PDA

View Full Version : Re: Profits



ectobuilder
05-17-2011, 02:56 PM
I've been thinking about this ever since the NEX-FS100 was dropped in price by a whopping $1000 on pre-order launch day.

What kind of margins are we talking about here? What other item on the market other than real estate or a car can a company drop the MSRP by $1000?????

And to think we were all about to pay $1000 more! That's $1000 of air!

And to think that these products don't even cover the full spectrum of basic needs (i.e. no HD-SDI, no ND-Filters...etc).

I almost think that we are being had as higher-order consumers (we are more willing to pay more) as the industry is taking advantage of our willingness by offering products that partially give us the solution that we need, thus forcing us to upgrade down the road.

What do you guys think?

Rick Burnett
05-17-2011, 03:33 PM
Well I can only speak for myself, but I knew the MSRP was way higher than the camera would cost. I don't typically buy a lot of things that are in the $5k range myself, but when I bought my car, I DEFINITELY got it a lot cheaper than the MSRP. I'd say, look at it from the other perspective. They announce a higher price to start with, then come in lower on launch. People are excited to see it cheaper and it changes their minds. Maybe there was some technology involved that became cheaper. Maybe they want a larger market share and to get closer to the competition. I'd MUCH rather go this way then a company that announces a lower price, then begins raising it.

Postmaster
05-17-2011, 04:16 PM
LOL. I never heard anyone complaining about dropping camera prices before.

Frank

zeke
05-17-2011, 04:17 PM
I've been thinking about this ever since the NEX-FS100 was dropped in price by a whopping $1000 on pre-order launch day.

What kind of margins are we talking about here? What other item on the market other than real estate or a car can a company drop the MSRP by $1000?????

And to think we were all about to pay $1000 more! That's $1000 of air!

And to think that these products don't even cover the full spectrum of basic needs (i.e. no HD-SDI, no ND-Filters...etc).

I almost think that we are being had as higher-order consumers (we are more willing to pay more) as the industry is taking advantage of our willingness by offering products that partially give us the solution that we need, thus forcing us to upgrade down the road.

What do you guys think?

If you've been following Sony for any length of time, they traditionally quote a higher price than intended when they make their first public announcements. Been doing that for years. Almost no one was surprised by the price drop.

kprince
05-17-2011, 04:43 PM
LOL. I never heard anyone complaining about dropping camera prices before.

Frank

ditto.

imag
05-17-2011, 04:44 PM
Are you kidding? They are taking advantage of us because they dropped prices?

You want gouging? How about if they had charged MSRP for the first four months, THEN dropped prices. That would actually be a bummer.

All they are doing is trying to make people feel like they are getting a deal, just like any bargainer in a flea market anywhere.

FelixGER
05-17-2011, 05:18 PM
I wonder what the € Price will be... I bet at least 6000 € without Kit Lens despite 1,43 $/€ exchange rate...

Mike Harvey
05-17-2011, 05:21 PM
Five years ago this class of camera didn't exist. You wanted the 35mm film look? Get 35mm film... or fork out a small fortune for a high end 2/3 camera like the F900. That we now can get something with DoF and resolution rivaling film for ~$5k + lens is amazing. I'm not complaining that the street price is $1k less than the pre-release MSRP.

David G. Smith
05-17-2011, 06:10 PM
If you've been following Sony for any length of time, they traditionally quote a higher price than intended when they make their first public announcements. Been doing that for years. Almost no one was surprised by the price drop.

Or the prosumer video camera market as a whole. $5,000.00, give or take $1500.00 is kind of a sweet spot in the market where some very innovative, prosumer niche, flag ship cameras kind of hit the market. It has been that way for quite a while actually. I have a FS100 on pre-order and it is just about the same price that I paid for a Canon XL-1 back in 1998(ish). I am sure that Canon made a good bit of money on that purchase back then, and that Sony is going to make a good bit of money when I get my FS-100. Are they ripping me off? No. It is a price I am willing to pay for the benefits that the cameras offer me, and the camera manufactures are willing to invest millions and millions of dollars in research and design to offer the cameras at a price where they get the return on investment that they seek, and that is workable in a highly competitive market. Welcome to the game!

