Why do model railway builders expect a discount

[Trains4U]

I completely understand the frustrations, but its part of life being a Model Railway retailer, and, as others have said - you just need to suck it up.

 

 

The BIG difference between Model railways and other hobbies lies, I think, with the magazines.

 

Pick up an RC mag or Model kit mag, and you see lots of generic ads for local shops, some of whom have something special to offer.  However, prices, particularly for kits, are lower, and the items relatively bulky, so less attractive to mail order operations.

 

 

Open ANY model railway mag, and you are confronted with a Hattons catalogue, a Rails catalogue, a Tower catalogue...

 

The largest mail order companies spend such a huge amount on advertising, that they are ingrained on everyone's mind, and it is the most readily available "Price list" for a lot of modellers - so a lot of people will ask,   "Can you match xxxx"   without giving much consideration to the added value that is provided by the local shop (Take it away today, inspect and test before purchase, Identify complimentary rolling stock, install a DCC decoder, offer handling and maintenance advice etc)

 

Its one of those things - you really should carry locos  - you need to if you want a credible model railway operation - but don't expect them to form your bread-and-butter income.

 

However, there have been occasions where I've had a "Can you match Hattons"  as an automatic question - and I've had to say - "Yep, just wait while I add £xx to the price..."   - It certainly put a grin on my face, if not necessarily the customer's!

 

BTW,  never, ever take someones word for it on the price someone else is selling for - ALWAYS check online first!  and if they cannot provide evidence, then refuse.

Edited September 25, 2018 by Trains4U

[Clive Mortimore]

Hi all,

Some one mentioned earlier about people from the Emergency Services/NHS/Police asking for discounts. There is a reason for this. Many shops actually officially do discount to those groups via who they work for or the trade unions they belong to. This has been happening since before I joined the NHS nearly 40 years ago. It is just that it is not widely advertised that they do it. When I started  every year you were given a little booklet that told you who were giving discounts nationally. There are not as many places still doing this discounting as there used to be and the booklets are no longer given out. So you have to politely ask if they give discounts for NHS staff. One big area where NHS staff still get a discount is in motor insurance especially if they belong to the RCN. But if you do not ask you do not get. I think it is really all in the way you ask. If you just inquire politely that's ok. If basically you demand a discount then you should so no politely. You never know they may still come back and buy something more.

There is an old adage that seems to be forgotten the "The customer is always right" even when they are wrong. Poor customer service is never a good thing even to a bad customer. As those bad customers have friends and their experience will be passed on to those friends and possibly loose you even more custom from people who may actually be nicer than the customer you have been rude to.

I remember those booklets saying where NHS staff and/or RCN members could get discount. As a RCN steward for quite a number of years I could never bring myself to use the "discount in shops etc" as a way of recruiting members. One of my colleagues was excellent at using that as a selling point.

[Steamport Southport]

The main problem and the reasons hattons can sell so cheap is normally there is a discount if they buy a certain amount where as the small model shop will buy 5 but the bigger shop will buy 20 and get a discount which can then be passed onto the consumer but the small model shop doesn’t get the discount so it’s dearer for the consumer. But I always buy from invicta or KGR. And I like the feeling of going in and buying a loco or some other bits. It’s got so bad that the team invicta has now guessed when my wages are because I’m always in at roughly the same time every month and that a personal touch you don’t get when you buy over the internet.

 

Big James

 

Hattons don't get a discount on wholesale. It's a myth trotted out by smaller shops who can't understand the concept of "pile it high and sell it cheap".

 

Hattons (and other large retailers) actually take a knock on sales, but they've got a few thousand pounds going through the till each day whilst some competitors still have that stock on the shelves. Where it will remain for several months or years until they sell it off for a loss.

 

It's basic economics.

 

 

 

 

Jason

[souwest]

I agree about expecting and requesting being totally different.  We have a screed of programmes on tv showing or purporting to show, for entertainment "rip off Britain".  This has a trickle down effect and people beginning to feel that The Man is trying to rip them off.  Yes, model railways is a hobby but it is getting more and more expensive.  Arguably the quality and choice is getting better and better - worth paying more for better quality?

