Simon Says

[sub39h]

If they hadn't then I wonder why multiple retailers all have Bachmann's Class 47 priced at an £89.21? It seems a very strange price to pick don't you think!

 

Also I have edited the above post Stationmaster. I always find your rebuttal of my points regarding price rises as insightful so I would be interested to hear your thought.

[Jol Wilkinson]

sub39h

 

In the same way that it is said that a people get a government it deserves, surely this is an example of the consumer creating marketplace which, when economics create an exceptional level of change, turns out to be what they don't want.

 

RTR buyers have enjoyed strong retail competition which kept prices down and put many smaller/older/less adaptable local shops out of business. By seeking out the best discounts, you have now limited the competition.

 

Improved manufacturing quality and much more accurate and detailed models, followed by rapidly increasing production costs and supply difficulties, has pushed prices up from what were probably unrealistically low medium/long term levels.

 

As for affecting the youngsters joining the hobby, my firsts Hornby Dublo train set was second hand, but I was so overjoyed to get it I didn't realise (or care when I did). There are more routes into and along the modelling road than just buying the latest RTR must have product from one of the big discount houses. In part, the frothing on RMWeb is responsible for creating/sustaining that must have belief.

 

A look at that sector of the hobby that predominantly build from kits or adapts RTR stuff will show that, while it is potentially more expensive than buying RTR, modellers are able to achieve what they want within arguably the same or even less annual outlay (and with more satisfaction?). They also, through a quite different marketplace model, have a different, closer and more under standing relationship with their suppliers. 

 

Jol

[The Stationmaster]

If they hadn't then I wonder why multiple retailers all have Bachmann's Class 47 priced at an £89.21? It seems a very strange price to pick don't you think!

 

Also I have edited the above post Stationmaster. I always find your rebuttal of my points regarding price rises as insightful so I would be interested to hear your thought.

It all depends where prices start (an area where in many respects Hornby are rather cagey it would seem0.  Hornby's trade discount is, so I understand, now 10% and may only be bettered by getting a bit of extra discount (amount unclear to me) by prompt/early payment which for many retailers will probably mean paying for stuff before they sell it although fast moving new items such as the P2 can obviously help them.  Hornby cut their discount to 10% with their infamous new trading terms this year, last year they had cut it to 20%, before that it was greater although I'm not sure of the exact figure but probably 30% or better.

 

When a retailer only gets 10% discount it is very difficult for any of them to make money once overheads are taken into account although they can do better if they have spare cash and can get in the early payment discount.

 

Bachmann are different but also do something else.  I don't know their standard trade discount or any ways it can be improved by such things as early payment but as far as I understand things it has not been reduced at all in recent years and it is clearly greater than Hornby's.  But what Bachmann do is impose a retail discount limit of no more than 15% off their RRP for the first X weeks (I forget the exact figure) after release of a product - hence if all retailers knock off the 15% they will all come up with the same price.  Bachmann took that action to level the playing field between the deep discounters and the smaller retailers and while it obviously ended early deep discounting it has probably helped re-balance teh retail market to some extent.

 

Now work out this one - a certain well known deep discounter sold a particular Bachmann loco (not affected by the 15%) at no more than a couple of £s above the trade price, it was a popular model and even some other retailers bought from them and then resold at near RRP and still made a profit.  A successor version of the same loco appears and two things have happened - firstly the RRP (and hence the trade price) has risen significantly and the discount is initially limited to 15% for everyone.  If you have always bought a deeply discounted prices you effectively get a double whammy of price increases and wonder what the heck is happening.  If you didn't previously buy at deeply discounted prices the real increase, should you buy the second loco, in what you pay might well be considerable but nowhere near as 'ouch' as the one suffered by the guy buying the deeply discounted first model.

 

Is that a bit clearer now?

[Jol Wilkinson]

If they hadn't then I wonder why multiple retailers all have Bachmann's Class 47 priced at an £89.21? It seems a very strange price to pick don't you think!

 

It may be nothing more than something like taking the retail price before VAT, knocking 10% off it and selling at that price inc.VAT.

 

After retirement I worked with a major national chandlery company at the London Boat Show for a number of years. Their pricing policy was simply to take the manufacturers list prices ex. VAT, as their inc.Vat price (which equates to a 16.7% discount).

 

So it may not be collusion against the customer by evil retailers, guided by devilish manufacturers, but a simple, easily calculated and commonly adopted policy. Remember that no retailer will offer an markedly bigger discount as it is only giving money away. After all they have to make a living, just like you.