Lee Saxon
05-17-2011, 07:30 PM
Maybe they thought no one was going to pay $6500 for 1080p60 since that's about what Red plans to charge for 3072p120...

mcgeedigital
05-17-2011, 07:56 PM
Who gives a rat's patootie what their margin is on the camera?

I want them to make OBSCENE amounts of money on the camera, and then spend it all, after the saki party, on R&D for the Sony F4.

David G. Smith
05-17-2011, 07:58 PM
Maybe they thought no one was going to pay $6500 for 1080p60 since that's about what Red plans to charge for 3072p120...

On what planet? Don't you remember.... you have to, "Man up..." to own a Red?

Hidef1080
05-17-2011, 08:23 PM
If you you think the price is too high, don't buy it.
At 6K I would not buy an FS100.
At 5K I would.

I don't know, maybe I am stupid for "giving" Sony my money but for as long as I can remember there was always MSRP and Street Price in photography.

Based on downloaded footage and reviews and form factor and the fact that I can use lenses I already own and the SONY name [I have yet to own a bad Sony product] I think the price is right for me at this time for my budget.

dsleep
05-17-2011, 08:35 PM
Who gives a rat's patootie what their margin is on the camera?

I want them to make OBSCENE amounts of money on the camera, and then spend it all, after the saki party, on R&D for the Sony F4.


haha, exactly! I like the way you think, make a great camera and reap the rewards. Nothing at all wrong about that. I am guessing most working professionals agree.

imag
05-17-2011, 08:44 PM
Maybe they thought no one was going to pay $6500 for 1080p60 since that's about what Red plans to charge for 3072p120...

This is one of those times on the internet where I can't tell if someone is being sarcastic or not.

Postmaster
05-17-2011, 11:56 PM
If you you think the price is too high, don't buy it.
At 6K I would not buy an FS100.
At 5K I would.



The bad thing is, if it is $5000 in the US it will be about 5000 Euros ($7000) here in Germany.

Grrrrr...!

Frank

ectobuilder
05-18-2011, 02:06 AM
My point is that this is an indication of how HIGH margins are in this industry. The ONLY reason why they dropped their price is because of the lukewarm reviews it got for it's wonky physical design compared to the AF100 and the fact that the RED Scarlet was coming in at $6K with everything included.

I don't think a corporation drops the prices for the sake of doing so, they normally are reacting to competition. So my point is that had it not been for the competition, Sony would have absolutely taken advantage of reaping in $1000 more profit from us.

ectobuilder
05-18-2011, 02:14 AM
Or the prosumer video camera market as a whole. $5,000.00, give or take $1500.00 is kind of a sweet spot in the market where some very innovative, prosumer niche, flag ship cameras kind of hit the market. It has been that way for quite a while actually. I have a FS100 on pre-order and it is just about the same price that I paid for a Canon XL-1 back in 1998(ish). I am sure that Canon made a good bit of money on that purchase back then, and that Sony is going to make a good bit of money when I get my FS-100. Are they ripping me off? No. It is a price I am willing to pay for the benefits that the cameras offer me, and the camera manufactures are willing to invest millions and millions of dollars in research and design to offer the cameras at a price where they get the return on investment that they seek, and that is workable in a highly competitive market. Welcome to the game!

I totally get what you are saying, the fact that this is a business investment rather than for pure consumption is why we are willing to pay the dollars for it. My point is we are not exercising enough market force to lower the MSRP of these products.

I've worked in the consumer electronics business for many years now and the end-consumers do a very good job in accelerating the downward trend of MSRP's of electronics. Take LCD TV's for instance, 3 years ago a 46" 1080p was $3000, now they can be had as low as $650. However I see that the same isn't true within the professional audio/video segment.

Margins on consumer electronics used to be 30% (on average). It tanked to as low as 5% last year, basically consumers were getting electronics last year for the bulk price equivalent of 3 years ago. We used to make $4000 on a $8000 TV at the upper end of the profit scale. But now good luck making that much as consumers have done their due diligence to keep our industry honest with them.

