Bachmann - why price increases are necessary

[t-b-g]

Well played to Bachmann and to Andy for the way this information has been released. I have expressed the view on other threads that we have had our very good models at very low prices for a long time and that it couldn't go on for ever.

 

The new prices being quoted are not OTT silly, particularly when you compare them to the prices of RTR stuff of non British outline.

 

Only 6 new models being announced! That is, as has been said already, an increase of several hundred percent on how things used to be not that long ago.

 

We have had it so good for so long and all this represents to me is a little reality check.

 

I do hope that somebody from Hornby is looking at all this and making some notes on communication and customer relations.

 

Tony 

[AngryMeerkat]

First of all thanks Andy for the excellent write-up and explanations, spending money is easier when you know why you have to spend so much.

 

Also compliments to Bachmann for being so open, a rare thing in business.

 

As for the price increase, it's both understandable and fair. Having worked in the Far East (Thailand, Malaysia, Taiwan) and helped set up companies out there I have some understanding of how things are out there. The labour market in the countries I've mentioned is VERY fluid, and I know China is even worse. The way we got around this was paying 50% more than the local wage which meant our staff wanted to stay with us and we got continuity, but even this 'high' wage still resulted in our staff earning the equivalent of just £300 per month for 10 hour days 6 days a week. Unfortunately even this sometimes wasn't enough, but luckily we could train a new person in just a week and we weren't manufacturing highly detailed items for a VERY discerning customer.

 

It's also worth noting that as the UK economy comes out of recession, and with the tax benefits most of us are now getting, the wages earned in the UK are also rising gradually. Granted it's not a 20% rise! but it's enough that spending 20% more on an item that already costs +/-£90 isn't something we will really notice. And if spending £10 more is really going to make that much difference to your budgeting, then should you be buying the model at all wether it costs £90 or £105?

 

At this point I'd urge people to keep things in perspective.

 

And at this point I'll shut up and stop wittering on, I hope I haven't bored you all to tears!

 

Mark

[pete55]

Is it really necessary to again remind the grieving LNER/NER community of the reasons behind the SECR C and LBSCR E4 being modelled? These are locos in full running order on one of the nations most successful preserved railways - the Bluebell. Their sphere of operations in BR days has nothing to do with it. Their visibility to enthusiasts now is the reason they are a commercial stone-bonk certainty to sell.

 

A Q6 is in full running order another successful preserved line, the NYMR, so I have to disagree with the above comment!

[Coombe Barton]

I thought that this thread was about Bachmann prices?

[stewartingram]

Derby 2-car dmu at £144? Compare with a loco at £120 + a coach at £35?

 

Stewart

[34theletterbetweenB&D]

...Should manufacturers look to other parts of the world where labour is cheaper just to keep prices low or should we adjust our expectations so that the last 20 years of development of continually improving quality products is not thrown away for the sake of market expectations?

 

We've seen what transferring production from one factory to another can do to a model manufacturer and the angst that it causes consumers so it's apparent that sustainability and dependability now have a price.

 

That's just wishful thinking. Japan priced itself out of the market for this class of export goods a couple of generations ago, and exactly the same will happen to China. Yes, it will take two to three years in another developing economy from project start until the product from 'Elsewheria' begins to meet the required standard, but in the greater scheme of things that is no time at all.

[dibber25]

One very big difference though. These Broadstairs meetings were amongst the model railway industry who only passed on tidbits to the general public as seemed necessary. This is a very open discussion with Bachmann where I assume all details are in the public domain immediately. A commendably fresh approach by Bachmann to communicate with us, their customers. No ridiculous embargoes either which I always felt treated customers with a degree of contempt.

Not true. Almost exactly the same people were there today as came to the Broadstairs meetings - the magazine Editors and on-line media (Chris Ellis and Pat Hammond were normally at Broadstairs but not at today's meeting). The magazines passed on the information as provided by Hornby in considerable detail, just as will happen with today's meeting. The Broadstairs meetings were press conferences and the only 'industry' representatives there were two Hornby staff. Today's information was treated in the same way (there was information and comment today which we were asked not to publish). The Hornby embargo was not ridiculous or in any way treating customers with contempt. It was a vain attempt to try and give publications with widely different deadlines an equal chance of all providing the news at roughly the same time. It is true that, for various reasons it didn't work and with access to instant media the exercise became impractical. Embargoes are normal in the press and in some instances (D notices, for instance) the penalties for breaking them are severe. Those of us who work in the press are accustomed to working within the embargo system (it is currently being used by at least one manufacturer, for instance, regarding a product announcement). 

