The Cost of Our Hobby

[jjb1970]

If they have been loosing money, that is not the customers fault.

I don't think anybody is blaming the customers. If a business doesn't offer a reasonable return to investors then why would anybody invest in it or bother to continue with its activities. Just as no model supplier is indispensable to the hobby so it is also true that manufacturing model trains is a niche activity that only exists whilst those doing the manufacturing consider it to be worth their while.

[BlackRat]

All good here, and using my down time in retirement (semi) to do..........so modelling!

 

This week I've been mostly making....... A new platform and flower pots!

[jjb1970]

I think there is a lot of negativity towards Bachmann at the moment over price and assumptions that we are all being taken for a ride. If we put aside for a moment the simple fact that nobody actually needs a model train in the way we need food, water and shelter (ie. if you don't like the price then don't buy, not buying a train is not the end of the world) and look at other markets for model railways UK modellers still get a good deal. I remember when North American models were as cheap as chips, if you look at North American models now they are not cheap. Yes the quality of North American models has been transformed over the last 20 years, but the same is true of British OO. Both Bachmann and Hornby are total suppliers, they offer track, scenic, DCC and control, coaches and wagons. Now most of that stuff can be bought from other suppliers but large total suppliers are important for the health of the hobby I think. To experienced modellers a fractured market of cottage industry suppliers may not be a concern, but for new entrants and many others the comfort of seeing a comprehensive range of products from suppliers they recognise is important. There are quite a number of ways both could reduce prices:

-Go all pre-order so that projects are de-risked. I think many accept that with a project like the APT-E but do people want the general market to go that way? One thing suppliers have to price into their cost of doing business is inventory, time to shift stock and risk of unsold stock etc, it would be much better financially for them to follow the Rapido model.

-Just make locomotives and keep these locomotives to stuff like more A4's as passenger coaches in particular are said to be expensive to produce and offer lower returns than locomotives (I believe DJM Dave is on record as saying such and admitting he is far from being interested in doing coaches for that reason, something for which I do not criticise him at all). This is pretty much what Heljan do for OO although I do give Heljan credit for making some very unusual locomotive types that I never thought I'd see done as RTR.

-De-spec models, Hornby tried that and look at the response they got

-Eliminate the middle man and go to all direct sales, that could allow suppliers to reduce costs significantly but do people really want that?

-Look for a lower cost economy to move into to take advantage of lower costs, that is possible but expect a period of uneven production and issues, look at how Hornby have struggled to get their new suppliers up to speed after the demise of Sanda Kan

-Lean man and get rid of costly overheads like paid staff, how many products do people think Hornby or Bachmann would make if they were operating on the same basis as Realtrack?

Unless we are willing to support options like these and accept what it would entail for the hobby then we just have to accept that prices are going up. There seems to be a tendency to see new entrants like Oxford and the small boutique suppliers as the saviours of the hobby despite the fact that in OO gauge the market is dominated by Hornby and Bachmann and that the supposed saviours of the hobby have not actually produced a great deal for anybody to actually go out and buy yet. Now that is not a criticism of these new suppliers but I find it is getting a bit silly that the two companies that provide a breadth and depth of product that no other British OO supplier comes anywhere near and which have a proven track record of delivering high quality product which can be bought in shops including excellent passenger coaches and such like are constantly being denigrated.

[chris p bacon]

but I find it is getting a bit silly that the two companies that provide a breadth and depth of product that no other British OO supplier comes anywhere near and which have a proven track record of delivering high quality product which can be bought in shops including excellent passenger coaches and such like are constantly being denigrated.

Good post jjb

 

The last bit sums it up for me. I cannot understand some of the attitudes and opinions expressed from a position of few facts. . . . oh yes i forgot,  facts get in the way of an opinion sometimes. . .

[Donw]

One thing people seem to forget is that the tendency for items only being available in batches may not encourage youngsters. With limited funds they cannot splash out and buy when things are available. If key things are not available when starting they may just decide to go for other hobbies.

