Prices and the economy

TriggerHappy

TriggerHappy

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Jamie
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Without wanting to open a can of worms I was wondering what your opinions on the recent increase in prices for photography equipment are.
Are these increases in prices directly and solely a result of the economic crisis or were they an inevitable change that would have happened regardless?
If they are a direct result of the crunch, will prices fall when/if the economy recovers?
If they have no connection (which I find unlikely), will prices fall from other means?
Finally, is there any risk that prices may increase even more in coming months?
My reason for asking is that I wish to purchase some new gear, though have no immediate need, and want to get the equipment for the lowest price possible but also as soon as possible.
Any input or discussion would be much appreciated.
Jamie
 
I think it has more to do with the weakness of the pound against the dollar and Yen than anything else. Photographic equipment is generally priced (on the wholesale market) in US dollars, and as pound has weakened from £1 = $2 to £1 = $1.40 (a drop of 30%) the price rises have been inevitable.

As exchange rates depend on "the market" and "the market" depends upon "confidence", who knows what is going to happen.

I am philosophical about the whole thing - If I want something and can afford it at today's prices then I'll buy it, if not - its my hard luck.......
 
It is down to the pound weakening against the Yen. I used to work for a Japanese company and the prices we had to buy our stock at from Japan to the UK went up by more than 1/3. The fact that camera equipment went up by "only" 30% was because the companies actually absorbed a few percent.

There will be a sliding back over time (IMHO) but I doubt we will ever get back to the prices we had six months ago because (quite simply) prices never go all the way back down again. It may take over a year for all of this to fully stabilise but in a free market economy competition dictates that the prices will have to shift in order to maintain sales.

I've already seen an offer of 3K off a 1Ds III. :)
 
Just a bit off topic. But have people sold their lenses for more money then they bought it new?

Hence 100% profit?
 
AliB said:
There will be a sliding back over time (IMHO) but I doubt we will ever get back to the prices we had six months ago because (quite simply) prices never go all the way back down again.
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Yes, it always seems to work that way. If the exchange rate returns to what it was prices will drop, but manufacturers and retailers will strive to hold prices
up to some extent to improve profit margins.
 
DropDead said:
Just a bit off topic. But have people sold their lenses for more money then they bought it new?

Hence 100% profit?
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Well, 0% loss, rather than 100% profit :)

But yes, it's easily done, I bought an 18-55 IS in January new for less than £100, cheapest on CPB now is £137 delivered. I'm sure I could shift it at a little profit with a decent eBay auction.
 
If I wanted to sell my lenses I'm sure I could make a profit but they are lenses I want to keep.

i.e. I bought my 24-105 new last year from Kerso for just over £600 - most people want over £950 now.

Now that's profitering !

In fact I've just totalled up my other 3 lenses (bought second hand) and the I paid less than half what they are currently going for new!

Best I check my home insurance
 
DropDead said:
Just a bit off topic. But have people sold their lenses for more money then they bought it new?
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Have a look in the for sale section, there are many people selling lenses for a good couple of hundred pounds more than they paid.
 
bigbigblue said:
As exchange rates depend on "the market" and "the market" depends upon "confidence", who knows what is going to happen.
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AliB said:
There will be a sliding back over time (IMHO) ....
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What's going to happen to the exchange rates - and particularly the £/Yen rate - is of huge interest to me. I'll probably be spending somewhere north of £50,000 on lenses in the next few months, and I'm really quite uncomfortable with the thought that I might effectively be paying over the odds if the exchange rate goes back where it came from.

I wondered about hedging my costs by buying some Yen futures. But I had no idea how sensible or practical that was. So I asked one of my college mates who works in the City. (Oh the shame of it - I have a friend who is a *anker!)

What he explained to me was that it's essentially impossible to predict the movements of exchange rates. The currency markets are so flexible and efficient, if anybody knew that exchange rates would move in a certain direction then the prices would adjust to reflect that. (For example, if traders expected that in 6 months time the rate would be £1=$2, then everybody would be selling $ and buying £ - and the rate would become £1=$2 today.) Of course the rates can and do change - but not in any predictable way. And as a corollary, all you can do with futures is lock in today's rates.

So I guess that means what I need to do is take a deep breath and just spend the money. No point worrying about what might or might not happen in the next few months.
 
I know jack about financial matters but won't comment on the £/$/€ side of things, other than to say there's a hell of a lot of imported stuff going for much more than it did 12-18 months ago. Fishing tackle and snowboarding gear (two things I'm interested in) have seen noticeable price hikes in recent months, fishing manufacturers only just starting to pass on the rise, most noticeably in carbon-based products (rods, poles).