FYI: Margins on audio tend to be between 50% to 70%. Imagine as an audio professional if you could get the industry to reduce it's MSRP to more reasonable levels. If you average out most business models that provide products (not services) it would be hard to find a model that have gross margins higher than 25% on the retail side. So the audio industry have sneaked past our consumer eyes to become king of the margin hill.

Hidef1080
05-18-2011, 05:45 AM
Profit margins in the fashion world and jewelry business are pretty high... Real, pretty, very high.



I understand what you are saying but what is you want us do?
Not buy an FS100 and hope that Sony will drop the price more?

I willing bet that everyone here knows that we are paying more than cost for this camera but I'm just wondering what it is YOU think we should do?
What do you think is a fair market price?


Sony has already met my “I will pay that” price.
Will I be happy if they came down even more in price? Heck ya!
Will I wait [how long?] for the price to drop more? I plan on a July or August purchase date, so I'll see.



As far as the AF100 goes.
It has more features for sure. And a lower base price.
It does not have an S35 or lower noise or better low light.
I hate noise......

When is Red coming out with their 6k everything killer camera?

imag
05-18-2011, 07:36 AM
Do you have any idea what the volume difference is between the professional and consumer segments? They are multiple orders of magnitude different. Huge amounts of R&D dollars are needed to develop these things, so when they sell 5 million of them, they cost less than when they sell 50K. That's called a supply curve, and it's combined with a learning curve:

http://en.wikipedia.org/wiki/Supply_and_demand

Stephen Mick
05-18-2011, 07:40 AM
My point is that this is an indication of how HIGH margins are in this industry. The ONLY reason why they dropped their price is because of the lukewarm reviews it got for it's wonky physical design compared to the AF100 and the fact that the RED Scarlet was coming in at $6K with everything included.

I don't think a corporation drops the prices for the sake of doing so, they normally are reacting to competition. So my point is that had it not been for the competition, Sony would have absolutely taken advantage of reaping in $1000 more profit from us.

You have zero evidence or support to back up a claim like this. Please refrain from submitting your opinion as fact.

nsoltz
05-18-2011, 08:18 AM
The primary erroneous assumption on the part of the OP was that there was no price drop at all. Sony, and all manufacturers, announce MSRP and then set a minimum advertised or minimum selling price. At intro, Sony had not yet announced a minimum selling price. Obviously for competitive purposes, resellers will generally choose to sell at the minimum price in order to be competitive.

Rick Burnett
05-18-2011, 10:12 AM
The *fact* is there is a substantial history of this practice. Not just at Sony either, but at other companies as well. I did not pay MSRP for my AF100 either. No one pays $16k for the F3. Comparing this to Red is an exception rather than the rule. In fact, I'd say Red really isn't the best example to quote either. There is NO S35 camera from Red that hits $6k, period. They've moved their bottom bar in the S35 realm to the F3 territory and arguably more. Further, there is NO indication of when a Red S35 Epic-S is even going to be purchasable. None. EVERY date milestone has come and gone for Red for the most part so no one really has a clue. They could change the price *again*, change features, or even drop the Epic-S altogether. None of this would surprise me. I would MUCH rather have Sony announce a higher price then bring it down then do what Red did to me. I was saving up for the Scarlet S35 when the brain was $7k and then they upped it to $12k as the Epic-S and that just put it out of my price range.

Barry_Green
05-18-2011, 10:47 AM
The primary erroneous assumption on the part of the OP was that there was no price drop at all.
EXACTLY.

Sony, and all manufacturers, announce MSRP and then set a minimum advertised or minimum selling price. At intro, Sony had not yet announced a minimum selling price. Obviously for competitive purposes, resellers will generally choose to sell at the minimum price in order to be competitive.
There has been no "price drop". The FS-100 carries an MSRP (without lens) of $5,850. Look it up yourself:
http://pro.sony.com/bbsc/ssr/cat-broadcastcameras/cat-nxcam/

The "street price" is $4995. Just like the EX1R has an MSRP of $7790, the same MSRP as the original EX1 had and has had since 2008. Street price is $6300-ish.

HPX370 has an MSRP of $11,700. Street price is about $9200.