[sub39h]

With due respect Stationmaster, Bachmann may spin it as levelling the playing field, but the end result is more money in their pocket and this if anything is the primary aim. Like I said, profit isn't a dirty word and if it works for them then fair enough. I don't think it will and it has drastically affected my buying habits which means in a sense they have lost a customer. The model railway world isn't a big place. Manufacturers can't afford to lose too any customers as there aren't many to lose in the first place, and then if on top of that entrance into the hobby is hindered by high costs, they really are pairing themselves into a corner.

[coniston branch]

I don't normally get involved with the price debate, but are things really that bad ? Argos is listing the Hornby Tornado Pullman Express at £99, the same price as last year, a number of Bachmann sets are still available for less than £100. I realize that a number of models have increased  markedly, such as the pollybulks and presflows, but the new Bachmann  1f is selling for around £75 and the porthole stock is still less than Hornby Staniers of a couple of years ago.

 

Phil

[jonny777]

But of course this is subjective. I realise I'm in a relative minority, but I was born in 1968 and from the age of 4 1/2 went to a school next to the WCML in north London. I was transfixed (yes, I mean transfixed) by AC electrics, 501s, 310s and class 25s in BR blue. If I went further afield as I got older, there would be other weird and wonderful trains and locos, all in blue. To me, that was what a proper train was. Books and museums just had pictures of old fashioned trains that looked nothing like what fascinated me, the real, modern, grimy and down-at-heel railway.

Nowadays my interests range far and wide and I enjoy railways from all eras and indeed different countries, but that curious period from the late 60s to my teenage years where literally everything bore the BR corporate image, yet just below the surface lay what was in essence, still quite a largely steam-age railway (unfitted freights, semaphore signals, steam heat were all in abundance) - to me personally, that still exerts the greatest fascination and represents the greatest period of personal interest.

Now I don't seek to convert anyone else - but I do find my hackles rise when someone else declaims as fact rather than opinion that BR blue is boring.....

 

I think you have missed the point somewhat.

 

The claim (as fact) that BR Blue was boring, came from someone who had experience of the time before BR Blue. To most enthusiasts like myself who witnessed BR Lined Green/Black and maroon/crimson & cream - corporate blue *was* boring; although despite the mass desertion of many railway enthusiasts, some of us (after a brief break due to overwhelming depression over what had taken place in the 1960s) kept our interest going and slowly became used to corporate blue.

 

I understand that, for those who were at primary school during the late 1970s, the BR Blue era was the defining one by which everything after that can be judged; and for that reason the all over corporate livery was great, but they have to understand that to an older generation it was definitely not - for many reasons, not just the colour scheme.

 

It must be annoying to hear that your fondly remembered era is considered a railway 'low point' by older enthusiasts, but this is not a sleight on your judgement or nostalgia. They are not doing it on purpose just to make you feel inadequate, but just telling it like it was for them. Had you been born some 20 years earlier, I am pretty sure you would have agreed.

[Ian Hargrave]

With due respect Stationmaster, Bachmann may spin it as levelling the playing field, but the end result is more money in their pocket and this if anything is the primary aim. Like I said, profit isn't a dirty word and if it works for them then fair enough. I don't think it will and it has drastically affected my buying habits which means in a sense they have lost a customer. The model railway world isn't a big place. Manufacturers can't afford to lose too any customers as there aren't many to lose in the first place, and then if on top of that entrance into the hobby is hindered by high costs, they really are pairing themselves into a corner.

Neither can they afford to sell at the prices they were charging until fairly recently.Sharp rises in the cost of manufacturing in China have been well documented here and elsewhere.

There were howls of anguish a couple of months ago when Bachmann's price rises were announced.This has not stemmed the announcement of new ventures such as the Webb Coal Tank or dampened the enthusiasm for new releases such as the Inspection Saloon and the1F tank.

Obviously,you have decided to opt out.That's your choice.If you have any evidence that Bachmann are heading for a 'corner',then of course you might like to share it with the rest of us

One anecdote....last week,I heard Dave Jones,the new kid on the block with DJM models,talk frankly about his aims and aspirations with his new venture. He told the assembled gathering at RMWeb Live that he wanted to make lots of money and move to The Bahamas. There were amused chuckles of admiration and a healthy positive reaction from his audience.He is developing some exciting new goodies.Take a look...I'm sure you have,already and then note his prices. He's not heading for a corner any time soon. Neither are Bachmann nor I am now pleased to say,Hornby.