As far as togging gear going up in price and staying that way, who knows. I suspect we'll see some drops if the manufacturers are suffering a decrease in unit sales but then again, they may just cut back on production so there's not an oversupply.

The prices have rocketed though. I can remember looking at the Nikon 10.5mm last year and it was going for between £370 - £400. Now it's about £450 at least and even the ebay prices, which were always much lower, have shot up, even more than UK RP prices have.

Like StewartR says, we might just have to write off the bargains we once had access to and start thinking of today's prices as the base to work from. f they go up further then we'll all be wishing we'd bought now; if they drop then we'll be onto a winner. Secondhand is definitely a much more appealing prospect for me when it comes to lenses but then again. sellers are cottoning onto the demand and used prices are deffo going up in accordance.
 
Have boards gone through the roof? I've got an 04/05 Burton custom 156 totally unused, never even had any bindings on it, sitting at home. I won it on the last day of a 10 week boarding holiday and not been able to afford to go since (got into photography more) is it worth anything?

*sorry to hijack*
 
TriggerHappy said:
Are these increases in prices directly and solely a result of the economic crisis or were they an inevitable change that would have happened regardless?
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No, it has b****r all to do with economy, the first price hike was due to the exchange rate, for the past 4 months the exchange rate has fluctuated no more than a few percent, and since the december hike last year, we have seen prices gone up 2 more notches.

it's the manufacturer and distributors try to increase profit margin. I think in terms of UK market there are still a load of people buying these ridiculously expensive lens, i think they are using us to pad up losses somewhere else, for instance europe, north america. Oh the point of price hikes are even more poignant when the used lenses are considered.

with regard future price hikes, yes it will happen, cos eventually people will just stop paying for stupidly priced lenses and equipments. and that when these shops and manufacture really do need to increase their profit margin for a slowdown in sales.

all in all i think its a good time to get shares in Nikon Canon Sigma cos they are going to report good profit this and next quarters :) and very likely jessops too :gag:
 
ricky1980 said:
No, it has b****r all to do with economy, the first price hike was due to the exchange rate, for the past 4 months the exchange rate has fluctuated no more than a few percent, and since the december hike last year, we have seen prices gone up 2 more notches.
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I think you'll find that the price hikes just about match the exchange rate fall. The retailer's prices always lag the actual exchange rate by a few months depending on how much stock they hold, and how much margin they are prepared to sacrifice.

I don't believe they are cashing in at all at the moment, quite the opposite in fact, I would be surprised if their margins weren't being squeezed very tight currently. Every channel is raising prices roughly in line, this suggests it's not just 'greedy' companies trying to increase margins, unless they are a cartel.

That said, they are likely to hold off on price drops if/when the exchange rate moves back in our favour.
 
How many of us buy Photo gear as an investment?? (Stewart being the exception!). We either buy for our business, in which case we generate a profit to offset the investment or we are hobbyists, which means it costs us money!!

You can be 'lucky' and buy gear cheap and sell it on for a profit, but isn't the point the joy of taking photographs?


For what it is worth, I expected the £ to strengthen over the next couple of years for one main reason: inflation.

We are pumping the economy full of money and when the banks eventually release it is likely to be in a flood which we stoke inflation to 5-8% and the good old BOE will have no choice but to raise interest rates to compensate which will in turn strengthen sterling, but not back to 2007 levels. My guess is 1.30 Euro and $1.70.
 
Sterling has been falling against the Yen for ever. The real driver of low prices has been the scale economies of mass production techniques (in the eighties) and the popularity of digital (in the noughties). You can still get a Sony A200 with 18-70 kit lens for under £300, which is an amazing bargain by any reckoning. But top end gear that sells in small volume - Nikon D3, Canon 1D series, L lenses - will follow the exchange rate much more closely.

But there is only so much that can be done to reduce manufacturing costs, and the internet has made sure that there is absolutely no slack in distributor and retail margins. So while price increases due to the exchange rate are inevitable, they will have been greeted with at least a small degree of relief as a ligitimate excuse to shove prices up.

And they will have been pushed up higher than strictly essential in the hope of clawing back some of the lost ground, and in an attempt to restablish a new, higher playing field. As such, there will be strong resistance to reduce prices even if things like cheaper sensor chips come on stream, or the exchange rate moves in our favour. This credit crunch is a wonderful mask in that respect and as has already been pointed out prices rarely come down - at least they certainly don't come down at anything like the speed with which they went up. While it is the market that drives prices up, it's human nature that will keep them there.

