Archived posting to the Leica Users Group, 2003/03/06

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Subject: RE: [Leica] Leicavit-M, Business Models, Collector's Items, and other Ramblings Extraordinaire!
From: "Kit McChesney | acmefoto" <kitmc@acmefoto.com>
Date: Thu, 6 Mar 2003 13:06:49 -0700

Austin--

On the first point (differences), yes they are different. How they function
or what they do may not be different, but they are different products with
different manufacturers with many differences between them.

On the second point (lifetime warranty), yes, Tom warranties them for life.
But for the life of whom? And as far as warranties go, I think most folks
know that a few years is standard for a warranty and beyond that, you're on
your own. Everyone knows that after a while, things age, stuff breaks, and
people drop things after they're not new anymore.

On the third point (infrastructure), I'm not talking about dealerships. I'm
talking about the manufacturing infrastructure. By the time the product gets
to the dealer for sale, the majority of the cost has already been built-in
to the product. Don't kid yourself and think that the margins are that high.
If I wanted to go out of business in a day, I could still sell you products
at cost and you'd say, "Gosh, how come these things are so darned
expensive?"

On the fourth point (Leica vs Tom and your willingness to pay whatever you
pay), well, Austin, that's your choice. No one is forcing you to buy the
Leicavit. More power to you if you want to buy Tom's product. That's great
for you, and for Tom, and for whoever is selling Tom's goodies. There are
those who will pay for the Leicavit from Leica. That's a different customer
from Austin Franklin.

On the fifth point (economies of scale with a larger company, prices, etc),
I said "one would think that a large company could make a product much
cheaper," but at the same time, these aren't the same product. And as I said
in another post, the after-market manufacturer doesn't have the same
development costs that the OEM has. Remember who invented the Leicavit, the
original, in the first place. Those costs are part of creating the new one.
Perhaps the two products are very different. Have we compared what's inside
and how they're made? Are they identical? Probably not. Tom's may well be
the superior product. I'm willing to entertain that idea. Why not?

On the sixth point (Tom's pricing and if it's fair), maybe Tom's pricing is
fair. Maybe it's more fair to his customers than it is to him! I have no
idea! Maybe he'll raise his prices because he can. Maybe he won't. Maybe he
does just fine where he is. Maybe he'll get more customers because the
presence of the Leicavit will raise people's awareness of his product.
People who might find themselves in the market for a Leicavit who might find
the price too steep may find their dealers showing them an Abrahmsson winder
instead. Actually, I think the really smart dealers will carry both and give
their customers a choice.

On the last point (collector's items), well, like it or not, Leica is a
collector's item. Every Leica product that comes off the workbench is a
collector's item. So the Leicavit-M will be one, too. But at the same time,
I'd bet that Tom's winders are also collector's items. What's wrong with
that? Doesn't matter to me. As I've said before, there's a collector in
every user, and a user in every collector. If you've got more than one of
anything, you're a collector. ;-)

Kit


- -----Original Message-----
From: owner-leica-users@mejac.palo-alto.ca.us
[mailto:owner-leica-users@mejac.palo-alto.ca.us]On Behalf Of Austin
Franklin
Sent: Thursday, March 06, 2003 11:55 AM
To: leica-users@mejac.palo-alto.ca.us
Subject: RE: [Leica] Comments on a BD Colen statement & PMA


Kit,

> With all due respect to everyone who has posted to this thread, I think it
> is difficult to compare the products that Tom makes to those that Leica
> makes in terms of cost, because they are two different products

Are they VERY different?  They may be different, but I believe hardly
"very"...

> with very
> different business models.

Why should that matter, as far as why I should pay more for it?  Another
thing to consider is warranty.  Tom stands behind his for life, no matter
where you bought it...and that avoids the Leica "warranty fuss fest".

> Though both are hand-made, the infrastructure
> that is bringing these two products to market is very, very different.

Why?  Tom sells his through Leica dealers as well...and doesn't Leica do so
as well?

> Not
> only that, but even if Tom's overhead is lower than Leica's because he
> operates a smaller operation, the cost of creating each individual unit is
> how you have to compare--and again, that's only if the two are identical
> products.

I disagree.  I don't CARE how much it costs anyone to make what they make.
I know that I will absolutely not pay a premium of 1.5-2x for something with
a Leica name on it, over Tom's superb product, unless there is some
advantage to the Leica unit, which there does not appear to be.

> One would think that a large company that can take advantage of
> economies of
> scale by using its existing manufacturing capacity and whatever else can
> make a larger company more efficient at making something in quantity would
> be able to do so with a price that is competitive.

Correct...

> But we are basing our
> idea of a competitive price on Tom's current price for his product, which,
> and I know I may get a faceful of rotten tomatoes for this one, may very
> well be underpriced.

But that's his business, not ours...and knowing what I do about the
manufacture of products, I doubt his is underpriced as far as him making a
FAIR profit from it.

> Then again, maybe they are priced just
> right. If that's
> so, then I think--and I may get a faceful of rotten wienerschnitzels for
> this one--that the introduction of the Leicavit-M may in fact help Tom's
> business.

Well, yes and no.  I believe he produces all he can sell...and doesn't want
to produce more...so in reality, they won't help his business, unless he
decides he wants to make more.  The Leica winder may take some sales
away...though I doubt it.

It almost looks to me like it's another "collectors item"...

Regards,

Austin

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