More expensive times are with us,like it or not

[The Stationmaster]

With due respect Stationmaster, Bachmann may spin it as levelling the playing field, but the end result is more money in their pocket and this if anything is the primary aim. Like I said, profit isn't a dirty word and if it works for them then fair enough. I don't think it will and it has drastically affected my buying habits which means in a sense they have lost a customer. The model railway world isn't a big place. Manufacturers can't afford to lose too any customers as there aren't many to lose in the first place, and then if on top of that entrance into the hobby is hindered by high costs, they really are pairing themselves into a corner.

It undoubtedly is more money in their pocket because they have increased their prices - and they have given reasons for it.  Don't overlook the simple fact that Bachmann is as near wholly owned as makes no difference by a corporation which has been losing money on its model railway sales for several years past.  The alternative is equally simple alas - if they continue to make losses they will go bust, or parts of their business will go bust, and then they won't be there at all.

 

As an aside on the question of Bachmann's prices a number of retailers I have spoken too (but hardly a scientific survey of course) were of the view that many of Bachmann's past prices were too low for what they were offering.  Why that was the case is open to all sorts of interpretation and opinion of course but the fact that their prices have risen steeply might be read as indicating there was some validity in such opinions.  And don't forget that all manufacturers inevitably include an element of market pricing in their price structures and very often that can work to our advantage - albeit depending on what we want to buy.  As far as we're concerned, at the end of the chain, the manufacturer has explained why prices are rising - the reasons they have given make perfect sense to me especially where labour is such a large element of models involving many detailed parts and sub-assemblies; that might not mean that I like what they're saying when it comes to the money going out of my wallet but spending, or not, on their products is still my choice.

 

As modellers who buy new r-t-r we have had a great opportunity to make hay while the sun shone, things have now got tougher but as LNWR Modeller has said the market consists of an awful lot more than new r-t-r which means shopping on a budget can still be possible for many folk who are happy without having to have the latest.

[JSpencer]

From time to time you can buy top notch detailed models at really reduced prices, however these can be due to a shop needing cash rapidly or a manufacturer clearing out the warehouse of the few remaining items.

 

We cannot use that to compare a clearance loco price with a recently released super detailed bogie wagon.

 

Niche items will appeal only to a small part of the market and therefore will consequently be more expensive. However Railway history stars such as P2, A4 etc can be, and actually being made to few different price vs detail specifications to cater for the variations in demand by the market.

 

It should be noted that model railways is not the only hobby in the world, if you wish to bring in the younger generation then you aspects that appeal to them. Lego quite quickly returned to popularity by getting itself into various video games.....

[andyman7]

I think you have missed the point somewhat.

 

The claim (as fact) that BR Blue was boring, came from someone who had experience of the time before BR Blue. To most enthusiasts like myself who witnessed BR Lined Green/Black and maroon/crimson & cream - corporate blue *was* boring; although despite the mass desertion of many railway enthusiasts, some of us (after a brief break due to overwhelming depression over what had taken place in the 1960s) kept our interest going and slowly became used to corporate blue.

 

I understand that, for those who were at primary school during the late 1970s, the BR Blue era was the defining one by which everything after that can be judged; and for that reason the all over corporate livery was great, but they have to understand that to an older generation it was definitely not - for many reasons, not just the colour scheme.

 

It must be annoying to hear that your fondly remembered era is considered a railway 'low point' by older enthusiasts, but this is not a sleight on your judgement or nostalgia. They are not doing it on purpose just to make you feel inadequate, but just telling it like it was for them. Had you been born some 20 years earlier, I am pretty sure you would have agreed.

Thanks, I did word my post deliberately to emphasise a different point of view - I entirely accept and indeed can understand your post. The only thing I wanted to highlight was how subjective it is. The modern railway to me is not nearly as interesting as the railway of my youth, but my five year old loves it and I am living through what will be his nostalgia. The point I am making is that all our respective views are subjective - none of them are more 'right' than the other.

The one other thing that I think affects things is that for me, my childhood represented the rail network at it's nadir in terms of both investment and it's place in society. From a slow start in the 1980s, I have watched as railways have moved from being an under-invested inconvenience in the national mind to be once again be considered a critical part of our transport infrastructure - we are now building high speed lines and reopening closed routes. I can see that if I had been born 20 years earlier and had witnessed the savage cutbacks as they took place, it would indeed be much harder to have anything but the most negative views of the 1970s network.

