Bachmann Maximum 15% Discount For 8 Weeks - Pricing Effect?

[BR(S)]

Now that many products have been released that are subject to the Bachmann 15% maximum discount for the first 8 weeks, are items subject to this holding their price passed the 8 weeks? 

 

My general impression is that they are, but I haven't conducted a comprehensive check.  What have other people seen?  I'd be particularly interested to see what RMweb members who are Bachmann retailers can tell us.  

[Butler Henderson]

If they have sold relatively well then no retailer is going so see a need to reduce them further until they are stuck on the shelf and not moving, or the retailer needs a quick boost in income.

[Mike at C&M]

There has been no change to the 8 weeks arrangement, so in theory, once that time is up, then shops can do discount further should they wish.

 

In our case, we did not discount by as much as 15% before this arrangement, but decided that we would increase our reduction from RRP by 15% in an attempt to compete with the larger companies, and it has worked.

 

We often hear the comment that our prices seem competitive, and actively encourage our customers to place pre-orders with us, rather than go mail order, and we therefore save them the postage. Another "plus" point is that should there be a problem, these are easier to deal with face-to-face (In practise, this rarely happens).

 

Our policy is to continue with the 15% reduction after 8 weeks, it saves us having to re-price the items, and we are still perceived to be competitive.

[DougN]

Love this topic because if any one tried it in Australia and the ACCC heard they would be issued a rather large fine as price fixing!

[brushman47544]

Love this topic because if any one tried it in Australia and the ACCC heard they would be issued a rather large fine as price fixing!

 

But this is a chat among friends, not between retailers... at least that's how I like to see it.

[MikeParkin65]

I would expect some of the items that seem to be stuck on shelves might start falling in price soon. LMS Compounds in BR livery seem to be pretty plentiful and are relatively expensive at £112 for the early emblem and £128 for the late emblem (albeit DCC fitted). I don't know what the trade price for these was but I think they are a tad over priced and thats why they are still available more than 12 months after release.

[GNR Dave]

Just popped into my local shop this morning. They had D11/2 Luckie Mucklebackit in LNER lined black for £99.95. I make that nearly 25% off the £129.95 RRP, so the rules don't seem to be universally followed.

[GNR Dave]

Correction, the RRP is £125, so it's 20% discount.

[bennyboy]

I'm after the new Farish Class 25 which was released about three month ago, but I've noticed that Hattons are still selling it at only 15% off the RRP. I suspect that it's not just the small retailers that are quite happy with Bachmann's price ruling! 

[Bernard Lamb]

What we do not know is the batch size of the recent releases nor the expected popularity.

If people wait until the end of the limited discount period, than they could well miss out on popular items for certain and possibly on many others.

Hanging on to try and save a small amount seems to me to be a foolish game given the current climate.

Bernard

[sawyermodels]

We sell our Bachmann, Farish, EFE and other Bachmann related products at the 15% off RRP rule (rounded up to nearest round figure eg £33.96 become £34.00 and £20.17 becomes £20.50 as it makes life easier for adding up totals). We leave our prices at 15% off after the 8 weeks as it saves having to re-price all items and alter our website to. 

[Grovenor]

Love this topic because if any one tried it in Australia and the ACCC heard they would be issued a rather large fine as price fixing!

Used to be the case in UK, but if you look up the 'retail price maintenance' regulations for UK you will find they were changed some time ago so manufacturers are legally allowed to put restrictions on resale prices in appropriate circumstances.

https://www.competitionpolicyinternational.com/minimum-resale-price-maintenance-under-the-new-guidelines-a-critique-and-a-suggestion

Which Bachmann's arrangement may or may not meet, but as usual with legal issues it would need someone with a deep pocket to challenge it.

Keith

[Andy Hayter]

I think the perceived problem is not regarding RPM but rather about a set of commercial operations working in the same field discussing their pricing policies - which might be construed as a problem both in the UK and the EU.

