Why the price difference?

[ninjaleprechaun]

I tried perusing for a topic like this, but I couldnt find one.

I'm just wondering why there is such a price differential between Red and cameras that are currently top of the line but soon to be (seemingly) inferior. Why are the F950 and the Genesis and the Arri D-20 four or five times the cost of Red?

I was asked this by a friend yesterday and I didn't have an answer to it. We couldn't come up with an example of anything major that was actually this much better than its competition (on paper) that was priced so much lower. Almost invariably (with a few exceptions), the lower priced item is actually inferior in some major way that allows for the higher pricepoint of the competing hardware. Is this the case here? Doesn't seem like it based on what we're told.

So... What is Panavision or a Viper's selling point if a $20,000 camera can shoot 4K and can mimic film close to flawlessly? And if it's really so superior, why would anyone sell Red at so low a cost? It's not being developed in a vaccuum. High end hardware creators don't usually look to sell larger volume at a smaller mark up for a higher overall profit because it doesn't really ever work. Often times the rarity of an item, and the fact that most people will not be able to have something so super high end is a large part of its value.

Not trying to be a skeptic, I'm just curious as to the Red creators' input as to what allows them to do this (and why would they?). Thanks for any answers!

[Chris Forbes]

Hmmmm, an eternal question. Probably have to wait for the History channel documentary. :clown2:

Excuse me while I put on my fire proof suit.

[Mark L. Pederson]

So... What is Panavision or a Viper's selling point if a $20,000 camera can shoot 4K and can mimic film close to flawlessly? And if it's really so superior, why would anyone sell Red at so low a cost? It's not being developed in a vaccuum. High end hardware creators don't usually look to sell larger volume at a smaller mark up for a higher overall profit because it doesn't really ever work. Often times the rarity of an item, and the fact that most people will not be able to have something so super high end is a large part of its value.


Ahhhh ... THIS is the question burning in the minds of a many soon-to-be ex-executives at another company ....

[donatello b]

one of many possiblities

other manufacturers tend to price their camera's to where they fit in with current camera's that are selling in the market place NOT based on what the camera cost to make ... so if X camera sells for 50k and does 1,2,3 ... then our new Y camera that does 1,2,3,4,5 should be priced higher so sell it for 75k ...

take the varicam 27 .. it was selling for 65k ... price was lowered to 45k - the panasonic persons i spoke with said they are still making a profit at 45k and it could drop down the line depending on what products are in that range ...

RED is not taking that approach .. guessing - they seem to be pricing it based on cost and a projection of selling X number of units to recover R&D and of course make a profit and to feed $ back into the company ????

also RED pointed out Sony has 200,000 workers
RED has 14 full time ...

[Gunleik Groven]

One point, though is that Red - conceptually - is taking the it-based approach, so Silicon Imaging is more ofa comparison than Viper.

They save a lot (not in R&D but in production) on the fact that there's AFAIK no moving parts inside the camera - except for perhaps a fan -;)

It can be upgraded through softwareupdates.

Basically it's something in between - or rather both - a computer and a dslr that can record more frames pr second.

That is not to say that it is less advanced than the other cameras!

Also by going the RAW route my guessing (!!!) is that they avoid a lot of in-camera processing. The end user have to supply all the computer power needed for final processing. This shifts a lot of cost from cameradevelopment (managing to do all that pre tape/output) and to the user.

Less computing power needed.
The engineers can focus more on raw data throughput and less on in-camera processing.

Then you have the issue of no tapedeck. Although high-end decks are wildly overpriced, they are also quite complicated machines.

Then, of course - you have the "place the product in line with the rest of our gear" issue mentioned earlier.

Finally, they can sustain a lot of servicing over the internet, because the machine is basically a computer.

And I could go on with my wild and unconfirmed guesswork, but it would really be of no use.


Cheers!
Gunleik

[Martin Ludwig]

Jim told us at IBC last year : If we make the camera more expensive, a lot of competitors will try to do the same. in this price categorie no one will try the same.
I am sure, that the price for the camera will not cover the cost to develop and to build it. It is a personal JJ project and it will take some years to get a total return of investment

[Emmanuel Cambier]

Well…
1500 x 17 500$ = 26 250 000$

And that's just for the reserved cameras.
But I don't know much and you could very well be right.
When is that History channel documentary airing?

Emmanuel

[Don Woods]

Easy answer because Jim is the MAN>>> Plane and simple. He wanted to make a camera that could let more people produce moving images in digital cinema then ever before. Giving the starving artist the chance to produce better images to have there work taken more seriously from the start.

So basicly JIM IS DA S H I T !!!

[Greg Voevodsky]

I remember replacing my $100,000 Avid system with a $10,000 FCP system just 4 years later. It was great to watch AVID be forced to offer affordable solutions for the rest of us - would Media Composure software only for $5000 be around if it were not for Apple? No way. Wait till you see what Apple has up its sleve for AVID again this year. I'm guessing afforadable 4k solutions at 1/2 to 1/4 the price of AVIDs top end machines.

[Hrvoje Simic]

1.When you honestly chase your dream, you don't think about the profit.