 

Supermarkets offer discounts, supermarkets offer loyalty cards (Nectar) or £5 vouchers if you spend over a certain amount / points (Morrsions).

 

I recall a model shop in Dunfermline offering discounst to bona fide members of local model railway clubs in the Fife/ Clackmannanshire area (store now no more - but not due to a superfluity of discounted sales to club members I suspect).

Likewise a Very Good store in Poole used to offer a card which was stamped each time a purchase was made - ten purchases and you got a loyalty discount - that store is doing well and is the only place going to on the Bournemouth/ Poole area - it dropped the loyalty card after about a year.

[Jol Wilkinson]

This topic is a reflection of the general attitude to pricing in society. Phrases like "being ripped off" illustrate the distrust that too often exists between buyer and seller. I consider it goes back to the "class" divide -  the haves and have nots, the attitudes express by the relationship between Unions and employers, etc. In general the motives of large companies are distrusted, with one caveat, which is where they build a brand image such that people believe that owning those products will make them a better person or improve their status. (e.g. Apple, Range Rover, YSL, etc.) and so are willing to pay a premium. So far Hornby, Bachmann et al haven't achieved that although Rapido seem to be making some progress, partly through using RMweb as a way to create person to person contact.

 

I experienced the same distrustful attitude towards pricing when, after taking early retirement, I worked for a large chandler at the London Boat show each year. Their "standard" pricing was 15% below manufacturers list price, but we were often asked for further discount or people would tell us how much they were willing to pay for an item, sometimes offering less than cost. Some became quite rude when we didn't give them what they wanted. There was also a general belief that "show" prices should be further discounted, despite the cost of running a stand (not inconsiderable at Excel).

 

There is clearly a different attitude to buying products from the main manufacturers compared to some of the smaller businesses. The recent debacle over supply of the Rapido Stirling Single by the NRM has been generally considered as understandable for a "small supplier", but probably would have been condemned as totally unacceptable had it been a Hornby product distributed by Hattons. This relationship between manufacturer, retailer and customer and its impact on price goes back thirty or forty years when the likes of the Cheltenham Model Centre carried large adverts in RM with lists of products and (usually) discounted prices (other retailers were also available), As has already been said, most buyers don't understand the economics of running a business. Given the prices advertised by the "box shifters", then why can't anyone do that? So if a product is in stock at a higher price than someone else shows it in a magazine or online, then there is presumably enough profit in it to give a discount and that probably applies to everything else in the shop.

 

The kit market is something quite different again, based on experience from helping out one small supplier for over twenty years.Most of the producers are one man operations (with occasional help) who trade through shows, mail order and now usually online.They tend to have a different relationship with their customer base, many of whom they have met face to face. Their products are often unique and can't be bought elsewhere, so the idea of "shopping around" for the best price doesn't usually come into it. In the time I have helped out at shows, only once have I been asked for a discount, which we declined to give. His "excuse" for asking was that he had been given one when buying several Jidenco kits some years previously, which spoke volumes. As has been pointed out elsewhere, when you ask for a discount from a small trader, you are effectively asking him to give up some of his wage. The symbiotic relationship between the small supplier/producer and his customer is generally understood by most buyers. I don't think that  really happens in the larger RTR world, where the "us and them" relationship is possibly rather more the case.

 

Edited for spelling!

Edited September 25, 2018 by Jol Wilkinson

[Joseph_Pestell]

Hattons don't get a discount on wholesale. It's a myth trotted out by smaller shops who can't understand the concept of "pile it high and sell it cheap".

 

Hattons (and other large retailers) actually take a knock on sales, but they've got a few thousand pounds going through the till each day whilst some competitors still have that stock on the shelves. Where it will remain for several months or years until they sell it off for a loss.

 

It's basic economics.

 

 

 

 

Jason

 

Rather more than a "few thousand" I expect. It would not work otherwise.

 

But the bigger retailers do get special deals.

[Trains4U]

Rather more than a "few thousand" I expect. It would not work otherwise.

