Price is the Problem?


Maybe everyone is grumpy from calculating their taxes or something, but I keep hearing the same refrain lately: "camera prices are too high." Connected with this thought is always the “the camera companies would sell a lot more product if they lowered their prices.”

Uh, sure. And they’d make a lot less profit. Oh, wait, only two of them are actually reasonably profitable to start with.

I don’t buy the “price is wrong” argument for explaining the drop in camera sales of the past few years. What is true is that customers are buying what the camera makers are selling. The perception of value gained is lower than the price being charged. That doesn’t mean that price is the problem, though. It means that the value proposition—what you gain by buying a new camera compared to using your old one—is broken.

Yesterday I posted an article about sensors and noted that sensors increment in ways where most of us can see modest improvements in our image quality every three years on average. Sometimes we get more than modest improvement, sometimes we get slightly less, but the average is a visible improvement every three years. 

That means we’ve had five or six such improvement gains over the entire history of DSLRs. Each time there’s such a gain at the sensor, a few more people will drop off into the “that’s good enough for me” realm (e.g. Last Camera Syndrome).  

Dropping price really doesn’t do a lot for this, especially once someone is above their “good enough” bar. Yes, it’ll pick up a few more sales, but again, in order to drop price, product margins will go down or costs will have to be cut completely out of the camera.

One variation of the theme is from those that don’t know how to track inflation: look at my F2, which cost US$335 at discount in 1977. That comes to almost US$1300 in today’s dollars, which is more than a D7100 costs. And the D7100 has autofocus, very sophisticated metering, rechargeable battery (with charger), a 1/8000 shutter speed in a shutter that’s more accurate, can display the image you took instantly, can output to a TV, has a built-in flash, has higher frame rates, doesn’t require additions to take more than 36 shots, and a whole host of other improvements. Is it made of all metal? No, but so what? 

Today’s cameras are bargains, historically, not “too expensive.” Moreover, I want camera companies to continue making cameras, so those companies need to be profitable and get a decent return on their R&D investments. 

But let’s adopt the strawman proposal for a moment: let’s cut ALL camera prices in half. Everything’s on sale today! Will that trigger more sales? Sure, temporarily. Now you can afford to buy a US$1600 D810 instead of waiting for a US$1600 D400 ;~). The latest US$600 D3300 wasn’t really a compelling upgrade to your D3100, but if you can get a D7200 at the same price, that seems like a decent upgrade, right?

So, yes, we’d see a surge in camera sales. And then we’d be right back where we started. What are you going to upgrade that D810 to and how much would that new model need to get you to fork over another US$1600? Do you really need something better than a D7200 after jumping up from a D3100? Unfortunately, what happens in this scenario is that you get a sudden burst of sales followed by the same malaise the industry is currently in. 

Which means that lower prices doesn’t solve the problem.

What solves the problem is “more value for the price charged.” This is where the camera makers are lost. They think “value” comes from just some more iteration: more pixels, a bit better dynamic range, better video, a few more features, and so on. The public is saying “no” to that. A rather emphatic “no” at that. 

The most valuable thing to a camera customer is time. Time to learn new gear. Time to set up new gear. Time to get files off the camera to their computer. Time to post process files and share them. Time, time, time. 

Where are the camera makers valuing the customer’s time? What have they added or changed in cameras to get us from purchase to sharing images faster? 

I’ve written for many years now that communications and programmability are the keys to future cameras. The way we solve time issues is by letting users take full control over not only how the image is captured (aperture, shutter speed, ISO, etc.), but to do so in their own chosen way, plus add the ability to get those images from the camera to where we want/need them as instantly and conveniently as possible. The camera must communicate with the rest of the digital world, and we shooters must be in control of that process from beginning to end. Not some engineer in Tokyo’s idea of what we want to do. 

I’d bet we could increase prices on cameras and still sell more if they were designed to really solve customer problems. The history of Apple is paved with that notion, yet it seems very few other companies actually understand that despite saying they’re trying to emulate it.

In 2013 the Japanese companies shipped 1.67t yen worth of product. In 2014 this slipped to 1.43t yen, a 14% drop. Those that want the camera companies to drop prices to get more sales are probably barking up the wrong tree. It’s unlikely that such a simplistic action would actually result in anything useful to the Japanese companies. They’d have to get far more than an equal gain in sales to discount. If they dropped prices 20% they’d probably need 40-50% more sales just to stay in the same position they’re currently in. Moreover, given that only two of the seven major camera companies are clearly profitable with still cameras as it is, we might end up trimming that to just one by taking the fire sale approach.

Finally, there’s this: in any competitive industry, there’s always a tendency to try to “race to the bottom.” Basically make the cheapest product that’s got reasonable usefulness and can be marketed successfully against those products that established the market. In the tech world, I’ve watched company after company race to the bottom and get themselves into deep trouble. I’ve watched a few simply try to make the right product for the right customer the right way at the right price and do better than those racers. Quality products don’t always win, but racing to the bottom always ends up painful. 

So let’s ask the camera makers to make the right product, for which we’ll pay the right price.  

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