2.Intelligent thinking saves investment costs on many levels.

3.This approach will pay off anyway.

4.This is how it should be done.

[Joel Kaye]

I'm just wondering why there is such a price differential between Red and cameras that are currently top of the line but soon to be (seemingly) inferior. Why are the F950 and the Genesis and the Arri D-20 four or five times the cost of Red?

They are much higher profit per unit? They build high levels of service into the price? Or their cost of goods is much higher because they run inefficient businesses with bloated spending. There can be many rational reasons including RED selling at a much lower margin in order to expand the market and profit in volume. RED may not have a profit motive at it's core. It might be Jim wants to see if he can do it. Ya know, kinda like Howard Hughes.

None of it matters though. We'll all be able to use our own eyes soon. Many people don't trust their own eyes though... they may feel better spending as much money as possible just to be sure.

[Ralph Oshiro]

1. Jim's a really nice guy and he likes all of us.

[Ralph Oshiro]

Really, I was stunned when RED's price was released. I was thinking $30-$40K for the body only, plus very pricey accessories. When they announced $17.5K, I was floored. When they later annouinced the Nikon F-mount option, I peed my pants.

[Mark B.]

One word... greed.

Asian companies have been price-fixing with one another in order to get their products sold at the highest possible profit. That's why there's a huge price difference between previous camcorders... Red isn't gouging the customer as much.

[Ivan G]

I remember replacing my $100,000 Avid system with a $10,000 FCP system just 4 years later.

Ahhhhh yes :umm: You replaced your Avid and I replaced my Media 100 lx I purchased for $12,000 1996. That was one of the worst investments I made :glare:

[Ralph Oshiro]

MY FIRST RED POSTS . . . DOWN RED MEMORY LANE . . .

Here's one of my first RED-related posts, made back in 25 February 2006. This is what I guessed RED would be selling for:

"RED . . . . . . . . . . $25,000 w/out I/O, storage, lens, shipping 4Q, 200?"

But then, I grew more skeptical only an hour and a half later and posted . . .

"I highly doubt that RED will ship for anything less than $40K or $50K. I don't see how they could do it for less. I don't know what they think "affordable" is at this level of the game. Sure, they could come out with RED for say, $30K or $35K, but with glass ($12K), that's still out of most our reaches."

Then later that night, I posted . .

"I don't mean to rain on Jannard's parade but . . .

Announcing plans for a product, and building a working protoype, and then building a shipping product could take years. I know Jim has a lot of resources and a terrific entreprenuerial vision, but I'd be surprised if there were shipping product anytime before NAB 2007, and perhaps not until NAB 2008. Again, if Jim can do it (and maybe he can, with his resources and his inspiration, which is truly admirable), I'll be the first in line to get one. But I wouldn't hold my breath for an entirely new camera design to come to fruition within anything less than 18 months."

Very glad to see I was proven dead wrong on RED's pricing . . .

[Pig]

LOL , that's funny for sure.
And 35k-40k USD is totally not far fetched even today, and really should still be considered a bargain at that.
Heck, just because we're getting SOOO much for so little now that we know it's $17500 is just mind-boggling.
They even went and upped the specs. Yes, they took a few things out, and personally I am pleased about that. I'm just not too sure I'd much liked a 3.5" LCD on there. MUCH prefer the way they handled it and give us a credit to spend on what WE think most important.

[Martin Ludwig]

Well…
1500 x 17 500$ = 26 250 000$

And that's just for the reserved cameras.
But I don't know much and you could very well be right.
When is that History channel documentary airing?

Emmanuel

that is only the income.
how many people are working at Red ?
How big is the office ?
how big is the risk ? (maybe he has to throw away the first 500 cameras)
26 Mio USD sounds a lot, but the money will find his way - in any direction.
at the moment he is not able to pay his employees with the 1000 usd reservation fee he got.
He will earn his money, anyway - but he does a great job for us with a real
highly risk !

[Stephen Williams]

Hi,

Remember the Viper has been around for over 4 years now, its old technology.
In the first 3 years they sold about 50 cameras as the workflow was undeveloped. Last year they sold a further 50 cameras bringing the total to 100 units. Do the maths yourself!

Stephen

[James T Mather]

Yes, natural technology evolution might be the answer - our friend with the Avid above and then FCP ten years later for a fraction of the price might be a good analogy - Avids at the time were 80,000 with a very restricted audio feature set because they also wanted to sell pro-tools as a seperate thing for 26,000. Then FCP comes out and, presto, pro-tools is now bundled in the price of an Avid and as for FCP, many post houses are now using it as part of the pipeline. Fincher's cutting on it.

Or computers - Silicon Graphics used to be crazily overpriced - then Softimage ported to NT and again presto - they changed their prices and....oh wait, they went bust. Guess they didn't modify their strategy. :greedy:

Or finally, 3d apps - Softimage was 12,000 - then 3dMax and Lightwave start to catch up - in order to compete Soft has to drop prices. People natuarally assume that because it's expensive it's better - once the price point came to within consumer reach many people realised that it was just another option - that Max and Lightwave were about as good in some ways and better in others. Now lots of post houses use max. (it used to be the "game" 3d app - a backhanded way of saying it wasn't up to spec).