[brushman47544]

It should be noted that model railways is not the only hobby in the world, if you wish to bring in the younger generation then you aspects that appeal to them. Lego quite quickly returned to popularity by getting itself into various video games.....

Lego has certainly done well in that respect - a lot of my son's pocket money heads that way... So why not Hornby (or whichever) branded model trains in Minecraft...

[Legend]

I note no mention of Hornby increasing their prices to retailers while maintaining rrp (thereby restricting model Shops margin), or Hornby selling direct, when Mr Kohler is lamenting the demise of the model shop .

[Jol Wilkinson]

The demise of many model shops has been the result of previous commercial practises and  Hornby's recent action should be seen as a response to that rather than the cause. Whether they are right in taking that action, only time will tell, although the experts that frequent RMWeb will no doubt have an immediate answer.

[Hroth]

Lego has certainly done well in that respect - a lot of my son's pocket money heads that way... So why not Hornby (or whichever) branded model trains in Minecraft...

Or perhaps a "Discworld" themed set to link in with TPs recent novel "Raising Steam"?

[brittannia]

And the price of lego is a lot dearer these days, ask my grandson!

[robmcg]

I don't normally get involved with the price debate, but are things really that bad ? Argos is listing the Hornby Tornado Pullman Express at £99, the same price as last year, a number of Bachmann sets are still available for less than £100. I realize that a number of models have increased  markedly, such as the pollybulks and presflows, but the new Bachmann  1f is selling for around £75 and the porthole stock is still less than Hornby Staniers of a couple of years ago.

 

Phil

 

I agree UK 00 RTR models at least are still very good value if you shop around. The main range CotN P2 is under £100 to we outside the EU, and I just bought a couple of new existing-model Hornby King Class engines new/as new for around £50 ea on Ebay.  Hawksworth carriages cheap at box-shifters.  Maybe I'm a bit smug because I bought such as teak Gresleys when they were first produced, I have forgotten the prices but much less than today's RRP.

 

Rob

[Ozexpatriate]

Anyone who thinks the manufacturers are trying to rip people off would be well advised to look at their balance sheets. 

 

You can find Hornby's annual reports here.

 

You can find Kader Holdings' annual reports here.

 

Kader's loss for the six months period ending June 30, 2014 was HK$71,874,000 (£5.6M) compared with a loss of  HK$90,307,000 at the same time last year.

 

Kader made this observation:

Regarding the model trains business, the turnover in the first half year of 2014 was approximately HK$182.17 million, which decreased by approximately 19.04% as compared to the corresponding period last year. The Group’s subsidiary, Bachmann Europe Plc., enjoyed success once again in 2013 by winning many UK awards from the RM Web – Model Rail – MRE Mag competition and has received the overall “Manufacturer of the Year” for the 6th year running.

Hardly a rip-off by Bachmann I'd say if turnover decreased by 19% year over year. Their annual results do tend to be better than the first six months, clearly the second six months of the year is more profitable for them but there's no 'gravy train' in this business right now.

[Ozexpatriate]

It should be noted that model railways is not the only hobby in the world, if you wish to bring in the younger generation then you aspects that appeal to them. Lego quite quickly returned to popularity by getting itself into various video games.....

Lego has certainly done well in that respect - a lot of my son's pocket money heads that way... So why not Hornby (or whichever) branded model trains in Minecraft...

And the price of lego is a lot dearer these days, ask my grandson!

LEGO is an interesting company. They very nearly went out of business with expansion into non-core businesses like theme parks and video games. The company was rescued by hiring, for the first time, an executive from outside the family and restructuring the business to focus on their core activities - making bricks and separating the non-brick activity into a separate entity. (LEGO Group sold the themeparks to "Merlin Entertainment" in 2005.) The new executive team turned around what was a failing company in 2003 into what is a very successful toy company today.

 

They have been very successful by smart licencing strategies with the likes of Disney, (who own Marvel), Warner Brothers (DC Comics, Harry Potter) and the Tolkien marketing entity Middle Earth Enterprises.

 

As to pricing, if a 7 pound box of ABS plastic sells for $100.00, is that a rip off? It's not cheap!

[Ozexpatriate]

Lego has certainly done well in that respect - a lot of my son's pocket money heads that way... So why not Hornby (or whichever) branded model trains in Minecraft...

Or perhaps a "Discworld" themed set to link in with TPs recent novel "Raising Steam"?