 

But the bigger retailers do get special deals.

 

as they published their turnover figures for 2016/17 - they averaged over £36k per day

Edited September 25, 2018 by Trains4U

[PatB]

I'm in retail. I have a significant emotional investment in the products I sell as, instead of being bought in, they represent the end product of rather a lot of frustrating trial and error, quite apart from the physical inputs into each individual piece. I openly offer a fairly substantial discount for multiple purchases. I also, if someone asks if I can do something on the price of fewer items than would automatically qualify, I'll generally knock a token few dollars off in order to get the sale. It is, after all, sales wot pays the bills (as long as I'm not so daft as to sell below cost, which I don't) so, as others have said, I'd rather have 75% of something than 100% of nothing. If someone asks for more off than I'm prepared to give, or if I simply don't like them, there's no discount, and probably no sale, but I don't get offended about it. Folk seem more inclined to accept a refusal with good grace if I explain (in a suitably edited and abridged fashion) how my pricing is worked out. I have a mental script for this tucked away alongside the sales pitch and ready to use when necessary.

 

On the other side of the counter, if I'm making a substantial purchase and the person I'm dealing with appears to have the authority to adjust pricing, sure, I'll ask if there's any possibility of a bit off. That's if it hasn't already been offered, which, from the sort of businesses I like to deal with, it often will have been. I just work on the basis of "don't ask, don't get". Again, if nothing's forthcoming I don't get huffy or subsequently boycott the business. So, no, I don't ask for a discount in Aldi or Bunnings as things stand, because the bod on the till is some poor s%d on minimum wage. If the bod on the till was the MD, OTOH, or even the store manager, I might.

 

As I see it, offering a discount is at the discretion of the retailer. Asking for one and accepting what might or might not be offered is at the discretion of the customer. As long as it's all done in a polite and civilised fashion, I really can't see the harm.

[ikks]

I used to frequent Branchline in Croydon when I lived in Victoria,nearly twenty years ago, it was about 20 minutes from home and very handy, their stock was incredible and what they didn't have,(which was very little) they would order in. Yes they were expensive compared to Hattons etc. but I could go there and find Portescaps, Gibson product, DJH kits and lots of other goodies not easily obtainable locally. Never asked for and never expected a discount, the service, advice etc. was worth more than a few paltry dollars.

 

Mike

[grahame]

I guess there is a difference between enquiring if a discount is available and badgering for a reduction in a marked price. From what I've seen and experienced often the later is verging on the rude and unpleasant discourse, especially when insisted upon as some sort of right.

 

For me it's all about value for money that the purchase offers and the goods provide rather than just the pounds and pence price. And VFM takes in to account need, availability, quality, sales and after service support, convenience and ease of purchase, etc.

 

G

[Reorte]

If I was on the receiving end of being asked for a discount I'd find it outright rude, and wouldn't be able to bring myself to ask. The closest I ever get is "not got that much on me" if an interesting item is pointed out and I haven't got that much on me, or "like it but a bit much for me now." I'm not expecting a discount when I say that, just stating the truth, but once or twice have been offered. At the end of the day I think if I really need to save a few pounds I probably shouldn't be buying it anyway.

[GeoffAlan]

IIRC Legally any price ticket is 'an invitation to treat.' IE negotiate.

I certainly try to negotiate any second-hand price and will, in the right circumstances, do the same with new items. A few years ago I was looking for some military kits, tanks and other vehicles, and a shop I walked into while on holiday had several items I was interested in. All were in faded and dusty boxes and some had artwork which I knew had not been used by the manufacturer for some years. Knowing that the price asked was the same as Beatties charged for pristine examples I picked out 6 or seven I wanted and asked what his best price was, 'seeing you've had them in stock a while'. His best price was staggeringly below his ticket prices.

[njee20]

Hattons don't get a discount on wholesale. It's a myth trotted out by smaller shops who can't understand the concept of "pile it high and sell it cheap".

