Panasonic’s press office has just told me that the highly-anticipated LX100 compact which was announced last month at Photokina has been reduced in price to £699. This is £100 less than the launch price and cameras have not yet hit the dealers. This is odd and I wonder why. Has the company suddenly decided that production costs are lower than originally thought? Or perhaps there is some strong competition in the offing from other manufacturers.
Either way, the Leica D-Lux at £825 is now less of a bargain, although the premium is still lower than that charged for the V-Lux.
Today I managed to chat with a couple of Panasonic dealers and both said that the dealer network, in particular the larger wholesale retailers, had cribbed at the £799 price and felt that the LX100 would not sell with such a high tag. It therefore looks as though the decision to reduce the price had been rather forced on the company.
John, I think you have made a shrewd assessment of the situation. It is pretty clear that with such a small difference (£26 as it was in the UK) anyone would be mad not to prefer the D-Lux over the LX100. Whichever way you look it is, at that price differential the D-Lux was the only choice. I doubt that Leica will change their pricing strategy and the new £126 premium still leaves room to demonstrate the financial benefits of choosing the Leica. Of course, the big factor is discounting. That £699 price of the LX100 will soon come down once the initial demand has waned. Leica dealers will be slower to respond, although as usual there will be deals to be done.
Unfortunately for Leica dealers, what they had expected to be a major sales boost (and some may have over-ordered the D-Lux because of this low price differential) will probably not happen.
Mike , no way would the production costs have been wrong.Nowadays they know the costs down to a tenth of a yen in advance and these cameras are all very similar in terms of component and labour costs.
My take is that Panasonic are desperate to make some money out of their camera business-and so they set a retail price structure which the big retailers ( Amazon,B&H etc) baulked at so Panasonic were forced to face reality and lower the price or not get the volume.So their profit enhancement move failed.
The Leica D-Lux premium validates this hypothesis.Leica probably decided what they thought was their retail price point and as you point out the % premium was orginally less than they usually aspire to – because Panasonic pitched high.Now Panasonic have cut their price and so the normal Leica premium % applies.
I do wonder if Leica’s premiums on these "badge engineered" cameras are actually hindering Leica’s sales and not optimising their profits.If the Leica derivative cost say just 15% more than the vanilla Panasonic model I am sure that many more people would buy the Leica derivative in preference.Without knowledge of the cost structures I cannot really make this case but I do wonder if Leica have got their strategy wrong .