November 28, 2014, 03:44:28 PM

Author Topic: If the Japanese Yen is now low, why are Canon prices staying high?  (Read 9046 times)

dilbert

  • Canon EF 300mm f/2.8L IS II
  • *******
  • Posts: 3241
    • View Profile
Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #30 on: May 19, 2013, 10:11:40 AM »
The concept of prices as a function of cost is deeply ingrained in our minds, but it is not really true.

I'm still laughing about this quote above ;D

Why?

I've been to a market in China where I watched two people bought the same item, one for 200RMB the other for 500RMB. Neither price reflected the cost. Both prices reflected the ability of the buyer to bargain to a price that the buyer thought was fair.

You think that doesn't happen in the USA?
That prices of goods in the USA aren't set at the highest level that the company setting it thinks they can get away with?

canon rumors FORUM

Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #30 on: May 19, 2013, 10:11:40 AM »

J.R.

  • 1D X
  • *******
  • Posts: 1515
    • View Profile
Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #31 on: May 19, 2013, 10:19:13 AM »
Do the people expecting immediate price drops think that Canon just gives shops cameras for free?

No.

Shops need to buy stock from Canon (not for the same price that we pay, obviously.)

That stock will then sit in their warehouses or on their shelves until it is sold.

A change in the value of the Japanese Yen does not change the cost of the camera that is in the warehouse or on the shelf.

And more importantly, shops in the USA buy from Canon USA, not Canon in Japan (except for grey market stock which comes from somewhere else.) So if Canon USA keeps the buying price up for stores then stores will not be selling cameras for less.

True....but eventually Canon USA will purchase a similar quantity of gear off Canon Japan for a lower invoice total, thanks to the stronger US Dollar...and then they can price accordingly to wholesalers/retailers

No they won't (by the looks of it). Canon expects to keep the pricing for offshore markets at the same level which will translate to more JPY = more profits. If it were Canon's intention to reduce the pricing in the foreign markets, the JPY profit estimates (released by the CFO, not a journalist from Reuters) would have remained unchanged.

Simple ... If it ain't broke, don't fix it. You can validly rant on the forums as to why Canon isn't selling for less, but simply because JPY is getting devalued doesn't make you entitled to a lower USD price.
5D3, 6D, 600D, RX100
16-35L, 24-70L II, 70-200L II, 100-400L, 50L, 85L II, 135L, 24TSE, 40, 100 macro, 18-55 II, 55-250 II, 600RT x 4
I come here to learn something new, not to learn how bad my gear is - I know that already ;-)!

dilbert

  • Canon EF 300mm f/2.8L IS II
  • *******
  • Posts: 3241
    • View Profile
Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #32 on: May 19, 2013, 10:30:55 AM »
Do the people expecting immediate price drops think that Canon just gives shops cameras for free?

No.

Shops need to buy stock from Canon (not for the same price that we pay, obviously.)

That stock will then sit in their warehouses or on their shelves until it is sold.

A change in the value of the Japanese Yen does not change the cost of the camera that is in the warehouse or on the shelf.

And more importantly, shops in the USA buy from Canon USA, not Canon in Japan (except for grey market stock which comes from somewhere else.) So if Canon USA keeps the buying price up for stores then stores will not be selling cameras for less.

True....but eventually Canon USA will purchase a similar quantity of gear off Canon Japan for a lower invoice total, thanks to the stronger US Dollar...and then they can price accordingly to wholesalers/retailers

No they won't (by the looks of it). Canon expects to keep the pricing for offshore markets at the same level which will translate to more JPY = more profits. If it were Canon's intention to reduce the pricing in the foreign markets, the JPY profit estimates (released by the CFO, not a journalist from Reuters) would have remained unchanged.

Simple ... If it ain't broke, don't fix it. You can validly rant on the forums as to why Canon isn't selling for less, but simply because JPY is getting devalued doesn't make you entitled to a lower USD price.

And more to the point, if Canon are happy with the 5D Mark III sales figures then you can bet that there will be no price movement.

Now other vendors, such as Nikon/Sony, may see the change in exchange rate as the means to lower their camera prices to try and obtain greater market share. If that kind of move did happen and Canon felt threatened then maybe Canon would lower their prices.

dafrank

  • Rebel T5i
  • ****
  • Posts: 104
    • View Profile
    • davidfranklinphoto.com
Market principles do not behave like your aunt Sally
« Reply #33 on: May 19, 2013, 12:59:12 PM »
The Japanese Yen has fallen considerably in value in recent months. Japanese exports should therefore be much cheaper now for buyers, so why are Canon prices remaining so high? I'd love a new Canon 5D mk III but current MAP limitations are keeping prices high and stopping me from buying.

I have read many, but not all of the replies, so please forgive me if I repeat something someone else has already stated.

Unfortunately, you are thinking in ways that don't correspond to how businesses actually work. It is easy to do this because many of us tend to think of how we would behave - if we were perfectly selfless individuals acting on a one-to-one basis with a friend or relative - in setting prices on something or other ourselves. In this regard, corpporations, as well as individuals in business, who make and/or sell goods or services in the universal market environment in which we all conduct our financial transactions behave, at the most basic level, according to two principals: 1) they set their prices to maximize their income and profit, while always being careful not to set prices higher than would be the level to suppress demand, and 2) try not to churn the market by changing their prices too often or too rapidly, in order not to create ill will or confusion among their customer base and avoid pricing mistakes by basing their profit assumptions on too short a data sample.