CHRIS LEIGH

[birdseyecircus]

Well done to Bachmann for being upfront and to Andy's great write up.

Regarding only the 3 new OO toolings. Is this due to factory issues or don't they think there is the market demand for more?

 

Paul

[TheSignalEngineer]

Derby Lightweight DMU  - Current Price £114.95  -  New Price £144.95

 

A well known Merseyside retailer seems to have suddenly sold a few of these in recent hours, to judge by stock levels on the website. It's an ill wind.

Makes the one I picked up at IA Manchester for £68 last month look a real bargain.

[Jol Wilkinson]

I thought that this thread was about Bachmann prices?

Rule one of manufacturer topics - it will become a wish list. Rule two - their prices are too high. Rule three - someone will tell them how they should run their business.

[Lochnagar]

Not wanting to drag up an old chestnut but I'm happy Bachmann are continuing to make decent stuff, and for me if it involves reaching a bit deeper into my pockets then so be it. Quality over quantity at the end of the day, I'd rather have one well made item than two lesser quality ones. I know some will differ, but for me that's the way forward. 

 

Just means the pace of buying new stuff will probably slow down a bit. 

[Doughnut]

"Well done Bachmann"...are you serious? Do you send letters of congratulation to the big 6 energy firms every time they hike up the Gas & electric bills? 20% increase. What's inflation running at? What's the average payrise figure? Im going to leave this thread as I'm not sure which makes me more disconsolate....the thread headline or the responses!

 

Dave

[TheSignalEngineer]

One more thing they could ditch to save a bit of money is the awful weathering of coaching stock, which bears little, if any, relation to reality. Most passenger-carrying coaching stock went through washing plants regularly so the sides were usually fairly clean even if the underframe, bogies and roof were not.

I think it looks rubbish. My coaching stock gets a spray and dusting on the underframe and roof, and a thin black wash brushed downwards then almost wiped off for the sides

[APOLLO]

From Andy's original post

 

 

The Sanda Kan factory was discussed having been purchased in 2008 it continued to produce goods as an independent OEM plant with different supply streams for different customers. Market forces meant the factory lost some contracts and former employees set up in localised smaller competition meaning the factory will close and the plant and machinery will be transferred to Kader's own factory and still accommodate former Sanda Kan customers.

 

Now Bachmann's rival (Hornby) was a former major customer of Sanda Kan. I can only wonder at the above statement re market forces, loss of contracts etc.

 

Hornby is currently in the doldrums (re supply of models), Bachmann is more stable, both produce excellent models, and both are increasing their product costs astronomically.

 

Some have said the models at the new costs are still value for money, I wont agree nor disagree, just state that, for me, the price Rubicon has now been crossed and I will be buying far, far less in future. Income goes up 2% (if you are lucky) and before we model we have to live, eat, provide shelter and warmth for ourselves and our families etc etc. The modelling budget is amongst the first to get the chop.

 

Chinese goods - the shops are full of it, some of it more hi-tech than model railways. I do not see 20% increases in any other sector. Just imagine the furore if everyday items suddenly went up 20% !!!!!!!!!!!

 

Brit15

[Andy Y]

"Well done Bachmann"...are you serious? Do you send letters of congratulation to the big 6 energy firms every time they hike up the Gas & electric bills? 20% increase. What's inflation running at? What's the average payrise figure? Im going to leave this thread as I'm not sure which makes me more disconsolate....the thread headline or the responses!

 

Dave

 

We obviously wasted our time going into a detailed explanation today. Hopefully most people will have found it useful and informative.

[JSpencer]

20% is about the same as Hornby,s increase.

 

Note that we can expect a 20% increase each year for 5 years.

 

So if it was £100, then £120, then £144, then £174, £209 and finally £250!

 

Design clever don,t look so bad after all......

 

Boy, I am glad I brought my Derby light weights when they first came out for around £70.

 

Still they are supporting the model shops. Sales of repeat items will doubtless drop, but new items will sell like hot cakes, especially as we know succesive runs will be 20% greater or more.

 

3 new models, I hope SECR D class is amongst them.

