KR Models business model etc

[GWR-fan]

From my experience postage costs from Canada to Australia were very high,  similarly,  Australia Post shipping costs to the UK were more expensive than Royal Mail costs to here,  although recent increases during the covid era have seen RM costs skyrocket to destinations outside the UK.  

 

The "abrasive" nature of the company was shown at the outset when the GT3 was announced and upfront payments requested.  Given the then recent collapse of DJM,  many were very suspicious of a crowdfunded newcomer,  particularly when that company was using a Canadian post office box address.  There were even concerns raised that the newcomer had connections with the failed DJM company,  which were quickly dismissed as untrue.   The manufacturer was very reluctant to reveal any personal details so that potential customers could gauge the integrity of the company.  It was trust me I am a model railway manufacturer.  Some found personal details on social media platforms to which the manufacturer took offense that his personal life was being exposed.  I found a link on a Google images search of a similar sounding manufacturer who made plaster castings of "h.o." tunnel entrances.    Apart from that there seemed little reason other than blind trust why a potential customer should make an upfront payment to a new startup company.  

 

If the manufacturer was not a "crowdfunded" model then he had every right to keep his personal life secret and let his model stand for itself in the market.  However, his business model requires customers to fund the model and the risk and as such those customers needed their concerns satisfied.   The manufacturer promised accurate models,  something it seems that has only come to fruition after said manufacturer has taken onboard criticism (somewhat reluctantly) of his CAD's and engineering prototypes.   If the Fell project was self funded would the model produced have been more accurate?  Would the manufacturer have placed more emphasis on proper research and engaged those who were knowledgeable on the topic.

 

I keep coming to the conclusion that the manufacturer has possibly insufficient knowledge of his projects and relies heavily on the expertise of the Chinese manufacturer and their interpretation of the research material received.   Recall the Lima class 52 with the lamplight moulded in the body because an image provided showed the lamplight in place.  Any manufacturer with sufficient knowledge would not have tooled the lamp in position and would have left it as a separate item to be affixed at a later date.   Similarly it seems the Chinese manufacturer with their somewhat limited knowledge of an obscure or no longer existing prototype can only interpret what they have infront of them.  Without knowledgeable input from "experts" the end result can only be the information the company commissioning the project has provided.  This all gets back to due diligence in the research and less haste in getting the product to market. 

 

If the potential market for the models is near enough is good enough then the company will have success in the market because the modeller has no other rival company's product to compare to and it seems that a large sector in the market is happy to purchase a less than accurate model because that is all there is.  To criticise the company's projects one is branded a grumpy old rivet counter who is never going to buy the product anyway.  The manufacturer in his recent response calls those who criticise his product as not potential customers,  even though many of his mose ardent critics have either purchased the product (and subsequently returned as not fit for purpose) or have expressed interest in the product but been dismayed and disappointed at the responses from the manufacturer.  If the Fell had accurately portrayed the prototype then there was a potential three sales to me representing the prototype as released in BR black,  as subsequently modified in BR black and the same modifications but in BR green,  representing the type over its lifetime.  The rush to tooling without due diligence showed me early on in mid-2020 that the model was flawed and I cancelled my pre-order with Rails losing my deposit in the process.  The company by design or accident did not reveal the true state of the tooling until release date when the design flaws became obvious.  Even prior to release the company made a statement that minor tooling changes were delaying the release date,  leading many to believe that possibly the flaws were being corrected even though the project was apparently already in production.  I feel that I dodged a bullet as the model released was so obviously flawed and the tales of woe from customers with unreliable, faulty models were reported.    I recall one very vocal supporter of the Fell who until the day he received his flawed model sung the praises of the company and was like an attack dog defending the company against any criticism.  It seemed his tune chaged when reality struck and the accurate model he thought he was buying did not eventuate.

 

The company has many nice projects planned which will appeal to most of us (me included),  however,  until the company matures and the propietors take criticism on the chin and accept that material is out there to make their projects accurate,  even if it means less financial return on the product,  then I will leave my wallet in my pocket.  

[john new]

General observations.

 

The wagon seems expensive, but like the GT3, Fell and 4DD no one else makes one - but have the other manufacturers assessed demand and decided enough of it it isn't there? Time will tell. The proposed Class 40 seems a risk too far for me, there are models out there already.

 

I have a Bellerophen on order my first dealings with the company, if it has serious dimensional inaccuracies when it arrives I will presumably have three choices, (1) send it back (2) live with the inaccuracies or (3) rename it and live with it.  Both (2) and (3) assume it runs OK and (1) is semi-amended if it is a bit out but still looks like the engine it is supposed to be. The EP shots I have seen look OK, but then again I haven't taken a microscope to the pictures of the model and the prototype to look for errors. 

 

If I have a worry re their business case/model (I am a Chartered Manager now retired) it is that it seems an awful lot being done at once and one has to hope that £/$ being spent on design time,  tooling costs and promotion work are being met from sales revenue otherwise the cash flow will dry up and everyone from the proprietors, through all the middle trades onwards to the end user will lose out. My gamble, for that is what it is, I hope pays off and I get a model eventually.

 

 

Edited January 8, 2023 by john new

[Bluebell Model Railway]

These young start up companies I get they need to generate cash to start hence the interest and the funding to create a start point, that I get, personally as a customer or will be when KR deliver or quite what they deliver I do feel we as customers have a vested interest in how that model turns out... 

 

I said on said topic your only as good as your last model... The Fell is for me an unfortunate case of not enough research... Comparing it to a kit which was stunning btw just looked right..