The pro industry is a giant, and giants move slowly - It's all about acceptance.

[Matthew Lochman]

An interesting series of video. And a valid response to this thread, I'd say.
http://www.youtube.com/watch?v=9PWXrnsSrf0

[Michael Hastings]

Jim posted somewhere else that RED has 14 employees, so yes they can probably pay the employees with the reservation money.

You should probably figure that the average initial sale will be at least 20K so 1500 x 20K is 30 million - that is about what Ikegami does annually and I guarantee you they would love to have 1500 orders with deposits on their new HD camcorder.

So far Jim's business model has been brilliant.




that is only the income.
how many people are working at Red ?
How big is the office ?
how big is the risk ? (maybe he has to throw away the first 500 cameras)
26 Mio USD sounds a lot, but the money will find his way - in any direction.
at the moment he is not able to pay his employees with the 1000 usd reservation fee he got.
He will earn his money, anyway - but he does a great job for us with a real
highly risk !

[PaulClements]

Pretty simple really. If Red released their camera at 100-200k matching those on the market at the moment anyone that could afford to buy it would go with the tried and tested, even if it was worse than Red. By having such a low price Red will shift far more volume and make as much if they had sold the few at the high price. Their reward is grabbing a large chunk of the market immediately, denting there competitors. From here on in Red has it easy to sell more whereas other companies will have to rethink.

On a more personal level Jim Jannard will make his mark in the movie industry as the man who made digital cinematography an affordable and widely useable format and helped to change the face of independent film-making. And that is likely worth far more than making a bundle of money. Technical Oscars have been given for less, put it that way; I for one would be happy to see them receive such credit if everything goes as planned.

[Ken Willinger]

One word... greed.

Asian companies have been price-fixing with one another in order to get their products sold at the highest possible profit. That's why there's a huge price difference between previous camcorders... Red isn't gouging the customer as much.

An interesting outlook. I have wondered for years why the professional (and also consumer and prosumer) cameras have been entirely a Japanese cartel for 25 years. At least in the television broadcast industry in which I have worked for almost 30 years, there have been really only two major players until recently, Sony and Ikegami. Panasonic has in the last 5 years made great strides into the market, but not before Sony effectively crushed Ikegami. So now it is Sony and Panasonic supplying most of the broadcast cameras in the television market today (at least in the US market). There have been some licensed European companies like Thompson (France...but still a Japanese product) but American companies have been out of the picture since around 1980 (RCA).

So you may be right though I don't want to believe it, that there has been some price fixing on the Japanese part, although it seems that Panasonic is really changing the face of pricing for professional cameras recently with the release of the SDX 900, HDX 900 and the about to be released HPX 500, all much cheaper than their predecessors. And I'm sure causing Sony a bit of anguish.

I always assumed that the pro cameras were so expensive because of the limited market and large amount of R&D involved. The same with the accesories...if it's for the professional market, the price gets jacked up.

So I'm extremely pleased to see RED wade into this marketplace with high ideals and what appears to be just an honest desire to create a great product at a reasonable price. Let's hope it can be the HD solution so many of us have been waiting for, a solution that crosses many platforms. And also competition in the Japanese dominated marketplace.

For the past couple of years I've been wondering how to approach my business as a freelancer with clients asking for so many different formats. BetaSP has made a lot of money for freelancers for a very long time. As an owner/operator all the different format flavors makes renting many different cameras a must...you can't afford to own them all...and renting cuts into a freelancers ability to make a living.

I'm looking forward to NAB. Maybe the cartel will be broken. And from the looks of the current pricing for RED, I don't think "gouging as much" applies at all.

[Martin Drew]

One word... greed.

Asian companies have been price-fixing with one another in order to get their products sold at the highest possible profit. That's why there's a huge price difference between previous camcorders... Red isn't gouging the customer as much.

I disagree. If Japanese manufacturers have been fixing overly inflated prices then home grown competitors would be more prevalent. In the EU there is currently an anti-dumping levy in force against these same Japanese companies, thats the opposite criticism.

I believe the answer is that the world wide market for high end cameras is currently very small, so unit prices are high (to pay for the development costs). The japanese players have been very competitive within this market model. Jims vision, is to see that if a high end camera is cheap enough he could straddle markets and probably generate new markets. Then he can justify a low unit cost.

M

[RED-Tank]

Finally, they can sustain a lot of servicing over the internet, because the machine is basically a computer.


Do you mean a personal-computer that you can upgrade CPU, RAM and add-on card as necessary ? It is super brilliant idea if RED does it for RED-ONE, say we can upgrade CMOS, in-camera buffer, open a slot and put in a new output card for year 2010 technology...

am I back to the day of making my fun DIY PC :-D.

[Rogelio Salinas]

RED is going against the grain and providing a high quality product at a reasonable price. Their profit margins will be smaller than some of the more expensive camera manufacturers, but I guarantee that the respect and appreciation will lie with RED, which will allow them to gain positive word of mouth (one of the best methods of marketing) and help them attain a greater market share. In the short run, RED are making some financial sacrifices, but they will prevail in the long run.