 

Don

[Andy Reichert]

The cost of shopping for models others make/manufacture instead of building them oneself has clearly gone up.

 

But apart from difficult things like precision gears, some types of wheels and motors, how does that affect "modellers"?  I.e. the name of those hobbyists and their hobby, who make their own models.

 

Andy

[Paddy]

I believe we created this ourselves, Why?, look at it this way, we where happy to pay £150+ for ltd editions and being a high demand for them, Bachmann saw this and thought, well they will pay for these models so why not just pull all the rest of our models into line.

 

Smaller runs on models, higher prices, more profit and it will not stop there, it's only going to get worse, yes they will sell there models, but a smaller amount will buy/afforded them.

I have looked at what I have got 50+ loco's and have now drawn a line and will only buy maybe one or two models a year and only the loco's that fit in with my area, so I will not be buying a model that looks nice on impulse buys.

 

And if the prices keep going up and up then I will stop and call it a day on new models, it would be nice to have them, but I don't need them.

I feel sorry for anyone that come into the hobby in the next few years and having to pay these crazy prices!

It not even been constant on the price increases , some models have gone up by more than 50% , Pill box guards van was £12.95 now £24.95 as an example.

 

If Oxford rail can bring wagons in at £8-9.00 a model it just shows what sort of mark up Bachmann are making on each model and if Oxford rail end up doing a lot more rolling stock and these sell well, then I think Bachmann maybe in for a bit of a shock when there stock just ends up sitting on shop selves collecting dust.

I just can not justify paying for some of the new prices they are asking, I am not asking for the models to be rock bottom prices, But prices I feel that I am not being ripped off. 

And has Legend said two price increases in one year, did Bachmann not say in there press release that they would be doing a price increases once a year, so why two?.

 

Even my local two shops can not sell Bachmann stuff as no one want to pay there silly prices, Hornby is out selling Bachmann at the moment, it's killing the Hobby and killing the shops they way they are going!.

 

The thing I do not get is if Bachmann know for years that they where selling there models to cheap, why did it take them so long to work this one out? 

Darren

 

You make some interesting points Darren and I agree that the prices being charged now are potentially moving models railways from a mass market hobby (I use the phrase loosely) to a specialist one.  If this does happen then we are sort of going full circle and moving back to the days of "toys for rich boys and men" (no offence intended).  To be fair to Bachmann (and Hornby) it is probably much harder for them to hit the price point of someone like Oxford as their overheads will be higher.  May be it is time for Easy Models or Ryan Models! :-)

 

One companies problem is another's opportunity remember...

 

Paddy

[Paddy]

As Neil has mentioned, £25 for what is an extremely basic wagon from Bachmann (especially the Pipe and Tube), and one of the easiest to build Parkside kits in their range is really taking the p***. I too have bought one or two, but only as a reference for kit building purposes. Yes, there's the inconvenience of having to paint and decorate the Parkside model with transfers, etc, but even so, it will still work out much cheaper to do a batch of those than buy the same number of Bachmann tubes off the shelf. I tend to buy expensive RTR wagons singly for a reference now if the same wagon is available as a kit elsewhere.

 

May be one of the upside of the price rises is that we will see "modelling" actually coming back in to model railways?

 

Paddy

[Revolution Mike]

equates to a 60% increase in the finished product. Or, as was quoted in an earlier post, a 100% increase in the cost of a guards van.

Not a good idea to select one item as an example by the general tend seems gross.

 

You are right they are not good examples as they are the extremes, but it isn't rocket science to work out why some things (eg Polybulks!) have increased dramatically more than others - it is down to the assembly time (and therefore costs).

 

If they have been loosing money, that is not the customers fault.

There will be some impact from genuine cost manufacturing cost increases. I include all stages of the process in manufacturing costs. However, the increases we've seen strikes me that the industry is too fat and the manufacturers need to look to themselves before they look to the customer to fund the gravy train.

 

You are right it isn't the customer's fault, but it is the customer's problem.  Losing money on things only leads to two outcomes - the price goes up or the item is no longer produced (either because they manke no money on it or because they go bust).

