a product.

I agree. I wasn't implying that prices should never rise as costs increase (due to inflation, taxes, gas prices, etc., etc.). I just FEEL (let me point that out in advance this time) that companies would be more successful if they didn't always charge as much for their products as the market (or that portion of the market with money to spare) will bear. As I wrote before, I may be way out of touch with reality on this topic, but it doesn't seem like it. You are clearly right on some of the things you've written (and maybe some others that I couldn't understand), and I think I am right on some of the things I've written. Sometimes insiders (or those supporting them with honorable intentions) are so caught up with the trees that they don't see the entire forest from the outside, and outsiders don't know the details regarding each tree since they haven't seen things from the inside. Both perspectives have validity, though. The problem is that it would take till the end of time to discuss this in written form via the internet, and I'm burning out.

There is every chance that prices decrease as initial fixed costs are erased. Over time, the overall cost of producing another item starts to approach the marginal cost of producing one more item. This holds true throughout the industry.

I agree with the first sentence, but I will have to take your word for the rest of it.

Since no one makes a product that is so superior to the competition, they have to lower their prices as everyone else does in order to move the product.

And that is as it should be.

At best, I'm guessing the profits are the same. What is more likely is that profits toward the end cover manufacturing costs as they get hammered by competitive products.

I've thought about that with regard to the K-5, and you could very well be right. I actually anticipated that sort of reply the other day, but it never came. That's why I compared the K-5 to the K-01 -- as far as the labor costs, assembly-line costs and relative amount of material and technology that goes in it is concerned. If the K-01's initial price is $749 (body only), then Pentax-Ricoh must think they are making a fairly decent profit over and above their manufacturing costs.

It used to be that a serious photographer would spend more on film and processing than the camera.

Very true. This is why I will always regret that digital cameras (and the computers that must go with them) didn't exist at least 40 years ago. I was forced to be extremely conservative with regard to what I photographed due to film and developing costs. I was set free by digital. But I don't think (yes, my feelings again) that my being set free should be part of the cost of a camera, since my freedom didn't cost the camera companies anything. The labor (both assembly line and corporate labor), materials, R&D and other manufacturing miscellany is all I should be charged for.

Welfl: therefore, dSLRs -- at least mid- and medium-high-level dSLRs -- should not have entered the "elite boutique."

Once again with the "shoulds." Nobody knows what "should" be the case in camera manufacturing.

Yes, that was definitely my personal opinion, but it was based a on trends, not just on my feelings. Old-fashioned film P&S cameras (such as Kodak 127s and 110s and Polaroids) were replaced by ultra-cheap digital P&S cameras. Certain 35mm P&S cameras were replaced by bridge cameras (wild theorizing there). 35mm SLRs were replaced by dSLRs (APS-C and FF). High-end Hasselblad, Pentax 645N, Mamiya, Rollei and Leica film cameras were replaced Hasselblads, Pentax 645Ds, Mamiyas and Leica digital cameras. Looking at that trend, one could see the logic in thinking the higher quality dSLRs (like the K-5) would remain at the amateur, enthusiast and newspaper level (just as the 35mm cameras were), at least as far as pricing goes.

With regard to the rest, we'll just have to agree that we see things differently. We both have some valid points (or so I would like to think). I would love to go on until we come to an understanding, but I'm really tired (I can't find a tired emoticon, so just assume my eyes are closed behind these glasses ).