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EPIC and the change in RED from Consumer pricing to Professional Pricing

By Charles Haine  |  30-Jun-2011

The RED Epic-M, originally announced to be $40K, is now up to $58K. Addmittedly, it does more than the RED ONE, which cost only $17K, but does it do 3 1/2 times more? And also, don't camera's always come out every few years that do more and stay the same price? For instance, a top of the line Canon DSLR from right now costs about what a top of the line Canon DSLR did when the RED ONE came out 4 years ago, but does way more for that same price. Camera's are fancy computers, and computers keep getting both better and cheaper.

So, what gives?

In a nutshell, RED is switching from pricing at the consumer level to pricing at the professional level, which is an overall a good thing.

If you are unfamiliar with the distincition, consumer's purchase products for their own personal use, and professionals purchase products for business use. Compare something like sunglasses, say, which you buy to wear, versus a contractor who invests $350 in top quality tools.

Consumer businesses depend on volume to survive, while professional business's depend on margin, meaning a high mark-up. Think about a product like a digital camera, or a non-apple cell phone. The manufacturer profits a very small percentage on each unit sold, but makes their profits on tremendous volume of products moved. Motorola sold millions of RAZR phones per year, so even if they only profited $10 per phone, that could ad up to quite a bit of money.

However, when that phone breaks, what happens? It's hard to get Motorola on the phone. A replacement involves a trip to the store, and often waiting a few weeks while you mail your current one in for warranty repair. Would you want your business, your livelihood, to depend on something like that?

Compare that to the carpenter's tools. Sure, their $350 DeWalt drill-driver costs 10 times as much as the little black & decker, but it's worth it. Even though a huge amount of that (I'm guessing, but maybe as much as 75%) is just pure mark-up profit for the manufacturer.

First off, because the professional tool is designed to undergo day-in, day-out rigor, and a customer service infrastructure is built-in (and paid for by that increased cost) to support you when your tool breaks down. If you're on a job, and your gear goes down, it costs you money. As a contractor, you might loose the job altogether if your tools can't handle it; as a DP, you might loose hours of set time dealing with finicky equipment.

But more importantly, it's worth it because that tool pays for itself. Since you use it in work (and in some fields, like film and medicine, bill directly for your tools use), the tool not only pays itself off but then generates money for you. It costs more money, but because you can rent it out, in the long run it's a profit center.

Nobody rents out consumer goods (ever tried to rent a RAZR? Just buy one on craigslist for $20). But professional goods can earn you money, so it makes sense that they cost more. They are built stronger, and have a corporate level of support, that requires a higher cost, but it's the right cost.

This is why I'm excited that the Epic-M costs $58K. Because it's a signal to me that RED is switching to a Professional business model, as opposed to a consumer model.

The REDONE wouldn't exist without the brilliant idea to create a dgitial cinema camera around a consumer business model. It was a revolution for the industry, whose effects large and small are still being felt and will be for time to come. But, now that the revolution has occured, especially considering the economic climate, it's time for RED to go after a professional, not a consumer, market.

RED as a consumer company was a blessing, but it was also a curse. Without their consumer model, they wouldn't have worked so hard to bring a camera to market that did everything they advertised for only $17K (or $22K with the new sensor). It was truly ground breaking.

But once professionals got their hands on it, there was some friction. I remember one RED event where a professional asked a very reasonable question, and it sounded like the RED rep was shocked and annoyed. I couldn't figure out why, it seemed arrogant, then it hit me:

This was a company founded by a sunglasses maker. If I walked up to Jim Jannard while he was at Oakley and said "I hear you used Polycarbonate OxyCetylne-12 in your lens's, but that doesn't properly block all UV at irradiated angles (I made all that up, by the way)" he'd laugh in my face. That's not how consumers deal with products; I'd come off like a conspiracy theory nut, and he'd be right to be annoyed by me. Try asking someone at best buy about anything, really, and when you go into too much detail they get uncomfortable. Detail isn't for consumers, it's for Pros.

Jannard once described his perfect client, Steve Soderburg, as being someone who never complained, was always grateful and excited for whatever the camera could do. That's not a professional, that's a consumer. Soderburg is powerful enough within his field, and well financed enough, that in a weird way, he's kind of a consumer again. He can adapt his projects to the camera, and spend money in post to clean up problems if they occur. He is as much his own boss as anyone gets to be in the film industry.

But for the rest of us, we're not that powerful, we have clients of our own who have needs from us, and hire us to deliver on those needs. We ask questions and want detail and need support not because we're suspicious, but because we're turning around to our own clients and staking our name and reputation on the equipment that we invest in. We CAN'T be like Soderburg, as much as we might want to be, because our living depends on understanding the camera's and being able to deliver professional results with them.

I hope that the $58K price point is a sign that RED is acknowledging that if you are making digital cinema camera's, you are delivering a professional product. Whatever the margin was on the RED ONE (they might have lost money on them, for all I know, and made it back on the accessories), I hope it's a very healthy one on the Epic. Because professional products deserve a healthy mark-up, to pay for build quality (though the RED one was well built, no complaints there), and to pay for customer service and support that enable it to be a true professional tool.

Also, because of the economy, the volume on this camera is going to be lower. Even though the economy is recovering, loans are harder to get than they were in 07/08, and will remain that way for a very long time. A lot of people took out loans in those years in order to purchase the RED ONE who simply won't be able to get a loan to upgrade to the Epic, even if they wanted to. So, if RED is going to survive as a profitable company, it will have to do it in a lower volume, higher margin business.