 

Hattons (and other large retailers) actually take a knock on sales, but they've got a few thousand pounds going through the till each day whilst some competitors still have that stock on the shelves. Where it will remain for several months or years until they sell it off for a loss.

 

It's basic economics.

I'd be really surprised if you're right on that. How is "taking a knock" on sales good practice? Money through the till is irrelevant if you're making a loss on each item. They'll be operating on smaller margins, yes, because they're focusing on volume, but I'd still be amazed if they're not getting favourable terms from the the manufacturers.

 

I've no first hand experience of wholesale prices in model railways, but I know in cycling the Hatton's equivalent (Chain Reaction) are selling most items below the 'standard' trade price, ie they must be getting a discount or they'd be making a loss in each sale. I remember some years ago phoning to order some new brakes - they were £250 a brake, so pretty high end stuff. The distributor offered quantity discounts to the retailer for buying 2, 4, or 8 items, I think it was something like 2, 5 and 10% discount on the unit trade cost. My order got bumped down the list because Chain Reaction had ordered 250 of them. Now... if they're offering a 10% discount for buying 8, what rate do you think you negotiate if you buy 250!? I can only imagine it's exactly the same in model railways. If Bob's Models wants 1 loco from Dapol he'll get it for x price, if Hatton's want 100 of x loco it'll be far cheaper, otherwise what incentive is there to stock more? That's the basic economics.

Edited September 26, 2018 by njee20

[Legend]

Rather more than a "few thousand" I expect. It would not work otherwise.

 

But the bigger retailers do get special deals.

Do we really know that? I was told it isn’t the case retailers get money off for bulk purchases. They sometimes get special offers from manufacturers for models that are not moving fast (or at least they used to) , but that’s it . Their model depends on larger volume lower margins, the Supermarket approach rather than the corner shop. As to whether it’s worthwhile , well ,that depends on the initial mark up and the discount offered . I heard that typical retailer markups are 40% . That’s not profit because they have to pay rates, staff , heating etc . But if a “box shifter” gives 15% discount he is making 25% margin and relying on the higher throughput to make money.

 

It is fascinating. I’d often thought that on retirement from my existing job I’d quite like to run a model shop and be emersed in the hobby as I find it interesting . But for retirement that would certainly be a high risk option in terms of income and not one I’d really pursue.

Edited September 26, 2018 by Legend

[GreenGiraffe22]

Can't quite get my head around the mentality of people asking for discount if there is clearly no signage in the store offering discount... It would drive me mad too.

 

I admit I do most of my model railway shopping online, one because it it is simply more affordable at a time when one is also getting ready to take out his first mortgage on a house - eeek! And two, because my 'local' model shop is about 4 towns over.

 

I do tend to visit a shop if I have a day off and I'm in the mood to do more scenics because I can get it then and there rather than waiting for delivery.

 

It is also nice sometimes to visit model shops just to see items of rolling stock in the flesh =)

[Jol Wilkinson]

I'm in retail. I have a significant emotional investment in the products I sell as, instead of being bought in, they represent the end product of rather a lot of frustrating trial and error, quite apart from the physical inputs into each individual piece. I openly offer a fairly substantial discount for multiple purchases. I also, if someone asks if I can do something on the price of fewer items than would automatically qualify, I'll generally knock a token few dollars off in order to get the sale. It is, after all, sales wot pays the bills (as long as I'm not so daft as to sell below cost, which I don't) so, as others have said, I'd rather have 75% of something than 100% of nothing. If someone asks for more off than I'm prepared to give, or if I simply don't like them, there's no discount, and probably no sale, but I don't get offended about it. Folk seem more inclined to accept a refusal with good grace if I explain (in a suitably edited and abridged fashion) how my pricing is worked out. I have a mental script for this tucked away alongside the sales pitch and ready to use when necessary.

 

On the other side of the counter, if I'm making a substantial purchase and the person I'm dealing with appears to have the authority to adjust pricing, sure, I'll ask if there's any possibility of a bit off. That's if it hasn't already been offered, which, from the sort of businesses I like to deal with, it often will have been. I just work on the basis of "don't ask, don't get". Again, if nothing's forthcoming I don't get huffy or subsequently boycott the business. So, no, I don't ask for a discount in Aldi or Bunnings as things stand, because the bod on the till is some poor s%d on minimum wage. If the bod on the till was the MD, OTOH, or even the store manager, I might.