This is all much ado about nothing, folks. The OP apparently didn't understand how pro video manufacturers list an MSRP and then give their resellers an MAP to work with (Minimum Advertised Price) which equates to the street price.

There has been no price drop.

Lee Saxon
05-18-2011, 12:14 PM
This is one of those times on the internet where I can't tell if someone is being sarcastic or not.

I was.


Do you have any idea what the volume difference is between the professional and consumer segments? They are multiple orders of magnitude different. Huge amounts of R&D dollars are needed to develop these things, so when they sell 5 million of them, they cost less than when they sell 50K.

I think if you asked Sony or Arri to defend how grotesquely overpriced the F65 or Alexa are, this is the argument they'd use. I don't believe it, since Epic has a market no larger and a price much much smaller, but it's the one they'd use.

But the $5k prosumer camcorder market? While it's obviously not iPod-sized, does anyone really believe it's "increased costs due to small production runs" small? I don't.

nsoltz
05-18-2011, 12:46 PM
Mods... I think this thread has seen all the life it deserves and should just be closed.

Rick Burnett
05-18-2011, 12:48 PM
I was.



I think if you asked Sony or Arri to defend how grotesquely overpriced the F65 or Alexa are, this is the argument they'd use. I don't believe it, since Epic has a market no larger and a price much much smaller, but it's the one they'd use.

But the $5k prosumer camcorder market? While it's obviously not iPod-sized, does anyone really believe it's "increased costs due to small production runs" small? I don't.

R&D of company A does not equal R&D of company B. I've been in the industry long enough to know that. Given how fast Sony is bringing things to market, they could have spent a lot more R&D in parallel then say Red that has been working at a slower pace redefining their camera over and over and over again. Sure, I look at the price tag of the F65 or Alexa and think it's expensive, but even as a CMOS chip designer, I've seen stuff that goes beyond this that are used for incredibly low yields. There are so many variables, I would not even attempt to try and guess at the pricing schemes.

I also look at it this way, if it was a lot cheaper to do, a LOT of other companies that are not the big named companies would be jumping all over this opportunity. But, like Red, once they get in there, a LOT of issues can happen. Don't forget all the issues Red went through with the Epic, and new ASICs, and problems that they never actually divulged publicly (just announced they had to deal with a big one on). I know *A LOT* of people who are still scared about the Epic for one reason, the Red One track record. But Red is aware of that as well.

And yes, I ABSOLUTELY believe that cost increase is SUBSTANTIAL due to small production runs. I'm also a firm believer that the sensor in the F3 is hand picked to be the best of the best, and those that are slightly less as good probably go in the FS100. Not that it matters to me, but this is common practice in the microelectronics field. And, CMOS cost is VERY VERY high ESPECIALLY at these sizes. There is a reason these companies don't tell you the sensor yield because I am SURE they get a lot of parts that don't pass QA. CMOS has that much variance due to just physical process variation. The larger the sensor, the more chance of problems as well.

Barry_Green
05-18-2011, 12:53 PM
I think if you asked Sony or Arri to defend how grotesquely overpriced the F65 or Alexa are, this is the argument they'd use.
Who says they're overpriced?

When you have a five-month waiting list for people to buy your product at retail, that means it's *underpriced*, if anything.


But the $5k prosumer camcorder market? While it's obviously not iPod-sized, does anyone really believe it's "increased costs due to small production runs" small? I don't.
Well, the harsh truth is, whether people believe something or not, doesn't change the underlying truth of the thing.

Do you know how many $5k prosumer camcorders are sold? As compared to ipods? Fortunately the manufacturers have released some numbers so we can compare.
HVX200 - since Dec. 2005, they've sold approximately 100,000 worldwide. That's five and a half years to sell 100,000. Sixty six months, or about 1500 per month. And that is probably the best-selling prosumer camcorder ever released.

In that same timeframe Apple has announced that they've sold, worldwide, over 228,465,000 iPods. Two hundred and twenty eight million, in 5.5 years. Or, doing the math, 3,461,590 per month. As compared to 1500 per month for the pro camcorder. Is that a little bit bigger market? I believe so.