Why is this camera priced at $6995?

Why is this camera priced at $6995? Because it’s a Leica.

In the evolving digital photography industry where premium brands like Nikon and Canon have been forced to discount their high-end cameras in order to survive, Leica stands out. The Leica M9’s $6995 price—and that’s for just the body—is multiples higher than comparable products from both Nikon and Canon.

The product description (taken from a real Leica ad) is revealing in that it only highlights a few features; camera type, resolution, CCD size, LCD size, shutter description and color availability. Similar offerings from Nikon and Canon include a feature list 2-3 times as long. All that doesn’t matter. I suspect that the Leica offering could eliminate every feature from their ad and it would be just as compelling. In this case, it’s all about the Leica brand.

While I’m not a camera expert, I have to believe that while the Leica M9 is a tremendous camera, it probably doesn’t warrant a price multiple of 2-3 times that of other (similar featured) cameras. So why can Leica charge so much? Because they know that in many cases, price drives value (at least in the perception of its target buying audience).

Looking at the Leica brand I’d actually go one step further and speculate that the price-demand curve for Leica is such that if they decided to raise prices even further, demand would stay constant (or even rise). This flat to upward slopping demand curve (as price increases, demand stays constant or even increases) is a testament of the incredible power of the Leica brand. And just about the worst thing Leica could do would be to lower prices in search for demand.

Here’s the takeaway: Respect the power of the brand. It allows you to use price to drive value - giving you pricing advantages that can't be replicated by your competitors.