[Wheatley]

I'm not sure any group of commercial operations discussing in public how they abide by their supplier's (apparently legal) discounting policy is a 'problem'. A private agreement amongst retailers to sell everything at RRP plus 15% might be ...

[Unknown Warrior]

Just popped into my local shop this morning. They had D11/2 Luckie Mucklebackit in LNER lined black for £99.95. I make that nearly 25% off the £129.95 RRP, so the rules don't seem to be universally followed.

The RRP for the D11 is £124.95 less 20% is £99.96 which is about as good as it gets in normal discounting, + or - 1p! As we only received the D11 last Friday currently it should be £106.20.

 

I think Bachmann have served the retailer very well with this ruling allowing us all to compete on a level playing field during the first flush of sales after a new release. In my view £106.20 is a good price for a Model of the quality of "Luckie Mucklebackit," a win win for everyone.

[sub39h]

I'm not sure any group of commercial operations discussing in public how they abide by their supplier's (apparently legal) discounting policy is a 'problem'. A private agreement amongst retailers to sell everything at RRP plus 15% might be ...

As far as I understood it any attempt at price fixing (above or below RRP) was against competition law. Manufacturers are not allowed to dictate or even suggest a selling price to retailers.

 

There is a form available to fill online to inform the government of anti-competition practices. I'm tempted to fill it out to see if anything comes of it. Price fixing hurts consumers.I'm surprised it's talked about so openly on here.

[mevaman]

I am fed up to the hilt with people demanding that they have a 'right' to drive prices as low as possible and to push small, local businesses under. We all fully understand Bachmann's reasons for setting clear pricing structures when a model is first introduced. It is to protect the small local model shops who supply me with paint, glues and good modelling tips and advice.

 

If any idiot decides to try to report Bachmann for, what to me, is a very sensible and reasonable approach, we will all suffer in the long term.

 

I hope that sub39h sees some sense.

 

Andrew

[sub39h]

I am fed up to the hilt with people demanding that they have a 'right' to drive prices as low as possible and to push small, local businesses under. We all fully understand Bachmann's reasons for setting clear pricing structures when a model is first introduced. It is to protect the small local model shops who supply me with paint, glues and good modelling tips and advice.

 

If any idiot decides to try to report Bachmann for, what to me, is a very sensible and reasonable approach, we will all suffer in the long term.

 

I hope that sub39h sees some sense.

 

Andrew

This is nothing to do with the local model shop. I currently live in Coventry but I'm from Leeds originally. There is only one model shop with a Leeds postcode now, and it's in the very south of Leeds as far away from my family home as possible. There are two good model shops in Wakefield and I make it a point to visit them almost any time I'm back in Yorkshire and regularly buy from them.

 

If you'll have a look on the Model Shop guide I've also put in a plea to help another ailing local model shop I used to frequent when I lived in London.

 

You're fooling yourself if you think Bachmann's pricing structure is there to help the local model shop. They could just as equally offered the trade price they give the big boys get to the local shops? They didn't though did they? Their pricing structure is there to protect their margins.

 

The fact of the matter is, if they are engaging in any sort of price fixing it is illegal, and it hurts the consumer. I see sense, it's just that we have fundamental differences in point of view as to why Bachmann has fixed their prices in the first place.

[Jonboy]

Personally I see it as protecting their margins so they can continue to invest in a strong range of new models, to satisfy a wide range of modellers. As the products are still appearing regularly in the market, at a price the vast majority of modellers are happy to pay, and the details of their T&C's are well known in the hobby I am not sure what the issue is?

 

Contrast that to the way other manufacturers in the industry have apparently operated in terms of availability, new product releases, negotiations on altered T&C's and agreements with larger retailers and I know which I would rather see. 

[sub39h]

If it's a price modellers are happy to pay, then we don't need any sort of price fixing? The free market will pay what it's willing to pay, and everyone is happy.

[phil-b259]

Manufacturers are not allowed to dictate or even suggest a selling price to retailers.

