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Author Topic: Price point of a 5Dmk2 replacement  (Read 18394 times)

dgsphto

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Re: Price point of a 5Dmk2 replacement
« Reply #45 on: September 29, 2011, 02:00:20 AM »
....When you then add in the additional costs for other components that need to be larger (pentaprism, mirror/shutter assembly, etc.), and mark them up appropraitely, you will likely arrive somewhere in the $900-1000 range.  Not coincidentally, that's the cost difference between the 7D and the 5DII...

The incremental cost difference is not that high. I don't see why the prism has to be larger. Shutter, yes, but I bet that it costs almost the same to build either an APS-C shutter and a FF shutter everything else (shutter life, max speeds, etc.) being equal.

A lot of the cost difference between 7D and 5D2 is profits and not costs!

That's exactly my point. People need to shake off that mentality that the price differences are justified. Agreed without an argument that costs are higher on 5D2, but not by $1000. More like $300 if you compare 7D to 5Dmk2 is my take!

Anyway, this discussion is moot :) Canon's very greedy...we all know that! We have seen it with the 5Dmk2 launch. I think they are getting into a product cycle that's like Intel's "tick-tock". MP/Sensor --> Features --> MP/Sensor --> Features.....


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Re: Price point of a 5Dmk2 replacement
« Reply #45 on: September 29, 2011, 02:00:20 AM »

J. McCabe

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Re: Price point of a 5Dmk2 replacement
« Reply #46 on: September 29, 2011, 04:01:34 AM »
It's still all relative.  I could say, "I knew I shouldn't have gotten a PhD in Neuroscience," when I visit the house of friends of ours - husband and wife, both anesthesiologists.  I'm not actually sure how many rooms their house has, but one of them is a music conservatory with a grand piano and seating for 40 people.  He shoots with a 1DsIII, by the way...

1. AFAIK, doctors prefer to specialize in areas with more more glory than being an anesthesiologist, which results in shortage, read higher salaries.

2. Never rule out the possibility of getting the money elsewhere, say inheritance or winning the lottery.

[I'm not joking - a local reporter did an article on people who got first prizes in the lottery, I guess the lottery gave their details with their permission, and there was at least one guy who guessed the all numbers twice. He spent all the money, demonstrating that a fool and his money will soon depart.]

Rocky

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Re: Price point of a 5Dmk2 replacement
« Reply #47 on: September 29, 2011, 04:31:13 AM »
My calculation is: $300 difference between FF and APS-C, $300 for larger prism, larger shutter, lager mirror, larger body (compared to 7D). Assuming that the 5DIII have all the features of 7D then, the 5DIII should be  $600 above 7D. The current 5DII have less feature than the 7D and sells about $1000 above the 7D. Therefore the 5DII is over priced. Canon should be able to sell the 5DIII at about $2200. Since 5dIII is a FF, Canon may price it at $2800 for deeper profit.

neuroanatomist

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Re: Price point of a 5Dmk2 replacement
« Reply #48 on: September 29, 2011, 06:18:44 AM »
I don't see why the prism has to be larger.

You're right, it doesn't have to be larger on the 5DIII, as Canon could certainly choose to reduce viewfinder magnification from what the 5DII offers.  But currently, the 7D, APS-C sensor, 1.0x magnification, 100% coverage.  FF is larger than APS-C by a diagonal factor of 1.6x, so the 7D's prism on a FF sensor would mean 1.0/1.6 = 0.625x magnification with 100% coverage, or with 98% coverage, 0.64x.  The 5DII is 98% coverage and 0.71x magnification, therefore the prism is bigger (and the 1DsIII is 0.76x).

You can just set the cameras side-by-side and see that the 'bump' in the housing is larger on the 5DII.



But on the whole, your viewpoint makes sense...especially the part about Canon being greedy.   :-X
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elflord

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Re: Price point of a 5Dmk2 replacement
« Reply #49 on: September 29, 2011, 06:32:45 AM »
My calculation is: $300 difference between FF and APS-C, $300 for larger prism, larger shutter, lager mirror, larger body (compared to 7D). Assuming that the 5DIII have all the features of 7D then, the 5DIII should be  $600 above 7D. The current 5DII have less feature than the 7D and sells about $1000 above the 7D. Therefore the 5DII is over priced. Canon should be able to sell the 5DIII at about $2200. Since 5dIII is a FF, Canon may price it at $2800 for deeper profit.