[Legend]

It's a good point Doughnut and I understand your angst. I thought the same thing about Hornby where I despaired of posts along the lines of we should accept the increase because it would cost more to build a kit. Undoubtably true but not comparing like with like.Many companies seek to redress increases by making efficiencies, but look at the mess Hornby got themselves into. There can be little doubt that prices in China are increasing and manufacturing capacity is tight (anyone else notice that new commission announcements seem to have dried up) so there are reasons why prices have to increase. I do take the point though and wonder if Bachmann feel they can get away with such a price hike because Hornby have in the main been charging higher prices- note that even after increases Mk1s still are substantially less than something like a Hornby Gresley coach which has attracted considerable comment on here.

 

I do think the way they have gone about it with full and instant public disclosure is commendable. Sorry Chris we are going to have to disagree on the Broadstairs approach . By the other manufacturer with an embargo, do you mean Rapido? I thought it was being announced to all in June and given Jason's commendable use of blogging etc for communication I'd be surprised if there was an embargo. Maybe he has just taken certain people into his confidence.

[farren]

i understand and on the whole agree with these price increases they are a company after all and are in it to make a profit, But could this lead to the catch 22 as the more the models increase the fewer that will sell due to the finite spending power available from the modelers which in turn brings down sales and therefore profits which farces Bachmann into ways of increasing profits one of 3 ways increase RRP's decrease detail decrease production costs yes they could move unlikely and would only be be a short term solution, Decrease Detail possible but how well would the modelers take it. increase RRP's which would just make things even worse.     

[JSpencer]

Chinese goods - the shops are full of it, some of it more hi-tech than model railways. I do not see 20% increases in any other sector. Just imagine the furore if everyday items suddenly went up 20% !!!!!!!!!!!

 

Brit15

You are kidding, 2 years ago a pair china made shoes could be brought for £20. The same mark now is £40. The same for cloths. Only high end luxuary items have not hiked up as much because they had a large margin to start off with.

[t-b-g]

I am not sure that anybody is delighted that prices are going up by such a big hike.

 

The "well dones" are more for the way Bachmann have handled the announcement. 

[Tom J]

I do concur with the point about young people. My son saved up half of the £210 for his Blue Pullman, but that isn't pocket money territory!

 

Once, people built kits and scratchbuilt because RTR wasn't available. One day soon, some of us will build kits because we can't afford RTR. That might not harm the hobby so much, actually. It might be good discipline!

 

Some day soon, 3D printing etc may leave us wishing for more generic components at keen prices, for kits and projects of our own creation. That would simplify production, too.

[hornbyandbf3fan]

20% is about the same as Hornby,s increase.

 

Note that we can expect a 20% increase each year for 5 years.

 

So if it was £100, then £120, then £144, then £174, £209 and finally £250!

 

 

If that happens then I'm out of the hobby, there's no way I can justify £200+ for a loco. Better buy stuff now I guess!

 

 

Waiting for the disagrees

[Ramrig]

20% is about the same as Hornby,s increase.

 

Note that we can expect a 20% increase each year for 5 years.

 

So if it was £100, then £120, then £144, then £174, £209 and finally £250!

 

 

 

On that basis think of the Blue Pullman Price increase over the next few years.

RRP on the last run was £349

Year 1+ 20% = £418

Year 2 + a further 20% = £501

Year 3 + a further 20% = £601

Year 4 + a further 20% = £722

Year 5 + a further 20% = £866 

All approx if my maths is correct.

 

Glad I have already brought one 

[PaulG]

"The [J15] loco's now in bits for an overhaul and there hadn't been an approach from anywhere else to record the information."

 

Am I reading this correctly: Hornby are making a model of the J15 without having measured the real thing? Hmmm... I may delay my pre-order.

 

I understand Hornby had a full set of originally GER detail working drawings from the GER Society - the J15 at NNR has spent 50 years in preservation and had a number of rebuilds in that time!

 

Paul

[ian]

On that basis think of the Blue Pullman Price increase over the next few years.

RRP on the last run was £349

Year 1+ 20% = £418

Year 2 + a further 20% = £501

Year 3 + a further 20% = £601

Year 4 + a further 20% = £722

Year 5 + a further 20% = £866 

All approx if my maths is correct.

 

Glad I have already brought one 

 

It's not quite that bad.

 

The current increase has two basic elements - one is to more accurately reflect the cost of production and the second is for the increased labour rates, material costs and shipping.

In subsequent years the hike to reflect the cost of production won't need to be factored in, just the increases in labour, materials and shipping so whilst there will, inevitably, be increases they won't necessarily be quite as eye-watering.