Sorry for the provocative title, no offense intended and its only to attract your valuable attention. After all, nobody will admit they are dumb so nobody's affected. Mods, feel free to edit if deemed needed. I wanted to add this to the original Gear For the Aspiring Pros thread but it had grew too long and I feel that depreciation of equipment is a seldom discussed topic and very worthy of its own thread, especially since most pros stated out as hobbyists and such things were often never considered till they turned full time and hungry.
Assuming you bought Nikon's flagship DSLR the D3 in late 2007 or early 2008, shortly after its release, you probably paid about S$7000. Now in early 2013, which is 5 years later, people are having difficulty selling a great condition set at S$2800 (checked BNS for recent transactions). Realistically, if you need money in a rush, $2500 will be a more realistic figure. In other words, it depreciated $4500 over a span of 5 years. The cost of ownership is about $900 a year. We have not taken into consideration maintenance or repair costs, if any was incurred. If you lost the camera to theft, destroyed in an accident, etc. You suffered the lost immediately, plus you got to add in the figures for another replacement unit. It is very painful to a photography business to have its main machine stolen or destroyed.
The D3 is still a very relevant camera and I foresee it can still be acceptable for most professional usage for another 3 years before the latest prosumer pro totally trash it in specs. You CAN still use it, no doubt, I still have my D70 from 2004, yes I can still make good photos with the D70, but will I use it for my next big gig or project? You get my idea - very probably not, just too much at risk. We are pros with reputation and a business to loss. We cannot sing the 'its the photographer rather than the gear' tune as easily as a hobbyists with no risk or responsibilities to clients.
Back to the D3's depreciation, many pros have two units for redundancy, backup and for speed. If you have 2 units, you lost $9000 over 5 years, or $1800 per year. Scarely? Yes, thats why many pros don't use D3, despite marketed for the pros, its really bought by the amateurs. Fortunately we have the darling-seven-hundred D700 and the choice of buying Pre-Owned.
Assuming you bought the D700 in early 2009, pre-owned, you probably paid about $3500. Now in early 2013, 4 years later, realistic price to sell it off is $1800, depreciation of $1700 over 4 years, or $425 a year. Two units will mean $3400 over 4 years or $850 a year.
That was for camera bodies ALONE. The more stuff you own, the more money you lost. Lenses and flashes, fortunately, does not depreciate as much and stays relevant for a way longer time.
SB800 flash bought 5 years ago was about $600, now it can be sold for about $300. Depreciation is $300, or $60 per year, per unit, so two units is $120.
24-70 f2.8 lens bought 5 years ago was about $2500, now people are trying hard to sell pre-owned at $1800, so realistic price is about $1700, depreciation is $800 over 5 years, or $160 a year.
85mm f1.4D lens, 5 years ago was $1600, now sell $1000 nobody interested, so realistic price probably $900, depreciation is $700 over 5 years, or $140 a year.
A cheapo zoom from film era, 5 years ago bought $250, 5 years later now maybe can sell at $150, depreciation is $100 over 5 years, or $20 a year.
So my friends, assuming you own two units of D3, two units of SB800/900 flash, a 24-70 main zoom, a 85mm speciality lens (or any other speciality lens depending on your genre of work), plus a backup cheapo plastic zoom, your depreciation is $11200 over 5 years, or $2240 a year. If you are having two units of pre-owned D700 instead, it is $1290 a year. If you are having a hybrid system somewhere in between, you estimate its about inbetween. This is a conservation and optimistic figure only, many of you gearheads have more toys than you want to admit. Add another $150 per extra speciality lens and another $60 per flash. We have not even consider the amount of crap accessories, R rated straps and T branded bags you have. And if you have a studio or studio lights, oh my Lord Guan, even more, you do the math.
SO TELL ME HOW, how can you not calculate depreciation of your gear into your photography rates. So if you don't make at least $2240 for the dual D3 set example above, you did not cover that expense in your business and you actually lost money without you knowing. That's why some studios can suddenly close down after 2-3 years, or photographers changing jobs and returning to their old jobs again. In between the years of your career, any major purchase (camera/lens/studio flash) is a significant expenditure to your business, for they are fast depreciating assets. If an piece of equipment does not bring in money, does not get used, it only serve two purposes - 1) loss money and 2) hinder your cash flow.
As a working pro, even part time, you CAN NO LONGER treat it as a hobby anymore. The thinking of "I bought the gear, its mine, still in my hands, I did not loss any money what" just have to go. The moment you bought something, you lost money. Until that thing you bought makes you money, it is not an asset but a liability.
*Canon version, should have similar price points.