 

As I see it, offering a discount is at the discretion of the retailer. Asking for one and accepting what might or might not be offered is at the discretion of the customer. As long as it's all done in a polite and civilised fashion, I really can't see the harm.

 

If you are that emotionally involved then I would have thought that getting the sticker price would be more important as recognition of the work you had put in. Most kit suppliers have designed the kit,  made the patterns, built the tests etches/castings, written the instructions,  bought in the components, and packaged the kit. And then someone wants a discount which comes out of your wages, not out of the utilities bills, rent, rates, etc. So I wouldn't be surprised if you weren't willing to reduce the price.

 

IIRC Legally any price ticket is 'an invitation to treat.' IE negotiate.

I certainly try to negotiate any second-hand price and will, in the right circumstances, do the same with new items. A few years ago I was looking for some military kits, tanks and other vehicles, and a shop I walked into while on holiday had several items I was interested in. All were in faded and dusty boxes and some had artwork which I knew had not been used by the manufacturer for some years. Knowing that the price asked was the same as Beatties charged for pristine examples I picked out 6 or seven I wanted and asked what his best price was, 'seeing you've had them in stock a while'. His best price was staggeringly below his ticket prices.

 

If he had them in stock for that long, he was probably happy to get back the stock value to reinvest in something that was a better seller for him. Or perhaps he was a bad businessman, although he could have written down his stock value against his tax liability over the years.

[Stanley Melrose]

When I worked at Rank Xerox in the 1970s, there was a policy of "selling at a premium".  This required the salesman to offer a new product to the potential customer at a price higher than list.  The explanation offered to the victim was that paying the extra moved them up the order list.  To my amazement it worked time and time again.

 

Then there were salesmen in placed such as Lagos, Nigeria, who persuaded customers to rent copiers in offices with no electricity supply.  How and why?  Well the customer would proudly point out the latest copier installed in his offices to his customers.

 

It's a funny old world, Saint, isn't it?

 

Stan

[Steamport Southport]

as they published their turnover figures for 2016/17 - they averaged over £36k per day

 

Yes. That's the average per day.

 

But worth considering if Hattons or Rails sell 200 new locomotives priced at £150 then that is actual sales of £30,000 just on that model. Whereas another shop might sell 2 of them at £160 making £320 whilst the rest is stuck on the shelf. 

 

So £30,000 in the bank against £320. Which business is liked by the bank manager and which one goes under as they can't pay the rent that week?

 

 

 

 

Jason

[PatB]

If you are that emotionally involved then I would have thought that getting the sticker price would be more important as recognition of the work you had put in. Most kit suppliers have designed the kit,  made the patterns, built the tests etches/castings, written the instructions,  bought in the components, and packaged the kit. And then someone wants a discount which comes out of your wages, not out of the utilities bills, rent, rates, etc. So I wouldn't be surprised if you weren't willing to reduce the price.

 

 

It's a question of priorities. Living from market to market, $30 in the bank beats $40 still in the customer's pocket but my integrity intact. As I said, though, beyond what we actually advertise, the existence or size of a discount is dependent on various factors including, but not limited to, whether the customer asks, whether I judge they'll walk away if I don't offer, whether I like their attitude, whether I'm in a good mood, whether it's a piece that's been in stock for a while. Every transaction gets treated on its individual merits.

 

But the OP was talking about a retail shop, not a kit manufacturer. In any case, at least some kit manufacturers do offer discounts for multiple purchases or sets. Smallbrook Studio spring to mind, with their Stroudley coaches and C19th goods stock.

[Steven B]

I don't see any harm in politely asking for discount - particularly if you're spending over £100.

 

On a number of occasions I've asked if a shop/stall owner can match Hattons/Rails' prices. In some cases they can, others they can't but do knock a couple of quid off - often matching the Hattons price once P&P is added. The result? They make a sale, I walk out a happy customer.