Canon have manufacturing costs (per body produced) but they also have fixed R&D costs. How do they distribute those between the different models ? For example, if the R&D costs average $200 per camera sold, does that mean that entry level powershots "should" cost $200 plus manufacturing costs plus markup ? If you don't want to pay for the R&D, then why are we discussing prices of a model that doesn't even exist yet ? The way it ultimately works is that the way those costs are distributed among their models depends on relative supply and demand for the different models. Higher end models (those where a price increase doesn't hurt sales as much) are likely to cover more of these costs.

In terms of manufacturing costs alone -- Sony has already sold a full frame camera for $2000 (the A850). So it is likely that it is possible to get full frame cameras on the shelves for $2000 a piece with 0 marginal cost per unit  to the manufacturer.

But pricing does not depend on marginal production costs alone.  It depends partly on fixed costs and partly  on supply and demand economics (and these interact as fixed costs are likely to be distributed based on demand). The 5D Mark I has similar full frame hardware to the 5D Mark II, yet it is "underpriced" at $1000. The reason is that there is limited demand for an older model.

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Re: Price point of a 5Dmk2 replacement
« Reply #50 on: September 29, 2011, 09:36:07 AM »
My calculation is: $300 difference between FF and APS-C, $300 for larger prism, larger shutter, lager mirror, larger body (compared to 7D). Assuming that the 5DIII have all the features of 7D then, the 5DIII should be  $600 above 7D. The current 5DII have less feature than the 7D and sells about $1000 above the 7D. Therefore the 5DII is over priced. Canon should be able to sell the 5DIII at about $2200. Since 5dIII is a FF, Canon may price it at $2800 for deeper profit.

Canon have manufacturing costs (per body produced) but they also have fixed R&D costs. How do they distribute those between the different models ? For example, if the R&D costs average $200 per camera sold, does that mean that entry level powershots "should" cost $200 plus manufacturing costs plus markup ? If you don't want to pay for the R&D, then why are we discussing prices of a model that doesn't even exist yet ? The way it ultimately works is that the way those costs are distributed among their models depends on relative supply and demand for the different models. Higher end models (those where a price increase doesn't hurt sales as much) are likely to cover more of these costs.

In terms of manufacturing costs alone -- Sony has already sold a full frame camera for $2000 (the A850). So it is likely that it is possible to get full frame cameras on the shelves for $2000 a piece with 0 marginal cost per unit  to the manufacturer.

But pricing does not depend on marginal production costs alone.  It depends partly on fixed costs and partly  on supply and demand economics (and these interact as fixed costs are likely to be distributed based on demand). The 5D Mark I has similar full frame hardware to the 5D Mark II, yet it is "underpriced" at $1000. The reason is that there is limited demand for an older model.

A lot of times, people setting the prices are not rocket scientists (surprise surprise). They do not create sophisticated price elasticity models...  I implement financial package (ERP) applications in Fortune 500 companies, and it amazes me how rudimentary their cost allocation models are. Most of the time, R&D is considered a period cost and allocated based as a percentage of selling price or product cost, then a margin is added on top of that.

If one went purely with R&D allocation, it would not inflate the prices of the higher end models as much, what does inflate those costs is the % of Mark-up tacked on. Herein comes the art of pricing, the mark-up.

 A product manager for lets say a rebel line will work on what he has to work with given his product range and not worry about pricing for the pro series, he will have sales targets (the smarter companies will have profitability targets): These Targets at times are not always set to maximize profitability, but at times are set to mantain market share and customer base till the next model comes along. The real money is made from the higher margin products, therefore for consumers, the higher end models do "rightly" seem over priced, and they are.

I am not sure if the FF's prism is 40% larger that it costs 40% more as well... the cost of material is negligible in this case, the cost over overhead would be about the same, the cost of labor might be the same or even more for the smaller prism (depending how it is manufactured). But I do get that the yields on the sensors follow a different set of rules.

A $500-600 differential between a 7D to 5D class camera (other things being the same) might be justified, the rest is fluff and mark-up!


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elflord

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Re: Price point of a 5Dmk2 replacement
« Reply #51 on: September 29, 2011, 07:22:50 PM »
A lot of times, people setting the prices are not rocket scientists (surprise surprise). They do not create sophisticated price elasticity models...  I implement financial package (ERP) applications in Fortune 500 companies, and it amazes me how rudimentary their cost allocation models are. Most of the time, R&D is considered a period cost and allocated based as a percentage of selling price or product cost, then a margin is added on top of that.

If one went purely with R&D allocation, it would not inflate the prices of the higher end models as much, what does inflate those costs is the % of Mark-up tacked on. Herein comes the art of pricing, the mark-up.

