Economics of lens purchases

[Adrian]

A question often asked here is "should i buy x lens?".

Often people compare offerings by Tamron, Sigma et al with original lenses by (usually) Canon and Nikon. Price is generally a significant factor.

Lately I have bought several L lenses and have looked at eBay, imports ( I used HDEW cameras very happily) and also my local dealer (who I bought my 70-200L IS II f2.8 from).

It is hard to compare Canon's pro lenses with offerings from other manufacturers, as ruggedness and weather sealing come into the equation as well as performance and price.

What is very apparent though, is that pro glass holds its price incredibly well if you buy Canon and Nikon. In many cases used prices on eBay actually exceed the price of new glass available from importers (full Canon guarantee). Depreciation is minimal. The lens can be used for a year and sold on (if you wish), with a price differential equivalent to renting the lens for a couple of weeks. There always seems to be high demand for L glass or equivalent.

The same holds true for used equipment in dealers.

Clearly you have to fund it in some way it as the initial outlay is quite high, but the economics of ownership make sense to me (I never borrow money).

This does not hold true for the Tamrons and Sigmas though. If eBay pricing is used as a guide, depreciation is heavy (circa 40% in a year). This usually outweighs the cost of ownership of the OEM lenses.

I don't think I have seen this crop up in lens purchase advice.

Adrian

[Donald]

I don't think I have seen this crop up in lens purchase advice.

It is a very good and valid point that you make, Adrian. It is something that has often been mentioned on here in relation to puchase, though, thinking about it, perhaps not so much recently.

If you can afford to carry the initial capital outlay for a 'L' purchase, then, as you write, you can be confident that you are not actually going to lose money and can recoup the outlay if necessary. And in lieu of the meagre interest you would have gained by investing the same amount of money, you are going to gain lots and lots of pleasure!

[shreds]

I have to say that I have never really thought about this as I tend to buy the lenses as I need them. But, yes, Adrian is correct in respect of Canon and Nikon 'Pro' glass, although I would caution that it is not true across their full ranges, as 'kit' lenses etc do lose value. Just make sure you upgrade when the OEM upgrades the model though. (thankfully not as often as the bodies).

[davidedric]

Thanks, Adrian, certainly thought provoking.

I currently use a Tamron 70-300, so I've been doing an online comparison with the Canon L with the same range. I currently have a 600D body.

I will ignore the price difference, close to £1000, for the reasons Adrian gives. I do have the money, and as an investment it won't depreciate, so.

Full frame compatibilty. Don't see moving to FF, so not a consideration

Weatherpoof. My current (camera!) Body isn't, but that could well change, so to be considered.

Weight. Is important to me, but less difference than I thought, 750g plays 1000g so since this is not a carry about lens not too serious

Capability. Clearly more robust. Has "second mode" IS for use when panning. Could be a significant plus for birds in flight.

Longevity. Should be with me as long as I need it

IQ. Has to be the crunch. Presumably is better, though my Tamron is pretty good, but how to judge?

Will it make me a better photographer - clearly not.

Truth is, I've never thought of myself as "worthy" of an L series lens, but maybe I need to think again. And have a conversation with a certain lady

[DanK]

Interesting point. I had not thought about it before. I am not certain to what degree this holds, however. I just checked out eBay completed sale listings for two of my lenses. For the Tamron 28-75, the completed sales were about 40% off the discounted retail price. For my EF 70-200 f4/IS L, the sales seemed to be running about 33% off discounted retail. Still, it seems to me that you have a point: if you don't think you are going to keep a lens for a long time (I generally do), it makes sense to consider resale value in evaluating costs. I had never thought to do this.

[Adrian]

As an example, I have looked at several 85mm F1.2L II (I have this lens). There is one on eBay now. The price for a used lens is actually higher than the HDEW price for an imported new one. Roughly £1100. Full UK retail is close to £1400.

The same almost invariably holds true for the f2.8 70-200 L II. This is an expensive and popular lens. Used prices will almost always be close to the new price of a UK based Hong Kong importer.

Same holds true for the 100-300L, which I am seeking to buy for my son. Used eBay prices are very strong and almost identical to importer new prices. I think eBay is much higher risk.

The Hong Kong importers like HDEW and Wex are typically circa 20% less than UK sourced retail. This is duty paid, imported by the re-seller and supplied from the UK. Full Canon guarantee applies. So this is a useful comparison against eBay prices and dealer used prices.

I agree that this only appears to hold true for the best glass. I think an "investment" in good glass is relatively low risk, as the resale values are so strong.

Adrian

[NorthernFocus]

.... Just make sure you upgrade when the OEM upgrades the model though. ....