 

If what you say is correct then again the proof of the pudding is in their accounts and represents a tremendous opportunity for someone...I can't say I see it happening personally based on what I see from our company. Sure there are areas that costs can be cut eg retail margin but then people complain that they can only buy direct and not via their local model shop etc.

 

Cheers, Mike

[RBAGE]

May be one of the upside of the price rises is that we will see "modelling" actually coming back in to model railways?

 

Paddy

The problem is, and this is not based on fact but on logic (for the benefit of some contributors), at one time there was a very healthy cottage industry which produced kits and bits to allow us to fill the gaps that the big manufacturers were ignoring. There was enough to keep these small scale people afloat.

 

Whether it's greed or ambition or just wanting to outdo a major competitor, I don't know (no facts). The outcome is that the major manufacturers have probably overcommitted themslves, taken on additional none production staff to support all these additional lines with all the additional cost. There customers, with a limited budget, can only by one or two of the ten releases a year so total sales stays the same but the cost to bring a vastly inflated range to market has gone through the roof. And remember, these R & D people or quality people or back office staff don't actually make any money for the organisation. It's people at the coalface that do that.

 

To make matter worse, the big manufacturers have now mopped up all of the moderate earners that the cottage industries relied on so these people will have ceased trading. So, if and when the bubble bursts, there's not likely to be the support that modellers once enjoyed.

 

In the end, RTR models will be too expensive for new starters and there will be nothing to support experienced modellers.

 

A more healthy approach would have been for the major manufacturers to have operated within their own and the markets capability, developed their business by evolution not revolution.

 

The way the business has been managed in recent years is a bigger threat to the hobby than anything else.

 

This is only opinion and not fact. The same as most other post in this thread. We are not in a position to know all the answers. If we were, this vehicle for discussion wouldn't exist.

 

Bob (Grumpy old git from the north) 

[t8hants]

One thing people seem to forget is that the tendency for items only being available in batches may not encourage youngsters. With limited funds they cannot splash out and buy when things are available. If key things are not available when starting they may just decide to go for other hobbies.

 

Don

As a Newbie just getting back in the hobby after many years this is the one thing that disappoints me.  Loco's issued as special editions immediately makes me suspect the price is hiked up.

With Skaledale I find something that would fit my layout, only to discover it went out of production 18 months ago. 

Being a natural cynic, I have always believed that 85% of British companies price at the point just before there would be a noticeable drop-off in sales, never costs plus.  I may be able to afford one new loco a year, but the majority of my stock is going to be 2nd hand.  Which will be good for fellow enthusiasts, but not for the industry.  Kernow are getting my 'new' purchase as soon as the O2 appears, but the other makers products will be pre-owned before I can afford them.

However I am going to have to learn to plastic kit model again, and several buildings are awaiting my trembling hand to assemble and paint them, so that must be considered a plus.

 

It must be an age thing, but I do have second thoughts being asked to pay more for a new loco, then I did for my first few cars!

 

Gareth

[Arthur]

Being a natural cynic, I have always believed that 85% of British companies price at the point just before there would be a noticeable drop-off in sales, never costs plus.

 

Well that's essentially what I would do if I was running a business, they're not being run as hobbies.

 

Anyway, as some seem to believe that that these companies are exploiting massive profit margins, I'm expecting a vast expansion in RTR as new manufacturers rush to get their noses in this 'golden trough'.

 

We'll see.

[chris p bacon]

The problem is, and this is not based on fact but on logic (for the benefit of some contributors),

 

Whether it's greed or ambition or just wanting to outdo a major competitor, I don't know (no facts).

 

 

It's selective quote time again......

 

Your logic is that there are 3 reasons ........no hang on you've no facts to support this logic.....so it's not logic is airy fairy nonsense driven more by the fact that you possibly can't afford all that you would like. (harsh I realise but is it true ?)

 

But this bit is the one for me

. And remember, these R & D people or quality people or back office staff don't actually make any money for the organisation. It's people at the coalface that do that.