 A product manager for lets say a rebel line will work on what he has to work with given his product range and not worry about pricing for the pro series, he will have sales targets (the smarter companies will have profitability targets): These Targets at times are not always set to maximize profitability, but at times are set to mantain market share and customer base till the next model comes along. The real money is made from the higher margin products, therefore for consumers, the higher end models do "rightly" seem over priced, and they are.

I agree that the people who set the prices probably aren't that sophisticated. I notice for example that the refurbished prices are uniformly 20% discounted from new price, even though on high end items this has them undercutting street prices on used items.

However, at some level, demand driven pricing kicks in. They at least understand the need to price their items "competitively" and that they could lose a lot of sales if they don't. They fine tune their prices as necessary as demand slacks through rebate programs. It might seem simplistic, but if you were to go and deploy a sophisticated model, you usually need a human being to step in at some point and update the model inputs.

Whether or not the manufacturer allocates R&D proportionately to revenue for different products or uses some other mechanism is somewhat orthogonal to my point -- which is that you can't meaningfully choose any per-unit allocation of R&D costs, because the marginal R&D cost per unit is 0.

So it makes perfect sense for them to crank out the cheaper models as long as the marginal revenues exceed the marginal costs. That is, they don't have to pay the R&D bills with their point and shoots for it to be worth it to produce them. But they do this understanding that these units aren't going to be cash cows for them.

The cheaper models do have something in common with more expensive models -- they are subject to the laws of supply and demand. The big difference is that the demand curve looks quite a bit different -- they are dealing with a very price sensitive market.

So whether you attribute it to R&D allocation or "markup" or whatever, the fact remains that they can't jack up prices on cheap models very much without killing sales. So pricing is very much dependent on demand.

Quote
A $500-600 differential between a 7D to 5D class camera (other things being the same) might be justified, the rest is fluff and mark-up!

If that's the case, why doesn't someone get out there and corner the market with a sub $2000 full frame camera ? If you're right and a less expensive smaller sensor camera is good enough to keep the lights on, then why is it that Olympus and Panasonic let standard 4/3 die, Pentax (APS-C and medium format only) were bought out, while the full frame models are still going strong ?

It seems to me we're talking about the same thing -- prices are driven by demand (and not the "demands" of forum posters)

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Re: Price point of a 5Dmk2 replacement
« Reply #51 on: September 29, 2011, 07:22:50 PM »

Rocky

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Re: Price point of a 5Dmk2 replacement
« Reply #52 on: September 29, 2011, 11:19:21 PM »
Sony did it with a $2000 FF.

elflord

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Re: Price point of a 5Dmk2 replacement
« Reply #53 on: September 30, 2011, 12:35:23 AM »
Sony did it with a $2000 FF.

Yes, I know they released a $2000 full frame camera which I addressed it in my earlier post. Quoting myself:

Quote
In terms of manufacturing costs alone -- Sony has already sold a full frame camera for $2000 (the A850). So it is likely that it is possible to get full frame cameras on the shelves for $2000 a piece with 0 marginal cost per unit  to the manufacturer.

But pricing does not depend on marginal production costs alone.  It depends partly on fixed costs and partly  on supply and demand economics

However, they didn't exactly corner  the full frame market. The A850 was so successful that they pulled the model less than two years after its launch.

Does the A850 hold the record for the shortest lived full frame DSLR ?
« Last Edit: September 30, 2011, 12:36:56 AM by elflord »

Maui5150

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Re: Price point of a 5Dmk2 replacement
« Reply #54 on: September 30, 2011, 07:36:52 AM »
How much of that was because it was Sony?

When it comes to DSLRs I think Canon/Nikon and then maybe Pentax.  Sony I think more of the P&S crowd.  As a whole I think it is easier to move someone out of a D3100 or a T2i into a entry FF like the rumors are saying Canon has coming, then jump into the Sony Alpha line...

When it comes down to it, at least for me, part of the biggest selling point is Glass.  Nikon and Canon have huge arsenals and such a wide range... It is easier for me to step into a system that I can grow into and upgrade both in bodies and glass, than one that is very limited

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Re: Price point of a 5Dmk2 replacement
« Reply #55 on: September 30, 2011, 09:57:39 AM »
If that's the case, why doesn't someone get out there and corner the market with a sub $2000 full frame camera ? If you're right and a less expensive smaller sensor camera is good enough to keep the lights on, then why is it that Olympus and Panasonic let standard 4/3 die, Pentax (APS-C and medium format only) were bought out, while the full frame models are still going strong ?

It seems to me we're talking about the same thing -- prices are driven by demand (and not the "demands" of forum posters)

Agreed: Its demand driven. To be specific...
 
Why do we care about FF? Why not have a  30x20mm sensor as a standard? Why are train tracks the width they are? Why are they the width of 2 horses thethered side by side?  Many things are a result of backward compatibility...