Based on my observations over the years this is key for models that remain in the line and get upgraded e.g. Nikon 70-200 VR to VRII. There is a window of a few months when the new model comes out that the prior holds its value pretty well then they usually decline significantly.

Same holds for camera bodies. There is a whold market segment of folks out there who by last gen used equipment and are happy to do so. They've been itching to get their hands on the model above what they have and as soon as the new models are released they jump in and by the old outgoing line that people sell. Then after a while there seems to be a floor of sorts that used equipment settles in at a fraction of the original price and hangs there. Having learned this lesson I've sold several camera bodies for about half of what I paid for them and watched the used prices continue to decline substantially thereafter. I typically get a couple of years of use from a body. I calculated that at my usage rate and resale prices, digital camera bodies to-date have cost me about $0.04US/shutter click on average.

[Mike Buckley]

What is very apparent though, is that pro glass holds its price incredibly well if you buy Canon and Nikon.

I don't know about consumer Canon glass but consumer Nikon glass also holds its value very well. I recently wrote a post explaining that I actually don't understand why people buy a used consumer lens at only 10% less than the price of a new lens when, in the U.S., the new lens comes with a 5-year warranty. But they do and it's not at all unusual. In fact, the kit lenses hold their value so well that some people will purchase a newly released camera that can only be purchased with a kit lens, knowing that they can immediately sell the kit lens rather than wait months for the camera to finally become available without the kit lens.

[William W]

. . . What is very apparent though, is that pro glass holds its price incredibly well if you buy Canon and Nikon. In many cases used prices on eBay actually exceed the price of new glass available from importers (full Canon guarantee). Depreciation is minimal. The lens can be used for a year and sold on (if you wish), with a price differential equivalent to renting the lens for a couple of weeks. There always seems to be high demand for L glass or equivalent. . . .
Clearly you have to fund it in some way it as the initial outlay is quite high, but the economics of ownership make sense to me (I never borrow money).

Yes I get your drift and I agree it should be a factor mentioned, but you are mixing several factors and I think it best to isolate exactly what we are discussing.

Agree – pro glass holds its “price” – and maybe very close to holding its “value” in the first year or two: but after about 18 months (typical) it losses “value” because of inflation.
Exceptions are those silly lenses like the EF 50F/1.0L, which are now very expensive paperweights or collectors items.

Disagree - depreciation (for a business) is not minimal, (well I strive to maximize it) and then rolling over a lens becomes less a burden. (I know you probably were meaning “depreciation” in a less technical sense).

Agree – renting vs. buying and reselling: but this needs to be carefully calculated, though. Several years ago I rented an EF 35 to 350L for a month (needed it for about 3 weeks) – on paper it would have been cheaper to buy it and then resell it (taking h second hand prices being asked as a guide) – BUT I would HAVE to sell it to recoup the money – and I am not in the business of selling lenses and it was an “unusual” lens – so how ling and how much effort would I have to put into selling it?.
A similar logic applies to the more common lenses.

For example (I am using indicative prices just for an example of COMPARISONS, so no arguments about the actual dollars quoted, please):
Let’s say I bought an EF 24 to 70/2.8L three years ago for $1800.00. A year ago (BEFORE the MkII was released I maybe could sell it for $1600.00 – that’s good and goes well with our theory thus far, not much inflation in two years and etc – I get two years use for $200 – that’s 30 cents per day – bloody cheap usage: and if my business bought it is deflated by 45% after 24 months and I sell it for that price to me.
However, just forgetting the depreciation/business aspect, let’s move forward to the release of the EF24 to 70F/2.8L MkII and assume that “me” (as an amateur and not my business) wants to by that lens because it is better – all of a sudden a very large percentage of 24 to 70 original owners are thinking the same thing . . . sure there are lot’s of 24 to 70 for sale second hand, but whooooaaaa how many are selling for $1600.00 ?
In fact I bought a NEW (probably one of the last) original 24 to 70/2.8 for much less than $1600.00 –with 12 months warrantee etc.

Economics of ownership – Yes I agree.

WW

[rpcrowe]

Photographers often consider renting lenses as an alternative to purchasing a lens. While renting a lens may be a viable option for a short, one-time use, it may not be the best way to acquire a lens for a more protracted use. Renting a long focal length lens is often considered for African safaris and renting a wider lens is sometimes an option for a trip to Europe where in the narrow streets, a photographer can make good use of a wide angle lens.

There are advantages and drawbacks to renting lenses. One advantage is ease. Simply select the lens you want and the time you want that lens and contract with a rental company (or a camera store that has rentals). The lens will be shipped to you or ready for you to pick up at the designated time and returning the lens is a piece of cake.

