What performance-related factors make a Leica camera so expensive?

Question

I just saw a Leica M9 priced at 6995 USD, and a Leica M8 at 6295 USD. This is similar to the price for a high-end Nikon D3X or a Canon 1D Mark IV. So, I am trying to compare the specs, but can't get some useful information (at least in my eyes as a beginner).

What would make me prefer an M8 or M9 over a D3x or 1D? Performance-wise that is, not because Leica is more compact or it has a tougher frame — or because it just is Leica.

Answer

Leica is a luxury brand with much smaller production runs than the big players in the camera industry.

Low volumes lead to high prices, especially since research and development costs have to be covered. In addition, there's more manual labor involved in manufacturing Leica cameras and lenses. This labor is German, which means higher wages and thus higher prices.

The luxury part translates into exclusivity. A large part of the draw of Leica is that not everyone can afford one. So even if Leica could lower their prices, it would not necessarily translate to lower prices.

Why would you prefer a Leica? The lenses are unique, in for far as no other manufacturer makes a rangefinder camera system. There's no DSLR equivalent to the Summilux-M 21mm f/1.4, for example, or the Noctilux-M 50mm f/0.95. However, you will have to pay many times more than the body to get one of these lenses.

Some people prefer the rangefinder for focusing and composing. The camera can be more unobtrusive, but this is less true now when it costs as much as a used car.

For a more detailed look at the differences between rangefinders and (D)SLRs, see this question and answer.

I would say that if you're a long-time Leica shooter, you'd prefer a digital M over a DSLR simply because you can use your existing lenses. If you're starting out, it's a lot of money to pay for some pretty intangible benefits.

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