The Cost of Passport

[Nowhereman]

>> You, as the consumer, have to place your own value on the items

>>you purchase. If the passport has a value to you, buy the new one,

>>if not, go used.

 

That's not the only choice: the choice is Passport, used, or gray market. And gray market may the best deal because you don't have to worry about any defects that may appear in the used lens that you may not have seen when buying it. Despite what Passport advocates may say, Leica has a one-year internatyional guarantee on grey market lenses, as it doe for lenses bought anywhere in the world from a Leica dealer. Just thibk about it, it has to be this way: say, you live for two years in Japan and buy some lenses in Hong Kong (I bought an M6 there some years ago for $1250 when the US price was $1700) and you move back tot the States. You think that Leica USA will not repair the equipment under the one year guarantee? Of course they will. In my case, Leica USA aligned the rangefinder in M6 for free after three years.

 

--Mitch/Bangkok

[lee_shively]

I bought my first camera somewhere about 1973. I've probably bought a carload of cameras and lenses over the years, new and used. In that 29+ years, I've had one camera that required warranty service. I've had one autofocus lens that failed within a week of purchase and was returned to B&H for replacement. Even considering the mass of electronic crap I've purchased in my lifetime, I can only remember two items that needed warranty repair--both pieces being stereo equipment. Warranties are good but not worth the nearly $200 extra it will cost you.

[bob soltis]

<<You, as the consumer, have to place your own value on the items you

purchase. If the passport has a value to you, buy the new one, if not,

go used. >>

 

I burned a hole in the shutter of my M6 walking around sans lens cap.

 

Leica USA didn't have a shutter handy, and John Dempsey of Bob Davis

Camera in La Jolla insisted that Leica replace the M6 under passport.

Leica did.

 

IMHO, there can be value in establishing and maintaining a business

relationship with a dealer, and in having the Passport warranty.

 

Best

[bobtodrick]

Bob...unfortunately, in my mind, you prove my point exactly. Why should I, in any way have to pay for the fact that you've burned a hole in your shutter...something that is not a fault of the camera at all, but you not reading your manual carefully where it says plainly that this is a distinct possiblilty. IMO I am paying for the fact that too many people don't want to take responsibility for taking care of their investments. Leica (probably being financially astute) has taken the stance that by keeping all these people happy they'll buy more Leica, and with such a small market base they need all the help they can get.

[cliff_henry]

Bob...I'm afraid your thinking is a little off. I've heard your train of thought many time before, i.e., for Leica, or any manufacturer, if they make a product and their cost, including materials, labor, marketing, warranty (Passport) etc. is X, then they will sell it for X + some percent of markup for their profit. I don't want to burst your bubble or change your perception of reality, but it just doesn't work that way.

 

You would be shocked if you knew Leica's or any manufacturer's cost compared to their selling price. In my previous post I stated that if they didn't make a profit then they would not be around to continue to make the great products that we all love to buy. And not withstanding my statement about all cost being built into the price, I didn't say how much that price might be marked up.

 

Manufacturers are not selling commodities, each of their products are unique. If you are selling a unique product, then your pricing is based on "perceived value" and not your cost. Any manufacturer not pricing this way is no longer with us or will soon be gone. What do you perceive the value of a M7 to be? Your perception is based on the price having been established where it is over time and the willingness of others to pay that price - if Leica sells it for that price then it must be good, because that's expensive, and others buy it for that price so it must be worth the selling price. The actual price has nothing to do with what it cost them to make it or what it cost to include the PP.

 

Leica's image is they make the very best products in their category. One way to make that statement is to be the highest priced on the block. There are many consumers that get off on just knowing they paid more for their "toys" that their buddies. Should I use the S word.

 

So, your effort to put a cost on the Passport just doesn't work. Sure Leica knows their cost, but it's not calculated like you think and it's not anywhere near what you think. Again, the PP is a marketing tool!

 

IMHO, if Leica did not offer the PP they would still not reduce their prices. Why would they? They don't want to be less expensive, they want to be known as the best, top of the line - meaning most expensive in the eyes of consumers. Would Leica have as much appeal to you if they were priced the same as say Pentax? I think not; because then every photographer you know would own one and the mystic would be gone.