But the fact remains that we live in a very competitive market and if prices do begin to fall in real terms, then whatever benefits there are will be passed on to consumers sooner or later. Cartels don't work. If change is coming, we will likely see it first from the smaller retailers who can react more quickly. The bigger traders like stability and they tend not to be able to move that quickly especially if they have long term or bulk purchasing commitments in place.

I guess what I'm saying is that while prices are driven up by unavoidable circumstances, human nature will try to exploit those circumstances, and maintain any upside for as long as possible. But if there is an opportunity for price reductions, somebody will do it and the rest will be forced to follow. I don't see any likelyhood of that happening anytime soon :(

What does Kerso reckon?
 
Why is it other things from Japan such as motorbikes haven't seen the increases that photography equipment has?
 
Kev M said:
Why is it other things from Japan such as motorbikes haven't seen the increases that photography equipment has?
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Because there is more margin in them, or some other opportunity to maintain prices. My guess is there is more margin because they are very specialist consumer, not mass market consumer, and they are much more difficult to ship between markets which helps to build in margin. The manufacturers have a lot more control. Not really comparable I would say.

The other one is flat screen TVs which are still very competitive. This is down to mass production savings driven even faster by huge worldwide consumer demand, which is outweighing exchange rate increases.

Edit: There is always a reason why prices are as they are. And I know enough to know that all markets are different and making comparisons is so skewed as to make it very unreliable in terms of projections. And I'm only guessing at all of this! People spend their whole lives doing this, and it's as much an art as a science.

One quite valid explanation for high prices is indeed profiteering - if you can get away with it. Take Leica. Is their D-Lux-4 worth nearly double the cost of the identical Pano LX3? Apparently yes. And even more if it's got a limited edition sticker on it. Does it cost any more to produce? Absolutely not! It comes off the same production line and has never touched German soil.
 
After all this discussion I actually found the receipt from Kerso for my 24-105. £570 last year, Warehouse Express currently want £945.
 
The whole issue of people selling 2nd gear for more than they paid is irrelevant.
If someone is asking say 50% more than the used price 6 months ago then you should be asking them to show you the receipt proving they bought it recently therefore justifying their asking price.
Bottom line though is they can ask what they want.
Ive seen a few Tammy and Siggy 70 -200mm f2.8 recently for £450+ when they were max £250 -£300 a few months ago.
Also Canon 5D @ £800 but the last four people i know who bought one used paid £650 to £720 for them.
In the end...Check used prices and take or leave it.
 
ShawWellPete said:
What if they are selling it to buy something else that has gone up?
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The credit crunch does not affect the price of used gear m8. If it was worth £300 6 months ago its still only worth that or less now.
 
CraigF said:
The credit crunch does not affect the price of used gear m8. If it was worth £300 6 months ago its still only worth that or less now.
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Good condition second hand lenses are usually 20-30% lens than new ones. If new ones go up then so will the second hand ones, as the market this year has proven.

The fact that you want prices to remain low however, is perfectly understandable if a little unrealistic.
 
mid_gen said:
I think you'll find that the price hikes just about match the exchange rate fall. The retailer's prices always lag the actual exchange rate by a few months depending on how much stock they hold, and how much margin they are prepared to sacrifice.
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i don't agree at all, if you look at exchange rates since the high point, some 10 months ago and the compare to now, its about a 35%, but the prices for equipment especially lenses have increase by 50%.

pound/yen 1:218, now 1:145 (BBC business data) which is a 33% drop in value. as you can see doubling the lenses costs do not match the exchange rates at all for example nikon 50mm f1.8 £65 to £90; sigma 100-300 f4 £600 now its £900; sigma 24-70 f2.8 £220 to £400; nikon 70-200 f2.8 VR was £1050-1100 now £1500 at least etc etc...some lenses are worse affected by others
 
CraigF said:
The whole issue of people selling 2nd gear for more than they paid is irrelevant.
If someone is asking say 50% more than the used price 6 months ago then you should be asking them to show you the receipt proving they bought it recently therefore justifying their asking price.

