The Myth of outrageous new Canon lens prices...

Hello,

I've been reading (and drooling over) about the new lenses that Canon is releasing (and has released in the past couple of years).

I must admit that the most common reaction that I come across is the (understandable) disappointment over the $ and € price increases over these products.

One common comment is that Canon is "taking advantage" of its dominant position in the market and increasing the prices of its lenses in order to "rake it in"...

So, I decided to separate the facts from the myth and took a short **EDIT it ended up being not short at all! /EDIT** visit to the "Canon Lens Museum" in order to take a look at historical prices of the EF lens lineup (**EDIT and for historical context I looked at the New DF, FD, FL, R and S mount lens price histories /EDIT**).

I sampled the price of a few lenses (all f/2.8L except for one **EDIT - My charts now contain all lenses that have history of more than 2 models over their lifetime - EDIT**) that have had different iterations/updates over the years to determine exactly how "outrageous" the price increases have been.

Surprise, surprise! The latest versions have actually had the smallest price increases (ave % price increase per year) compared to their previous brethren...

Of course, it doesn't change the fact that the new lenses are expensive, but what I conclude from my short "research" is that Canon is not really at fault here, but rather the exchange rates. For some reason, unbeknownst to me, the Japanese Yen has been very strong compared to other currencies.

Of course people will use electronics prices (also Japanese made) to "prove" that my point is wrong, but don't forget that glass is glass and does not follow Moore's Law. Glass does not get smaller/faster/cheaper every 24 months...

I hope you find this interesting. I thought it was so I decided to share...

<EDIT - UPDATED 04.08.2014 >

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Thanks for the work you've done here.

Not surprised with the information you've come up with - people don't even factor inflation into prices! If there's something we should be mad about, it should be housing prices...

Good work and thanks for sharing.

I think with the US economy, and the economy of other countries, the price increase just "seems" gigantic?

nice piece of work, thanks for sharing it.

Thanks for the kind words guys.

It is quite startling to see that despite the huge advancements of, say, the 300mm and 400mm telephotos in both image quality and weight (also very important), the products, which bears saying, are low volume, niche-type products, have only averaged 2% price increase per year over their lifetime.
That's lower than inflation!

I have a feeling that Canon's profit margins are suffering for it.
I'm not a Canon shill by any means, I've always liked their products, but I am, like everybody else, very price sensitive.

At least now now I know that nothing "fishy" is going on with Canon's latest price "explosions".

Thanks, this is quite interesting information.

[Start rant]
Pricing strategies are actually quite complex decisions. Most of the time, we tend to think of it as cost plus - that is a company simply adds a markup to the cost of production and that's their profit. The reality is that pricing can be and in many cases, should be set completely independent of the cost of production. Obviously it should be more than production costs over the long term. There's a whole other area of study in marketing for how pricing should be set and what it communicates to the customers.

At the end of the day, the price is a reflection of consumers' willingness to pay for that product, they wouldn't give a rat's ass about how much it costs you to make it. So if people are willing to pay the price and the company's turning a profit given the amount that it can produce & sell, then there's really not a "problem". These lenses aren't the necessity of life that needs to be regulated to ensure that everyone has to have access to them, so this is capitalism at its finest [/End Rant]

http://www.youtube.com​/watch?v=ovxtgj4SsiI

Also, this video will give you an appreciated for the manufacturing process. It follows the Canon 500mm f/4 through manufacturing.

Hope you dont mind if I link this around a bit.. it kind of irks me when people complain about the 'wicked high prices' of Canon's new offerings. Any chance you could do this with the primes that are coming out too?

Capeachy wrote in post #14281217
At the end of the day, the price is a reflection of consumers' willingness to pay for that product, they wouldn't give a rat's ass about how much it costs you to make it. So if people are willing to pay the price and the company's turning a profit given the amount that it can produce & sell, then there's really not a "problem". These lenses aren't the necessity of life that needs to be regulated to ensure that everyone has to have access to them, so this is capitalism at its finest

The results of "refusing to pay" are not always what we want. Sure the companies will respond with cheaper prices, but they will reduce quality and cost to get there. My sister has a Canon SD850 from back when canon could charge $400 for a point and shoot. It's a well built, solid camera that just exudes quality. It seemed better built than my S90! Contrast that with the new sub $200 ELPH cameras and there is no comparison. Canon lowered build grade in order to make enough profit margin on cameras that can no longer be sold at high prices.

Another example is bikes. Shimano parts are on most bikes and make up a good chunk of the price of the bike. Shimano is in Japan and has the same exchange rate woes. People didn't want to pay 20+% for the same bike models as they had 2-3 years ago, so the bike makes just started re-releasing the same bike models with lesser parts. A $1000 bike that would have had 105 level parts now has mostly Tiagra. And Shimano came out with two level of their Sora (entry level) so that they could sell cheaper parts with the same name on $5-600 bikes.

Companies exist to make money, not provide us with toys. If we don't pay what they need to make their profit goals, they will change what they sell.

Nice theory Taylor, and true in many/most cases. Do you feel the same way about fuel companies, by chance?

Mistabernie wrote in post #14281251
Hope you dont mind if I link this around a bit.. it kind of irks me when people complain about the 'wicked high prices' of Canon's new offerings. Any chance you could do this with the primes that are coming out too?

By all means, link away!

As you may have noticed I performed this on lenses that have a long history while being in a specific group / focal length / aperture. My minimum sample size is 3.

I'll do the 100mm f/2.8 macro (sample size = 3) and if you have any other examples of lenses that have been around for a while relatively unchanged, let me know...

1Tanker wrote in post #14281476
Nice theory Taylor, and true in many/most cases. Do you feel the same way about fuel companies, by chance?

Fuel is more of a raw commodity. There is not really a good way to make cheaper crude oil by using inferior blends, is there? If so, I am sure someone is doing it.

tkbslc wrote in post #14281558
Fuel is more of a raw commodity. There is not really a good way to make cheaper crude oil by using inferior blends, is there? If so, I am sure someone is doing it.

Oil prices are set by a cartel called OPEC which many countries belong to. Together they can and have fixed the price and supply. If this was an organization within Canada or US, it would be considered illegal. But because they are sovereign nations, you can't do much against it without possibly severe repercussions against your own products/goods.

Coffee bean prices were similarly affected in the past.

I understand that. I was just saying I don't think the same logic applies.