 

What are you on about ?

 

Look at it this way, if you think the people at the 'Coalface' are the one's that drive everything just think about how the materials get to them, how they get paid, how the product is shipped....oh yes that would be the back office staff. And think about what they are making at the 'Coalface' where would the details and planning for that come from....Oh yes the R & D team.........can you see the flaw in your argument ........I can...

 

Don't take this the wrong way but I'm going to assume that you are not in manufacturing ? even overseas manufacturing ? would I be correct ..........

[Legend]

Well that's essentially what I would do if I was running a business, they're not being run as hobbies.

 

Anyway, as some seem to believe that that these companies are exploiting massive profit margins, I'm expecting a vast expansion in RTR as new manufacturers rush to get their noses in this 'golden trough'.

 

We'll see.

But they are. That's why DJ models, Rapido and Oxford are all getting into the British market

[Arthur]

None of them are new manufacturers, Rapido are Canadian and are only involved in two commissioned models, Oxford are long established model makers with, apparently, some non UK model railway experience and capacity already, and DJ is a spin off from Dapol/various commissions. Essentially existing entities doing what they know.

 

I await the first completely new entrant drawn in by visions of riches.

[chris p bacon]

But they are. That's why DJ models, Rapido and Oxford are all getting into the British market

DJM is working on a few of his own and in partnership with others.

 

Oxford have 1 loco and some wagons

 

Rapido are working in partnership with Locomotion and do not produce in the same way as Bachmann/Hornby as it is essentially made to order.

 

None of those are a comparison, when they produce a full range including items that take years to get their money back on then you could quote them.

[jjb1970]

The other obvious point is that to date neither Rapido, Oxford nor DJM have delivered any of the promised new models. Now clearly DJM Dave has a strong pedigree at Dapol and I do not doubt his models will be very good whilst the quality of the models Rapido make for the North American market is exceptional but the point remains that it seems bizarre that there is a body of opinion in the hobby who are venerating manufacturers who have not yet delivered anything of note to the UK market whilst vilifying manufacturers who have. And if talking prices, you can't ignore the different sales models (I'm sure Hornby and Bachmann would reduce prices if they only made what customers have ordered before production starts and only sell via a single source), if people want the alternatives then fine but don't complain when there are no more model shops and you have to order models months in advance on trust that it will be good. And DJ Dave has been quite open and honest in discussing inflationary pressures and that this will affect his pricing.

[Legend]

DJM is working on a few of his own and in partnership with others.

 

Oxford have 1 loco and some wagons

 

Rapido are working in partnership with Locomotion and do not produce in the same way as Bachmann/Hornby as it is essentially made to order.

 

None of those are a comparison, when they produce a full range including items that take years to get their money back on then you could quote them.

Everybody starts small. Airfix was Class 31 and Prairie , Mainline the 4MT, J72 and Peak.

 

The point is these people wouldn't be entering the market if they didn't think there was money to be made

[Dunsignalling]

It must be an age thing, but I do have second thoughts being asked to pay more for a new loco, then I did for my first few cars!

 

Gareth

That started happening to me a very long time ago!

 

My first car cost me a fiver (1959 Ford Pop, one of the last sit-up-and-beg ones) in 1968 complete with knackered engine. A further fiver secured a rusty 1953 example with good mechanicals and a 12v conversion and I made one good one up out of the two on the front lawn (surprisingly tolerant mother).  

 

The (non-standard) chrome Lucas "King of the Road" headlamps that came with the '53 car would fetch more than enough for a new loco nowadays!

 

John

[Revolution Mike]

The point is these people wouldn't be entering the market if they didn't think there was money to be made

 

Correct, but that doesn't mean that anyone is being ripped off/profiteering etc etc as has been accused by some in this thread.

 

The prices announced so far are hardly out of step with the other manufacturers apart from perhaps Oxford Rail.

 

Cheers, Mike

[chris p bacon]

Everybody starts small. Airfix was Class 31 and Prairie , Mainline the 4MT, J72 and Peak.