In the end...Check used prices and take or leave it.
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CraigF said:
The credit crunch does not affect the price of used gear m8. If it was worth £300 6 months ago its still only worth that or less now.
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This isn't true. The availability of alternatives has a significant influence over prices. If the price of a new product goes up then it is completely normal for people to be willing to pay, and able to charge, more for the same product secondhand.
 
from previous posts about cartel. i think it does exist in this industry or rather the shops are happy to have their products at ridiculous high market value cos they know some sod will want to buy them.

to break a cartel is for someone to under cut everyone else and thus driving down the prices. I really cannot see this happening. i can't see this happening, first of all you need volume to make a good profit by under cutting. cameras and lenses are very specialised stuff and thus volume tend to be small, even the cheap stuff. and secondly you need a big company or a player with good finance, which none of the chains are at the moment. So i really think the shops are going to be price fixing and profiteering unfortunately
 
ricky1980 said:
...to break a cartel...
you need a big company or a player with good finance, which none of the chains are at the moment. So i really think the shops are going to be price fixing and profiteering unfortunately
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These days it only takes one independent on-line retailer to break a cartel. There is no organised price fixing in UK photographic retail - it's not possible.
 
mikeward said:
no the price fixing is done by the manufacturers not the sellers.
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I seriously doubt that too. Only Canon and Nikon are interested in the status quo. Look at what Sony is doing to prices, just to get a toe-hold in the market. Canon and Nikon must absolutely hate that, but they can't stop it.

And then there's Panosonic, Samsung, Olympus etc all desperate for a slice of the action. There only one thing fixing their prices, and that's the market. You can't have price fixing or cartels in any truly competitive market, and that is what photography is.
 
HoppyUK said:
I seriously doubt that too. Only Canon and Nikon are interested in the status quo. Look at what Sony is doing to prices, just to get a toe-hold in the market. Canon and Nikon must absolutely hate that, but they can't stop it.

And then there's Panosonic, Samsung, Olympus etc all desperate for a slice of the action. There only one thing fixing their prices, and that's the market. You can't have price fixing or cartels in any truly competitive market, and that is what photography is.
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Both Samsung and Sony have already been heavily fined for running cartels in other markets, what makes photography any different?
 
Flash In The Pan said:
Both Samsung and Sony have already been heavily fined for running cartels in other markets, what makes photography any different?
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They might try, but it obviously doesn't work. You cannot sustain a cartel in a competitive market. It can only ever work if all parties have a strong vested interest in the status quo. That is simply not the case in photography.
 
HoppyUK said:
These days it only takes one independent on-line retailer to break a cartel. There is no organised price fixing in UK photographic retail - it's not possible.
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maybe not organised but they pretty much all know what the others are selling them at. as i said you need massive volumes at low prices to drive the prices down, i can't see it happening. a small retailer may lower the prices but his/her shop will run out of stock very quickly, and resupply generally takes ages. like the 50mm 1.8d etc :)
 
ricky1980 said:
i don't agree at all, if you look at exchange rates since the high point, some 10 months ago and the compare to now, its about a 35%, but the prices for equipment especially lenses have increase by 50%.

pound/yen 1:218, now 1:145 (BBC business data) which is a 33% drop in value. as you can see doubling the lenses costs do not match the exchange rates at all for example nikon 50mm f1.8 £65 to £90; sigma 100-300 f4 £600 now its £900; sigma 24-70 f2.8 £220 to £400; nikon 70-200 f2.8 VR was £1050-1100 now £1500 at least etc etc...some lenses are worse affected by others
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Last time I looked the £ had fallen from a 52 week high of 220 to a 52 week low of 120 which in my fag-packet maths is around 40-45%. I think distributors/retailers etc have actually been swallowing some pretty serious dents in their margins due to the weakness of the pound.

Would be interesting to hear what someone like Kerso has to say on the matter, although he's unlikely to start discussing his margins!
 
Prices reflect The cost of manufacture the value and cost of money and the cost of selling.

The main factors in evidence now is the relative value of money.
This will change with inflation/deflation and the cost of borrowing.

Without changes in these areas prices are unlikely to move very much in either direction unless those factors also change.

Prices rarely fall for any extended period of time.
The thing that makes prices seem more affordable is wage inflation and that is unlikely to increase any time soon.

Since the relative value of the pound is likely to remain weak for the foreseeable future, do not expect any price falls on imported products either.

The most likely source of " exceptional value" is fire sales... clearance stock... and liquidations.

We must all learn to be fast on our feet, to win any bargains.
 
^^^ Agree with the two posts above.

"I think distributors/retailers etc have actually been swallowing some pretty serious dents in their margins due to the weakness of the pound." mid gen

"Since the relative value of the pound is likely to remain weak for the foreseeable future, do not expect any price falls on imported products either." Terrywoodenpic

The only products that have any chance of breaking this norm are those where consumer demand continues to grow, and where manufacturing technology and scale economies can still be driven through. That has certainly been the case with photography in the past, but not presently. Big tellies seem to be doing that still, but not much else in consumer electronics.
 
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