Welcome to More Price Increases

While Chinese lenses with no electronics seem to keep getting cheaper, I’m guessing that 2023 is going to be another year of increasing prices for most camera gear. Leica and Ricoh have already announced small adjustments in Japan, but as before, I expect Japan is just the canary in the coal mine for pricing. 

From a US perspective, of course, this “feels” wrong, because the dollar is so strong we’d generally expect lower prices for imported products, and let’s face it, cameras and lenses are all imported products. 

Behind the scenes, two supply chain factors are driving things, though. First, for the sophisticated image sensor and processor chips, fab space is 100% booked, which means that the camera makers want to do the same thing the US auto makers have been doing: put the chips they can get into the highest priced products they can sell, not the lowest cost ones (Z30, Z50, Zfc notwithstanding ;~). 

Because the camera companies are rationing chips, they're not getting the benefit of economies of scale, so the natural inclination is raise the price to give provide sales/profit growth. This is why I expect that any Nikon Z6 III will not stay at the US$2000 mark, but more likely move to the US$2500 mark that Canon and Sony have already moved up to. 

Second, supplier reliability is still really low. For all of 2022 the camera makers were juggling suppliers as China’s Zero COVID policy kept shutting down regions, which in turn shut down the smaller parts makers randomly. It may seem strange, but screws and springs and other small parts became an issue. Changing suppliers instantly and managing the QA on that doesn’t come at no cost.

As I’ll write soon over on sansmirror, I expect a new problem in 2023: continuing DSLR volume drops. Perhaps more precipitous volume drops than in past years. If 2022 camera shipments do work out to around 5.8m ILC shipments as I expect, one third of those were DSLRs. Lose another half of the DSLR volume in 2023 and mirrorless will have a difficult time picking up those units. Particularly since none of the camera makers want to “go low” and increase volume with consumer units (Z30, Z50, Zfc notwithstanding ;~). 

The adjustment I expect from Canon and Nikon to make up for lower consumer DSLR sales is simple: higher-priced mirrorless in their place, which won’t generate the same volume because, as every MBA student will chant in unison: “price elasticity of demand.” 

That’s not to say there won’t be instant rebates and flash sales from time to time. That Z6 II that’s usually US$2000 is discounted to US$1700 as I write this over the holiday. The Z6 III will likely be US$2500 and when on eventual discount more like US$2200 at times. Sony’s been solidly mounted ahead of this trend, Canon’s been straddling it, and it’s now Nikon’s turn to find the horse. 

Because of the dollar’s strength, I think we’ll see the same regional changes in pricing we saw in 2022: Japan first, Europe second, US last. But if the dollar arcs back down to earth, it might just end up “everyone pays more.” 

The 2022 holiday season had some behind-the-scenes “pricing” adjustments that you probably didn’t notice. Spiffs to salespeople and volume discounts to dealers tended to disappear this year. Bundled discounts didn’t scale up (e.g. free FTZ Adapter with body, or buy any body and any lens and get an additional discount). No last minute, time-dependent, large discounts showed up. You might even consider the launch of so many products in the last quarter of the year selling at list price another aspect of that (the camera makers could have used the parts for existing models and pushed volume, leaving the new models until after the holiday, as usual). 

The camera companies were as “buttoned up” as I’ve ever seen them in Q4 of the year. Very little marketing and sales aggression. What they sold is what they sold.

My expectation for 2023 is that they’ll stay fairly buttoned up, see if they can grow via pricing instead of volume, and watch carefully how that works. What I hear out of Tokyo is that everyone believes they had a reasonable holiday season that will keep them profitable, perhaps even growing profits, and there’s absolutely no panic going on in the management suites at the moment. 

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