 

The point is these people wouldn't be entering the market if they didn't think there was money to be made

Yes that is true, but you cannot compare the likes of Hornby and Bachmann with the size and complexity of the ranges they are carrying to them.

 

When DJM first started he openly said that if the first one didn't sell in the numbers he needed then he couldn't make anything until it did. How do you think that the 2 big players fund their cashflow ? from the better selling models, that's how. The popular ones pay for the slow sellers. Or would you prefer a load of cheap locos and nothing to put behind them ?

Again DJM has said that there is no return in producing coaching stock so I doubt we will see him enter that market (I'd happily be proved wrong there).

 

There is a glaring hole in all the arguments in favour of low prices and that is where does a company get its cashflow from ? Profit and loss is b*llocks without cashflow, you could have the best selling item in the country but if you couldn't get it until month 11 you'd be stuffed.. . . . . . .and you'd need backroom staff for that.. .and R & D. .oh hang on there's another argument......

[chris p bacon]

Correct, but that doesn't mean that anyone is being ripped off/profiteering etc etc as has been accused by some in this thread.

 

The prices announced so far are hardly out of step with the other manufacturers apart from perhaps Oxford Rail.

 

Cheers, Mike

Correct

 

As for Oxford rail, no one heard of a loss leader ? also be interesting to see what happens if the Radial doesn't sell in the required numbers due to its 'niche' market and Hornbys version (who has the bigger name in the hobby ?)

[bgman]

A wave of the MEK brush more like!

Incidentally........ I get mine in bulk now, I buy it by the litre and decant as and when I need it.

A litre costs about the same as a bottle in the shops and seems to last forever, no matter how much I spill on the garage floor!

I wonder if I buy wagons unboxed in bulk,........if it will work out the same............

I need to sniff that one out ! Bargain er........ can someone open the window

[RBAGE]

It's selective quote time again......

 

Your logic is that there are 3 reasons ........no hang on you've no facts to support this logic.....so it's not logic is airy fairy nonsense driven more by the fact that you possibly can't afford all that you would like. (harsh I realise but is it true ?)

 

But this bit is the one for me

What are you on about ?

 

Look at it this way, if you think the people at the 'Coalface' are the one's that drive everything just think about how the materials get to them, how they get paid, how the product is shipped....oh yes that would be the back office staff. And think about what they are making at the 'Coalface' where would the details and planning for that come from....Oh yes the R & D team.........can you see the flaw in your argument ........I can...

 

Don't take this the wrong way but I'm going to assume that you are not in manufacturing ? even overseas manufacturing ? would I be correct ..........

I am in manufacturing. Mass production. I have worked in quality for 28 years within the same organisation. Involved with supplied component development from developing or low cost countries.

I am semi retired and doing well enough that I can afford virtually what I want in the hobby.

As far as ready to run equipment, I probably have about 120 locos with about 75%  DCC sound fitted. I have about 120 coaches. I have about 400 wagons.

I have a cupboard full of kits to build which include top of the range (Bradwell, Finney etc) items.

I still buy ready to run if I want them. 3 Hornby K1's was my last new purchase.

So, I can afford it if I want it but new purchases will become less likely.

 

Being selective, I did point that my comments are not based on fact, just as yours aren't.

And I am well aware of the contribution that back office provide but they don't make anything. If you employ another R and D technician you can't make any additional current product. If you employ another manufacturing operator?

What the R and D man should be focusing on is trying to develop processes to make product quicker, easier, cheaper.

What the shipping and packaging people should be doing is trying to identify more efficient ways of shipping.

What management should be doing is realising that they can't produce models of every prototype so they don't need so many expensive indirect staff. 

[Arthur]

What management should be doing is realising that they can't produce models of every prototype so they don't need so many expensive indirect staff.

 

So you want less choice, fewer models produced but at lower cost per unit? Bit like the old days, one new model a year.

 

That's fine if you really want that but many would rather see a wide range of models avaiable, different prototypes covered and that comes at a cost.