However, the down side of lens rental is the cost involved. Unfortunately, some photographers, in order to minimize rental costs, opt to rent the glass right before they leave on their trip. The photographer then takes a trip of a lifetime with a lens he or she is not used to shooting and also hopes that the rental company has checked out the lens before renting it.

Piggy backing on the posts above, top line OEM lenses hold their value quite well. If a photographer was to purchase one of these top line lenses (such as the Canon L Series) at the going price on the used market, it is highly unlikely that much money would be lost when and if the lens is resold. If the photographer does lose a bit of cash, that would certainly be less than the cost of a protracted rental.

The time that the photographer has with the lens (within reason) is not critical. The photographer can get used to using the lens before it is put to the test on that trip of a lifetime. I have purchased and sold three L lenses: 70-200mm f/4L (non IS) which I purchased new and 17-40mm f/4L and 24-70mm f/2.8L which I purchased used. I kept the 70-200mm f/4L for about three years and when I sold it, I lost very little money. I purchased the 17-40L and 24-70L used and kept the 17-40L for two years and the 24-70L for three years. When I sold them, I actually made some money on the transactions.

If a person had a "Bill MeLater" account with eBay; he or she could actually purchase a lens, use it for a while and then sell it before the first payment is due...

[Shadowman]

I wonder how much negative/positive reviews weigh on the resell price of both OEM and third party manufacturers? Kit lenses (OM) often get negative reviews and lower resell prices, while specialty lenses such as UWA, fisheye, or fast lenses maintain steady prices regardless of the reviews.

[William W]

. . . Unfortunately, some photographers, in order to minimize rental costs, opt to rent the glass right before they leave on their trip. The photographer then takes a trip of a lifetime with a lens he or she is not used to shooting and also hopes that the rental company has checked out the lens before renting it.

Sage advice.


***

One point I wanted to add to my above (albeit a little tangential) - many stores provide a "returns policy" and will honour that policy for a purchaser's 'change of mind'.

Firstly such store policies are NOT world-wide and in fact in some countries the consumer laws state exactly the opposite (i.e. simply put all sales are final) but it is often assumed that a return for change of mind is a contractual right. (Having other business interests I've had first-hand experience with this matter, especially travellers from the USA, shopping at stores in AUS.)

Secondly (and to the point of this thread), I wonder how often this returns policy is exploited for a free "test out" of a lens for 14 or 28 days? That’s very inexpensive “rental” for an L Lens . . . 400/2.8L MKII . . . I’ve got a big sports event that I want to go to . . .

WW

[Adrian]

William

I do think that even in a technical sense real depreciation is minimal and inflation helps this. For accounting depreciation I am suggesting writing lenses down to their realisable asset value, not some lower figure.

For business use (I am in the UK) lenses (and cameras for that matter) are fully tax allowable and this is independent of depreciation (which is added back for tax computation purposes). Inflation of new product (not especially high in these recessionary times) tends to drag the realisable value up in the second hand market. In practice the tax relief is at the marginal corporate tax rate. It is my contention that for quality glass, whilst a lens is still current or near current, the tax relief equals or exceeds any depreciation to realisable value.

This picture is made even more attractive if you can recover VAT input tax on new purchases. VAT is 20% in the UK currently and if this is recoverable it instantly makes an eBay sale (which is always compared to full retail for consumers) attractive in price terms.

I am simply talking about risk of ownership here. For someone who is a pro photographer say, and knows that he or she will keep a lens for a long time, then resale value is not that relevant: it is the amortised cost of ownership and the opportunity cost of what else you could have done with the money that matters.

My post is targeted at the typical consumer who may be fickle with their hobbies and who may seek to change equipment fairly often, perhaps being on what they think is an upgrade path. I am in essence suggesting that perhaps the best upgrade path is to go straight to the top of it if you want to avoid losing significant funds on re-selling non OEM equipment along the way.

If you can afford the outlay for good glass, buying used (or new import ex Hong Kong) well in advance of that trip of a lifetime (to learn the lens characteristics), and then selling it again afterwards, is low risk and possibly better than a rental option. I suspect a lot of exotic glass we see on eBay and similar sites has had very low usage indeed. Rental glass will possibly have had both significant use and a lot of transport knocks I expect.

[William W]

My post is targeted at the typical consumer who may be fickle with their hobbies . . . etc

Adrian,

Yes I understood how your original post was targeted.

My contribution to the conversation primarily wanted to stimulate a wider agenda, not (as it might have appeared) debating your points.

The tax / depreciation situation you described as it might be if I were conducting business in the UK is particularly fascinating to me – thank you. Minor assets (for a business) here might be depreciated differently; also I believe the GST (here – AUS)) works differently to the VAT (in the UK).