 

Wrong!

 

Manufacturers are perfectly within their rights to specify a "Recomened Retail Price" (the clue is in the title) - though as you correctly say they cannot force any retailer to abide by it in the sense of specifying hard figures.

 

However, this does not mean the retailer has the god given right to demand a manufacturer supplies it with stock - you try offering Apple i-phones with a big discount and you will pretty quickly find that Apple will stop supplying you. The same goes for Porche cars - and if you are a food retailer as we found out the other week, it is perfectly legal for the supplier to demand money off the retailer, if you want to continue stocking Mr Kipling pies for example

 

Also its worth remembering that we consumers have no god given right to expect a "discount" of any sort - from the tone of some comments you would think "entitlement to a discount" is enshrined in the UN charter on human rights.

 

All Bachmann have done is said that if a retailer wishes to apply more than a 15% discount to the RRP of new items then they will have to wait 8 weeks longer than other retailers for stock to be supplied to them. The risk such a retailer runs is that once the 8 weeks are up Bachmann might have sold out of some of the items the retailer wants.

 

It might not sit well with certain peoples moral compass but the bottom line is what Bachmann have done is definitely legal and is in full compliance with current UK & EU laws.

[sub39h]

All of what you have said is correct Phil, and you're also right that Bachmann are not obliged to supply anyone who undercuts their 15% discount for the first 8 weeks and that this is perfectly legal practice. And no, playing trains is not and should not be a UN priority!

 

However the reverse is also true that suppliers are not obliged to buy products and it seems odd to me that a few months ago Hattons was selling Class 47 301 for example at £65 to clear (and sold out) after being on sale at £85 for months, and now has plenty in stock at £95 which don't seem to be shifting. Why would Hattons buy a product they couldn't sell before at a lower price just to put it on sale again at a higher price? Why are they playing ball so easily? That particular product has been on the shelf for over a year now.

 

Of course unless you are intimately familiar with Hattons business model you cannot know the answer. To me it suggests their hand has been forced i.e. Bachmann telling them what price they can and cannot sell their models at and that is illegal. If I were to fill out the aforementioned form and I'm wrong I've done nobody any harm anyway.

[mevaman]

I happen to know that Bachmann are not making greater margins by applying these terms. I also know that they do not apply different cost prices to different retailers. The only differences come in the form of settlement discounts for early payment.

 

I am an accountant and used to work in a model railway shop.

 

The pricing terms are purely a mechanism to even the playing when new models are first introduced.

 

It is very easy for posters to make assumptions without knowing all if the facts.

[sub39h]

With due respect sir, my wife, sister and father in law are all chartered accountants and my father a former business owner. I myself am from a highly qualified professional background and whilst I do not have an accounting qualification I am familiar with business practice and the difficulties that small businesses in all sectors have had recently.

 

With respect to the above model 31-655 or any of the class 47s for that matter, could you please enlighten me as to why a model that was already made and on the shelf is now subject to a price rise if Bachmann are not enjoying a higher margin? Could you please explain to me why Hattons seem bound to selling at a higher price than they could sell the model for before if Bachmann have not had a hand in setting the price? Please bear in mind that with respect to 31-655 specifically Hattons sold out of the model when the price was dropped to £65. To get more they must have gotten more from Bachmann.

 

I understand that it is difficult to gauge tone on the Internet so I don't mean the above in a condescending way. But you have admitted to having an inside knowledge into this complex area so I am asking for your informed explanation of this slightly odd behaviour.

[coniston branch]

Sorry in advance if I've got this wrong, but why would retailers want to have larger reductions on brand new models ? I've just looked on Hattons website for a Bachmann 1F and it appears to be sold out at the required reduction, with Bachmann selling out to supply orders, why would retailers want to cut their profits until they have assessed the markets need? After 8 weeks the demand for new models would have relaxed, and then surplus may require greater reductions.

 

Phil