Under the above realities, Canon has done two things: 1) when the value of the yen rose, it did not raise U.S. product prices as high or fast as the monetary valuations would suggest, and 2) when the value of the yen fell, it did not lower U.S. product prices as low or fast as the monetary valuations would suggest. And, if after testing the market for a period of time during which its competitors do not lower their prices and/or Canon's sales do not diminish or sales growth slow, they will probably take advantage of the period of lower yen evaluations to raise income and profit.

In short - no surprise here - the business world continues to operate under well known principles of supply and demand. "Fairness" in pricing is a principle that only exists in the minds of the naïve or schemes of various collectivist-minded "planners." The reality is that Canon will set its prices to maximize its income and profits, and only if the price levels they set punish them by reducing those two metrics, will they reduce their prices at all.

Regards,
David
Outcomes are more important than intentions.
See my work at: http://www.davidfranklinphoto.com

Plainsman

  • Rebel T5i
  • ****
  • Posts: 114
    • View Profile
Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #34 on: May 19, 2013, 01:13:15 PM »
The Japanese Yen has fallen considerably in value in recent months. Japanese exports should therefore be much cheaper now for buyers, so why are Canon prices remaining so high? I'd love a new Canon 5D mk III but current MAP limitations are keeping prices high and stopping me from buying.

Answer= Cartel.

The Japanese (or South Koreans/Chinese) do not abide by the same competition rules as the West whether it is cameras or shipbuilding!

I am not saying prices will not fall but they might fall at a time to suit the Japanese camera companies - certainly not the Western consumer.

In any case the Japanese who have not experienced monetary loosening on the same scale as US/UK etc - until now - have had to suffer sky high yen which was damaging exports.

Unfortunately it does not look like their will be any real competition to Canon Nikon Sony etc from S Korea or China so the Japanese rule the roost for a very long time to come. No competition obviously from the West either as preference is given to the financial sector ie money churning rather than industry (Germany excepted).

« Last Edit: May 19, 2013, 01:17:22 PM by Plainsman »

Jens_T

  • Power Shot G7X
  • **
  • Posts: 14
    • View Profile
    • Portfolio
Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #35 on: May 19, 2013, 01:21:52 PM »

Answer= Cartel.

The Japanese (or South Koreans/Chinese) do not abide by the same competition rules as the West whether it is cameras or shipbuilding!


Apologies taking this off-topic but I have to disagree to the way this statement is made, Plainsman.

Yes - there are governments protecting / supporting certain industries. Yes, competition is often not perfect. But that applies to most countries - the dispute between the US and EU about subsidizing / protecting Boeing / Airbus is just one example.

The whole FX impact topic has nothing to do with cartels. Such behaviour is normal business and can be found in any corporation, regardless of HQ location. Please consider this before accusing other countries of foul play.
But please let's not get into monetary politics :)

BR
Jens

unfocused

  • Canon EF 300mm f/2.8L IS II
  • *******
  • Posts: 2206
    • View Profile
    • Unfocused: A photo website
Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #36 on: May 19, 2013, 01:55:33 PM »
Several good and reasonable reasons have been identified here. But one that hasn't been mentioned that also contributes to this is that Canon is a multinational company. Its costs cannot be limited to any one nation or one currency.

A falling Yen does not reduce the costs of its production facilities in other countries and it may actually increase some of its costs for materials and labor.

Another major consideration – Advertising makes up a huge percentage of a company's total costs. A falling Yen is not going to reduce the cost of advertising in National Geographic or any of the hundreds of publications that Canon advertises in. They have to pay for those ads in the local currency, so exchange rates, again, can hurt as much as help.

When talking about a company the size of Canon, there are just too many variables to presume that one thing (like the exchange rate of the Yen) will have a major impact on prices

pictures sharp. life not so much. www.unfocusedmg.com

canon rumors FORUM

Re: If the Japanese Yen is now low, why are Canon prices staying high?
« Reply #36 on: May 19, 2013, 01:55:33 PM »

dilbert

  • Canon EF 300mm f/2.8L IS II
  • *******
  • Posts: 3241
    • View Profile
Re: Market principles do not behave like your aunt Sally
« Reply #37 on: May 19, 2013, 05:17:49 PM »
Under the above realities, Canon has done two things: 1) when the value of the yen rose, it did not raise U.S. product prices as high or fast as the monetary valuations would suggest, and 2) when the value of the yen fell, it did not lower U.S. product prices as low or fast as the monetary valuations would suggest. And, if after testing the market for a period of time during which its competitors do not lower their prices and/or Canon's sales do not diminish or sales growth slow, they will probably take advantage of the period of lower yen evaluations to raise income and profit.

But it did set the price of new products (e.g. 5D3) in accordance with changes in the exchange rate. What is the evidence for that? In Japan, the 5D3 retails for about the same price as the 5D2 (if my memory serves me correctly.)

canon rumors FORUM

Re: Market principles do not behave like your aunt Sally
« Reply #37 on: May 19, 2013, 05:17:49 PM »