 

Anyone asking for a discount on rail joiners deserve all they get in reply...

 

 

Steven B.

[boxbrownie]

Hi Simon

 

What if your boss was to knock a few quid off your wages every now and then? Because that is what you are doing to traders when you ask for a discount.

Daft analogy.........the contract for your wages was settled when you started the job, the contract for the item price is settled AFTER you have haggled.

[Mark Saunders]

I think the problem is that you go to many shops and they have permanent sales on, can you recall there not being a DFS sale or some places price reduced and there was only ever available at full price for five days in one shop!!

 

What is full price, just a figure to convince people they are getting a bargain when it is the normal one in disguise, no wonder that people are cynical about pricing!

 

Mark Saunders

[Clive Mortimore]

Daft analogy.........the contract for your wages was settled when you started the job, the contract for the item price is settled AFTER you have haggled.

Never negotiated your pay rise, I have. But that is not haggling is it, especially when it is with the secretary of state for health.

 

When running my own business I set my prices to what would cover my cost and pay me a wage. If I was to give a discount the resulting loss in money didn't come off the cost of running the business they were always there, but my profit, my wages. So asking for a discount is asking someone to work for less.

Edited September 26, 2018 by Clive Mortimore

[Mallard60022]

Daft analogy.........the contract for your wages was settled when you started the job, the contract for the item price is settled AFTER you have haggled.

That's quite an impolite response...."daft analogy".  It may be humorous and not correct but there are ways of answering without being rude.

Phil

[The Stationmaster]

Do we really know that? I was told it isn’t the case retailers get money off for bulk purchases. They sometimes get special offers from manufacturers for models that are not moving fast (or at least they used to) , but that’s it . Their model depends on larger volume lower margins, the Supermarket approach rather than the corner shop. As to whether it’s worthwhile , well ,that depends on the initial mark up and the discount offered . I heard that typical retailer markups are 40% . That’s not profit because they have to pay rates, staff , heating etc . But if a “box shifter” gives 15% discount he is making 25% margin and relying on the higher throughput to make money.

 

It is fascinating. I’d often thought that on retirement from my existing job I’d quite like to run a model shop and be emersed in the hobby as I find it interesting . But for retirement that would certainly be a high risk option in terms of income and not one I’d really pursue.

 

It has been said on a number of occasions - and in response to questions asked b y other retailers - that Hattons do not get any reduction on the trade price charged by Hornby although it is obvious that they have in recent years bought stock in the Hornby fire sale and have obviously also bought stock in the Bachmann clearance sale (as can any other retailer I believe as Bachmann used to circulate all retailers according to what I have been told).

 

But there the similarity probably ends.  Firstly it has been very obvious that at times Hattons was making as little as £1 per loco on r-t-r locos and I know of more than one retailer who has bought from Hattons when models were sold out at the factory then retailed them at RRP.  Do Hattons clearly work on very small margins but the other side of that coin was that in their really deep discounting days they were getting volume and hence cash flow and a quick return on investment compared with shops who sold at RRP or a small reduction thereon and were taking time to recoup their money.  But it goes a bit further than that because Hornby offer better payment terms, including I believe some level of rebate, if retailers settle their invoices within a certain time.  Thus if you price low, sell in volume as a consequence, not only do you get better cash flow and a quick return on your investment but you are probably able to pay at the earliest possible date after being invoiced and thus potentially get a rebate.  So overall although you buy at the same trade price as everybody else you can potentially make a saving by paying promptly (assuming that is still the case in Hornby's T&Cs?).

 

So it is clearly possible to build a business model around that sort of trading but you need the capital to do so because it will probably only really work with larger volumes.  Were you or I to set up as a model retailer I suspect the main thing we would be investing in is losing our money because I suspect starting to trade in that way from 'a standing start' would consume a lot of working capital and you wouldn't have teh advantage of 'price levelling' from buying in stock when the manufacturers were offering clearance deals (which Hornby have now ended in any case)