WW

[Shadowman]

Adrian,

Yes I understood how your original post was targeted.

My contribution to the conversation primarily wanted to stimulate a wider agenda, not (as it might have appeared) debating your points.

The tax / depreciation situation you described as it might be if I were conducting business in the UK is particularly fascinating to me – thank you. Minor assets (for a business) here might be depreciated differently; also I believe the GST (here – AUS)) works differently to the VAT (in the UK).

WW

Does depreciation apply to photography equipment as other items, meaning useful life interpretation. Some equipment can be depreciated for 15 years, is there an industry standard on the useful life of a lens? And how does this effect the purchase of a refurbished lens or having a lens repaired so that it is once again in good working order?

[Scott Stephen]

I mostly agree with the OP, but I will point out that the prices may be a little different between UK and USA. Used lenses are not often more than new over here, but the difference is surprisingly slight when talking about Canon "L" glass. I think that if you follow price upticks and downticks and buy in a downtick (and you never buy a brand new release in the first 9 months of availability!) then you basically can sell it on for a tiny differential after holding it and using it "free" for years. If you bought used, and drove a good bargain, I think you could actually expect to make a small profit on the use of L glass.

I would also point out, however, that you can take advantage of 3rd party depreciation by buying those Sigma/Tamron/Tokina lenses used instead of new. I don't own any non-Canon lenses, but our family does own 2 Korean cars (Hyundai and Kia) which we bought USED. The cars had PLUMMETED in price in the 3 years they had been on the road. The comparable 1st tier cars like Honda and Toyota had held their value better, but that just made the 2nd tier Kia that much more attractive.

If I see someone in a year or two selling a Sigma 35mm "Art" lens for 60% of new price, I think I will be all over that!!

[Adrian]

I agree that this high depreciation for non OEM lenses can deliver attractive used prices and that there is probably a point at which the drop in market value pretty much levels off and will not fall much further.

Cars always depreciate faster than lenses so are not that comparable: cars are usually "used up" in a more tangible way, and replaced both stylistically and technologically, so this affects the market among other things.

[William W]

Does depreciation apply to photography equipment as other items, meaning useful life interpretation. Some equipment can be depreciated for 15 years, is there an industry standard on the useful life of a lens? And how does this effect the purchase of a refurbished lens or having a lens repaired so that it is once again in good working order?

When I was referring to "depreciation", I was referring to how depreciation might apply to a business. There are several guidelines applicable to the depreciation of assets for Businesses in AUS and the correct one to use is based upon several factors, including, but not limited to: the size of the business; the type of asset; the cost of the asset.

My opinion, answering your question is: Yes. The general premise of most of the guidelines seems to be "a useful life".

However, introduced in about 2007 (I think) were "Simplified Guidelines" and in certain cases a (small) business might apply what appears to be a simplified formula of depreciation to (mostly) the majority of (small) assets.

It occurs to me that lenses and cameras are simply tools of trade for a professional photographer: and accordingly taking as an example two tools with a similar life expectancy, one might get less life out of one tool used more often and more robustly or in poor conditions than the other similar tool, used less often and in different conditions.

For example, let's say a photographer has two lenses: EF 24 to 70F/2.8L USM and EF24 to 105F/4 L USM. Let's also assume he shoots a lot of open water swimming - and for open water swimming he is ON the water in a small vessel and uses almost exclusively the 24 to 70 F/2.8 for that purpose.

On the other hand, let’s say he uses the 24 to 105F/4 mainly for indoor functions, such as meet and greet; prize-giving and awards nights.

Let’s assume each lens is “used” for about the same number of hours each year – but the 24 to 70 shoots three times as many frames as the 24 to 105.

Now whilst we might assume that both lenses have a similar life expectancy I don't think there’d be much problem depreciating the useful working life of the 24 to 70 at 24 months and for the 24 to 105 might be perhaps double that period.

I have no idea how the Taxation Laws with respect to Depreciation apply in the UK, (or any other parts of the world) I assume that for every country there will be different rules.

The preceding is not: accounting; taxation or business advice.

Does that answer your question?

WW

[stuck]

...imports ( I used HDEW cameras very happily)

Regarding HDEW, is the price you see, the price you pay? Or are there additional Customs charges that you don't know about until the goods reach you?

Ken

[Letrow]

Although I am in the same camp as Adrian and can see that good glass will hold its value pretty well, I would caution on too much optimism. What I have seen over the last year in the Netherlands is that sellers advertise with prices that assume that value has held up, but that it takes a long time now and then to actually attract a buyer. Prices have to be lowered here and there, even for top lenses, so it is not as good as it was in the past.
With enough patience though, it still seems worth the trouble.