There is a big difference between a per-unit cost of production (money paid to suppliers) and cost of operation (salaries and office space).
Let use some imaginary numbers - please don't challenge me on these numbers, as they are just examples.
Leaf sells 1,000 units per year.
Average sale price to consumer $20,000.
Average price paid to Leaf per unit by dealer $10,000.
Total revenue $10,000,000.
Expenses:
Let's say average cost of producing a unit is $3,000 (BTW, there is minimal difference in the production cost of a $40,000 back and a $15,000 back.)
Production: 1000*$3000 = $3,000,000
Salaries and office space for 30 people: $5,000,000
Total expenses: $8,000,000
Profit: $2m
Now let's make a 50% price reduction:
Lets say sales triple as a result of the price cut.
Cost of production goes down maybe 30% due to higher volume.
Cost of operations goes up maybe 20% due to higher volume.
So:
Leaf sells 3,000 units per year.
Average sale price to consumer $10,000.
Average price paid to Leaf per unit by dealer $5,000.
Total revenue $15,000,000.
Expenses:
Average cost of producing a unit is $2,000
Production: 3000*$2000 = $6,000,000
Salaries and office space for 40 people: $6,000,000
Total expenses: $12,000,000
Profit: $3m
==>
You are working three times as hard, and making only $1m more in profit.
Of course you could be selling now 5 times than before, and making $8m profit - but if you sell only twice as before, profit would be $0.
Negative side effects:
- Very increased exposure to fluctuations in costs, due to decreased margin. Now an earthquake in Taiwan can bring you to bankruptcy.
- Now you are taking bread out of the mouth of Canon - and they will make a move to compete and devour you. They can set up much more cost effective production lines, procurement and sales.
Regarding the actual numbers: the $2,000 numbers is a correct number for 5 years ago.
There is no way the per unit production cost today is more than $5000.