Recently, I was in search of a studio flash that would allow me to experiment with different forms of lighting on a relatively tight photography budget. I ended up looking purchasing the Paul C. Buff Einstein E640 because of its excellent feature set and price of a mere $500. You might think that's a lot, but in the studio flash world, it's not. Take for example the similarly specced Elinchrom Ranger RX AS light that sells for $2,300. Sure, it is twice as powerful as the Einstein, but given that the equivalent recharge time, flash duration and other important factors are essentially equal, buying two Einsteins at $1000 gives you the same capabilities at less than 50% of the price.
So what makes Paul C. Buff able to price their flash units lower than comparable manufacturers like Elinchrom or Profoto? It is their unique business model that eliminates "middlemen" from the equation and seeks lower profit margins. By only selling from their store in Tennessee and through their website, Paul C. Buff removes the markups that suppliers charge the distributors and the markups that distributors charge the consumers. Because the goods are traded less times to get into our hands, we essentially get "wholesale" price. Paul C. Buff, unlike most studio flash manufacturers, attempts to maximize their profit by selling at a lower price and have a greater quantity demanded, compared to selling at "pro" level prices and selling less units. Their business model apparently works as they command approximately 60% of the studio flash market, have their flashes used by professionals, and generate enough revenue such that they are able to generate new highly desired products.
So is this a model that most companies should attempt to emulate? It would definitely save consumers money, but would it also mean a demise of the independent local stores? Would a pervasive middleman-eliminated economy spell doom for so many jobs that it would be better to pay more for products for the greater good? Would there be other issues? It sounds like an interesting concept that was at least good for me this time around...
1 comment:
I think this business model is effective, one that would be good for companies to emulate - however, it's not the only good business model. In unSpun, we read about the human tendency to correlate price with quality, a principle demonstrated through Grey Goose's success of selling vodka that was three times more expensive than the contemporary leading vodka. I believe that some camera companies would be able to make just as handsome of a profit by taking that risk of pricing their products relatively high, as would a company like Paul C. Buff which takes the low-price/high-demand approach.
Furthermore, if every company employed this middleman-eliminated model, then there wouldn't really be anything special about Paul C. Buff's pricing - "wholesale" would just become "normal". The issue concerning job elimination also arises when middlemen are eradicated in the equation; I think it's fair to make consumers pay slightly higher prices so that jobs won't be lost.
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