 

Here endth the lesson...

 

Cliff

[markci]

<i>

Would Leica have as much appeal to you if they were priced the same as say Pentax? I think not; because then every photographer you know would own one and the mystic would be gone.

</i>

<p>

It would have vastly more appeal if it were priced like a Pentax.

<p>

Warranties and other forms of insurance are always, statistically speaking, a bad deal for the purchaser. If there weren't they wouldn't be offered. The only insurance worth buying is against contingincies you absolutely can't afford.

[bobtodrick]

Cliff...I think you are under the perception that cameras are like jewellry since they are somewhat of a luxury item. I've been in the sales and marketing of photo equipment for over 25 years, and count as faily close personal friends people like Gerry Smith of Kinderman, and Werner Schmalz, who was the Canadian importer of Leica for 20 odd years. Heres a breakdown of the cost you pay at the counter (these are non sale average selling figures). 20% goes to the dealer. 20% goes to the distributor. According to Leica figures 35 - 40% of the purchase price are hard costs...material, labour, R&D, leaving 20 or 25 percent (hoped for...why do you think Leicas annual reports have looked so dismal the last few years) profit for Leica AG. If you think the cost of the PP is just being absorbed due to 100 and 200% profits (like many people seem to feel), you are sorely mistaken. We are definitely paying, I'd estimate in the neighbourhood of 60-75$ a piece (lens or body) for PP. Not a lot I admit, but if I decide I want to buy 'insurance' that should be up to me.

[cliff_henry]

Bob...You are correct, you should have the consumer right to decide if you want to pay for an extended warranty (PP) when you make a purchase. I'll be the first one there to support your rights. However, Leica has chosen to market their USA products w/the PP and I don't think my or your opinion will change their mind. Of course, as another poster pointed out, you do have the option to purchase Leica w/o the PP just by buying gray market. You still get the 1 year international warranty. I guess the bottom line as to what the PP really cost the consumer, or is worth, would be the difference between USA price w/PP and gray market w/o.

 

The original post posed the question about paying a 40% premium for the PP (math was corrected). Some poster even suggested that Leica was making such a large profit on the PP that they were able to keep their product prices lower. Others questioned paying extra for an extended warranty w/o a choice.

 

The purpose of my second post was that I heard the unstated idea in the general tone of the postings that Leica, and consequently all other manufacturers, were quantifying all of their cost, including the PP, and then adding in their profit to arrive at the selling price. They do this to some extent, but the point I wanted to make was that the final selling price was not just a factor of those cost - especially the PP - and that consumers are willing to pay certain prices because of their own perceived value of the produces. Leica understands this concept and while the hard cost, including the cost of the PP, are in the price of their products, they also add an additional price - for additional profit - for the value the consumers see in their products. I never suggested that Leica was making 100 to 200% profit.

 

I repeat, the PP is a marketing tool. I don't know what its cost is to Leica. Your estimate of $60-$75 seems very high to me. I think that if Leica removed the PP and its cost from their pricing that the difference would be so insignificant as to be meaningless. I also think that if they did remove it they would not reduce their pricing because of the reasons I stated in my post. If they offered an extended warranty as a purchase option, I think it would cost multiple times what it really cost now.

 

Cliff

[douglas k.]

To Marc's query, above: in '98 I bought a Nikon FM2n gray market from B&H. It was so cheap that I actually bought the extended warranty, which is administered by MACK (this is on-topic, since I believe that MACK also administers the warranty for gray market Leica gear bought through Delta International). To make a long story short -- the camera is currently having its fifth visit to MACK for the same problem -- they've not yet been able to recognize the problem, much less fix it. At least they've agreed to pay S&H for these last two visits; but all in all, the warranty is essentially worthless -- between the $30 I spent on it, and the $50 spent shipping the camera for the first three visits, and all the time lost, I could have sent it to a competent facility and paid myself.

 

If your new gear comes with a MACK warranty, you'd best consider it unwarranted.