This is all guesswork, for all I know RED made more off every RED ONE than it is making on the Epic. But I for one am happy to see pricing for the Epic-M that reflects a professional business model. With the opening of their store in Los Angeles, we've already started to see a higher level of customer service from RED, and I believe we're going to see more of that going forward as the Epic increasingly becomes the standard for motion picture, especially Stereo, production.

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red avenger 19-Jul-2011

RED will be eclipsed by Canon, just like Sun computers was eclipsed by PCs, as Moore's Law tends to favor companies aiming up, rather than companies aiming downwards.

http://blog.9shooter.com/2011/07/red-will-be-eclipsed-by-canon-just-like.html

Kenu Rivas 18-Jul-2011

I have to agree with Jay. I don't know who Chris Hansen is, but he's not from this planet. I think his father is from the planet "CorporateDrone" and his mother from "InSonysbackpocket". Pleeeeease with the "corporate pricing..." That's industry PR speak for "we'll ration technology and we'll make you pay through the nose if you don't have an alternative." Hey, Sony did this to us with introducing a couple of new versions of the same crappy HDV camera from 2004-2008 a year, and expecting us to pay through the nose for minimal changes in technology. The zenith of this was those EX-1, EX-3 cameras, the latter of which cost 10G if you include those stupid proprietary SxS for 1G each. And then the 5Dmk2 and the DSLR revolution happened and now you can shoot better video than those stupid cameras for $400-500 (which is what a Panasonic GH1 with a couple of vintage manual lenses cost). And now, they're panicking introducing the AF-100 and the FS-100 trying to bring consumers back to paying ... somewhat through the nose for a nicely package, when you can get GH1/GH2 and 5dmk2 for a fraction of the cost.

So "professional pricing" my butt. I've never read an article that sucks up to the camera cartel in a worst way in my life.

Lance Bachelder 18-Jul-2011

Wow! Truly one of the worst articles ever posted here. The original Rd One was never a consumer camera. It did offer thousands of indie filmmakers the opportunity to move up to a pro camera without a lot of pain from their HVX's and EX1's. To say that the higher the price the more "pro" is just silly. Sony's F35 was the price of a nice condo - the new F65 will probably be the best cinema camera released to date and will start around 90 grand. Once your in that over 50 grand stratosphere you got a lot of other choices including the insanely great ALEXA and the new F65 - not sure RED is doing the right thing.

Jason Chocianowski 15-Jul-2011

It's amusing the 17k for the red one camera is considered consumer? Red's own website said that a working red unit is really close to 30k and this is a realistic figure to go buy. If they truly want to be professional in products the ideal goal is to make professional equipment at the lowest possible cost to encourage it's acceptance and adoption in the market.

Marc Dobiecki 02-Jul-2011

The RED One & optional MX sensor are far from a consumer camera package. The 17K price tag that you quote is not close to what is required to operate in a professional camera market place. This is especially true if you have upgraded to the MX sensor, SSD module and 256GB SSD media. Depending on your kit, one can easily spend 45-55K on a tricked-out package. This estimate is specific to RED camera body items only and does not include primes / zoom, matte box, follow focus, fluid head, etc.

When I first heard people exclaiming that RED was producing a 17K film killer, I snickered (loudly). First, I’ve learned over the years that cameras are cheap – lenses and accessories that make a package truly complete, are expensive. Secondly, digital acquisition has certainly put a dent in film sales. However, I'm fortunate to be involved with filmed entertainment on a weekly basis and I am consistently impressed with the beauty, flexibility and speed of 100 year old technology. I love my RED MX (which has a 50K price tag before accessories) but am glad that I still have a choice for selecting the right media to support a director’s vision.

Chris 01-Jul-2011

Except that Epic is priced at $28k.
Epic M cameras are hand made, hand machined. Thus the $58k price.

stu aull 01-Jul-2011

While I support the jist of what is being said (Epic=Pro=Good), this article is riddled with omissions:
1) The currently offered Red Epic _M_ is a stop-gap, hand made version of the identical soon-to-be-released EPIC-X, which will be sold in the under-$30K price range. The japan-tsunami event thru a wrench into Red's (and a lot of other manufacturers) plans on camera/accessory deliveries, delaying the mass production of the 'X' version.
So right off the bat, touting the EPIC-M as the "new" Pro price point of Red products is misleading.
2) The original Red One was NEVER marketed as a Consumer-Priced camera. Its workflow and feature-set was (is) aimed at Cinema professionals. so this whole "upgrading Red to Pro prices" theme is, well, goofy. $17K bought you a Red One _body_. Hardly consumer-pricing. I would imagine fully kitted out lens(es), monitor, recording device, etc, etc. these Panavision-killers were closer to $40K. Still a revolutionary product at a fraction of traditional Cine-digital cameras like the big Sonys.

Ironically this article seems to be damning Red with faint praise...

Stu Aull

Jay Rolt 01-Jul-2011

I found this article amusing and absurd. I can't help but wonder which planet this guy is from. Disinformation, misinformation and the antithesis of practical concepts about the realities in pro/consumer markets are the main ingredients in this concotion. Whoa....

Reading this was entertaining but of no other value. Charles Haine simply doesn't know what he's talking about.

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