In this case, it boils down to the investment in 35mm Glass we all have.... not necessarily the true cost of the FF body. Canon (like any other business)  is cashing in on this hitched loyalty. It might also explain why the other formats are dropping off... they do not have enough people out there with 4/3 glass to use perhaps.

There seems to be enough demand for APS-C and FF for these formats to live for the time being. Once APS-C sensors are good enough with low noise & high DR, I think we will see a shift from EF to EF-S lenses.... but I Digress.
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Re: Price point of a 5Dmk2 replacement
« Reply #56 on: September 30, 2011, 10:42:26 AM »
Once APS-C sensors are good enough with low noise & high DR, I think we will see a shift from EF to EF-S lenses.... but I Digress.

Good enough?  I suppose that's debateable.  But they are certainly popular enough right now...and I'd argue that we've already seen the shift from EF to EF-S lenses.  How many non-L EF lenses has Canon released lately?  The last one was the 70-300mm f/4-5.6 IS USM in 2005 - and that's the only one in the last 10 years (the one before that was the 100mm f/2.8 Macro USM, in 2000).

Going forward, I expect we'll see only L lenses and EF-S lenses released or updated.  FF will be around for a long time - even with improvements in noise and DR (with the former limited by the ongoing trend for rising MP counts), there are limits on DoF and due to diffraction with APS-C.  So, the L lenses for those with FF cameras, and EF-S lenses for everyone else. 
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ecka

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Re: Price point of a 5Dmk2 replacement
« Reply #57 on: September 30, 2011, 11:31:50 AM »
Once APS-C sensors are good enough with low noise & high DR, I think we will see a shift from EF to EF-S lenses.... but I Digress.

Good enough?  I suppose that's debateable.  But they are certainly popular enough right now...and I'd argue that we've already seen the shift from EF to EF-S lenses.  How many non-L EF lenses has Canon released lately?  The last one was the 70-300mm f/4-5.6 IS USM in 2005 - and that's the only one in the last 10 years (the one before that was the 100mm f/2.8 Macro USM, in 2000).

Going forward, I expect we'll see only L lenses and EF-S lenses released or updated.  FF will be around for a long time - even with improvements in noise and DR (with the former limited by the ongoing trend for rising MP counts), there are limits on DoF and due to diffraction with APS-C.  So, the L lenses for those with FF cameras, and EF-S lenses for everyone else.
I think you are right. There may be no new non-L EF lenses in the future. Canon's new 100L Macro and 70-300L somewhat confirms this theory. However, if this is really happening, then we should see some new EF-S primes coming soon (I hope).
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Re: Price point of a 5Dmk2 replacement
« Reply #57 on: September 30, 2011, 11:31:50 AM »

epsiloneri

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Re: Price point of a 5Dmk2 replacement
« Reply #58 on: September 30, 2011, 11:43:38 AM »
Once APS-C sensors are good enough with low noise & high DR, I think we will see a shift from EF to EF-S lenses....

In the longer term, I believe the opposite will happen :) It seems reasonable that, in the future, the cost for producing sensors will go down more quickly than the cost for producing optics. When the optics becomes the dominant cost of a consumer camera (as indeed used to be the case not so long ago, and already is for the most expensive lenses), it will be cheaper to produce a big-sensor camera with simpler optics for the same IQ as a more compact camera with a smaller sensor. I already envision toy cameras with Nikon V1-like colour diversity and both house and lens entirely plastic, containing a full-frame sensor and producing better IQ than today's best compacts :)


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Re: Price point of a 5Dmk2 replacement
« Reply #59 on: September 30, 2011, 11:49:47 AM »
Once APS-C sensors are good enough with low noise & high DR, I think we will see a shift from EF to EF-S lenses....

In the longer term, I believe the opposite will happen :) It seems reasonable that, in the future, the cost for producing sensors will go down more quickly than the cost for producing optics. When the optics becomes the dominant cost of a consumer camera (as indeed used to be the case not so long ago, and already is for the most expensive lenses), it will be cheaper to produce a big-sensor camera with simpler optics for the same IQ as a more compact camera with a smaller sensor. I already envision toy cameras with Nikon V1-like colour diversity and both house and lens entirely plastic, containing a full-frame sensor and producing better IQ than today's best compacts :)

Long term, I think that's probably the case.  But I suspect that's several years in the future, at best.  Canon may enter the MF market before that, to maintain a high end product line, assuming FF sensors become a consumer standard.
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Re: Price point of a 5Dmk2 replacement
« Reply #59 on: September 30, 2011, 11:49:47 AM »