Not sure if you are suggesting a "Discworld" model train or a "Discworld" LEGO train? From a LEGO standpoint this is something the AFOL (Adult fans of LEGO) community can easily do and recommend to LEGO through their "Ideas" process, but the appeal of "Discworld" is, I suspect, too limited for LEGO to be interested.

 

I think the same is true for model railways. It is the domain of "modelling" like bridgiesimon's very charming Hobbiton End.

[Paddy]

Can I ask a question? It is said that Bachmann restrict its dealers to a maximum discount of 15% for the first 'n' weeks after a model's release. Is this legal as it smacks of price control/anti competitive practice? I am sure Bachmann sought legal advice but it reminds me of how prices were controlled in book shops.

 

Best

 

Paddy

[Ozexpatriate]

Is this legal as it smacks of price control/anti competitive practice? I am sure Bachmann sought legal advice but it reminds me of how prices were controlled in book shops.

We talked about that at length in this (now locked) thread "Bachmann Pricing Policy to Retailers". We pretty much exhausted the subject there.

[Paddy]

We talked about that at length in this (now locked) thread "Bachmann Pricing Policy to Retailers". We pretty much exhausted the subject there.

Thanks Michael - I will have a read.

 

Many thanks

 

Paddy

[JSpencer]

It all depends where prices start (an area where in many respects Hornby are rather cagey it would seem0.  Hornby's trade discount is, so I understand, now 10% and may only be bettered by getting a bit of extra discount (amount unclear to me) by prompt/early payment which for many retailers will probably mean paying for stuff before they sell it although fast moving new items such as the P2 can obviously help them.

 

I have no comment on the 10%. However inciting shops to pay their invoice early (or on time) by extra discount is actually a good idea. Hornby does a lot of B2B (Business 2 business) trade, and believe me, the company I work for is the same. Remember Hornby have invested plenty paying for tooling and manufacture over a 2 year period (or more), so once the product is out, they need to recover cash from all of this as fast as they can.

 

If a lot of B2B customers do not pay on time or even take months to pay then:

1) the return on the investment will be less and may equate to a loss if drawn out over a long period

2) the company has no cash in its coffers, this means the next projects are delayed

3) you end having to employ additional staff whose sole purpose is to chase up shops who did not pay their bills, beg them to do so and in the worst case threaten them or instigate legal action.

 

Number 3 is both very costly (more money not ready to invest in future projects) and not at all very pleasent for people who have to work in that job since on one hand they have to deal with people that have not paid, on the other hand they have bosses wanting results on the cash flow. 

 

I therefore think it would be a bit much to expect Hornby to have to wait for shops to sell the item before they finally get paid. Hornby may be a big household name, but it is just a medium sized company with it's own overheads.

[The Stationmaster]

I have no comment on the 10%. However inciting shops to pay their invoice early (or on time) by extra discount is actually a good idea. Hornby does a lot of B2B (Business 2 business) trade, and believe me, the company I work for is the same. Remember Hornby have invested plenty paying for tooling and manufacture over a 2 year period (or more), so once the product is out, they need to recover cash from all of this as fast as they can.

 

If a lot of B2B customers do not pay on time or even take months to pay then:

1) the return on the investment will be less and may equate to a loss if drawn out over a long period

2) the company has no cash in its coffers, this means the next projects are delayed

3) you end having to employ additional staff whose sole purpose is to chase up shops who did not pay their bills, beg them to do so and in the worst case threaten them or instigate legal action.

 

Number 3 is both very costly (more money not ready to invest in future projects) and not at all very pleasent for people who have to work in that job since on one hand they have to deal with people that have not paid, on the other hand they have bosses wanting results on the cash flow. 

 

I therefore think it would be a bit much to expect Hornby to have to wait for shops to sell the item before they finally get paid. Hornby may be a big household name, but it is just a medium sized company with it's own overheads.

I quite agree but then Hornby also does the opposite by imposing some strict conditions, including possible loss of supply, on late payers.

 

However the point is that what Hornby has actually done is shift almost all of the risk at the distribution and retail end onto its customers by giving them a pitiful trade discount which it has drastically reduced over the past three years and now at a rate where it is far from easy to profitably sell their products.  And it then competes with them by selling stuff directly at less than its trade price (ok, not a lot of stuff but it might not need much).

 

The other interesting thing is that some bad payers - who are well known in the trade - have in the past been allowed to run up huge debts with Hornby but are still being supplied, weird.