 

I understand why Keith is a little annoyed judging by his comment, but when you have people's money and they are not right... What exactly are we buying... If everything was done spot on I and the GT3 which won a magazine review rather than overall model of the year... And the Fell was Faultless we wouldn't be having this conversion about business model or fundraisers, crowd funding... 

 Unfortunately for Keith when you have people's money there will be complaints and frustrations, or feedback, I understand he feels we are attacking him, business his character but we just want something that's right for the money paid...

People who review models for mags mark down manufacturers for how many spokes on the wheels 😅 

 

The vague newsletters which I received one in December... For one model we want to make sure we get everything right....ok...so what has been changed? Fill me with a little bit of confidence that feedback from customers or those in the know or keyboard warriors as he's called them... A bit of communication goes a long way. To keeping people at ease.

 

I do hope these models are good in the end, I do because it's a big risk to do unusual prototypes like a 4DD, a Fell, Gt3 a Leader ect... But if done right people like the unusual, and it sells, it's a unique selling point or USP.

[The Stationmaster]

2 hours ago, rembrow said:

Not when you order the item, I've been caught out a few times when placing an order, with the initial price being tax exclusive, without showing that it is.

It says it, quite clearly, next to the item price on Accurascale's  website - like this (an item I picked at random just now)

 

 

Compare that with this item taken at random off KR's website after I'd copied the A/S item.  It just  simply says 'price' which I could take quite reasonably as meaning what I will be paying for that model as the normal rule in the UK is that the quoted price should include VAT - and  note the price is given in sterling so it is obviously a UK price.  If I progress to the next stage it adds another sum - but doesn't say what it is so it could be anything (at that point) from postage to currency adjustment to the tea club fund for all I know.   In reality of course I don't know because it doesn't say what the amount applied to this particular model is and in any case it is actually 25% greater than the appropriate amount of VAT at the relevant rate .  Then at the stage after that it adds a postage cost and says that is what it is, and still leaves you guessing what the second amount is for.

 

 

 

 

[jpendle]

With regard to the UK VAT issue, it could just be a cultural thing. While Sales Taxes in Canada are not as fragmented as those in the US they do differ by Province/Territory.

 

So, like the US, the prices that you see at a shop or online DO NOT INCLUDE any applicable tax, that gets added at the checkout.

 

It's also highly likely that the software that KR use to do their online sales follows the same model. So unless KR were to set up a UK enterprise it's not surprising, to me at least, that their prices don't include tax.

 

Regards,

 

John P

[Ouroborus]

1 hour ago, The Stationmaster said:

It says it, quite clearly, next to the item price on Accurascale's  website - like this (an item I picked at random just now)

 

 

Compare that with this item taken at random off KR's website after I'd copied the A/S item.  It just  simply says 'price' which I could take quite reasonably as meaning what I will be paying for that model as the normal rule in the UK is that the quoted price should include VAT - and  note the price is given in sterling so it is obviously a UK price.  If I progress to the next stage it adds another sum - but doesn't say what it is so it could be anything (at that point) from postage to currency adjustment to the tea club fund for all I know.   In reality of course I don't know because it doesn't say what the amount applied to this particular model is and in any case it is actually 25% greater than the appropriate amount of VAT at the relevant rate .  Then at the stage after that it adds a postage cost and says that is what it is, and still leaves you guessing what the second amount is for.

 

 

 

 

 

 

Accurascale *does* quote ex-vat, at least initially.  Attached screenshot is class 89.    However, it then updates to an inclusive vat price.  I would guess this is a cookie issue and is detecting the country of your ip and amends the website accordingly.  Certainly the Accurascale website is very well polished and impressive 

 

KR models website is a complete mess and lists prices in both £ and $.  Shipping is calculated prior to knowing where its going to, so for Bellerophon i ended up with two different prices and two different shipping rates.   In my dim and distant memory i seem to recall being in a McDonald's in LA and finding that the price on the board wasn't what you pay - sales tax was added on separately and after you'd ordered.  Maybe thats how KR models operate, but i agree, its confusing.

 

Sorry for messy screenshots, editing these on Android isn't much fun.

 

 

 

 

Edited January 8, 2023 by Ouroborus

[john new]

I believe UK law states printed trade adverts can be ex VAT and those aimed at domestic markets must be plus VAT. Websites I am not sure on but I think the same applies. The price quoted therefore in UK hobby magazines, as they are definitely orientated to domestic consumers, should show VAT inclusive prices. The only exception will be small suppliers under the VAT registering threshold as they, obviously, can’t charge VAT.

 

Too late tonight for my cross-referencing of their website against an advert but if they differ then there is an issue. The price in a mag therefore should be X plus VAT plus p&p/carriage options which logically should be the same as the checkout online unless they clearly show any online discounts.

 

Why trade -v- domestic differences? Logically it assumes many traders will be VAT registered so will claim back the VAT anyway and the effective true price to them is the ex-VAT price plus carriage.

 

Edited January 8, 2023 by john new
Tidying up after a proof read.

[jjb1970]

To be fair to KR, I think they're knocking it out of the park in terms of what prototypes they're selecting. The Fell and Leader would be no-brainers for me if done well, and I'd almost certainly buy a well done 4DD. On 4DD and Leader I will wait for the final release before deciding, if they're not sold by Rails and I miss then it's not the end of the world. I can't get too riled by the Fell since I never bought it, but to me it was a missed opportunity.

 

I think two things would take a lot of the heat out of the KR debate:

 

-sell in the normal way as a default rather than asking for up-front payment, if they want a deposit (say £20) up front to guarantee pre-orders then I suspect most could stomach that) but let people make up their own mind based on being able to assess the final model. I never bought the Fell as it wasn't very good, but I also can't get that angry as I had the opportunity to make an informed decision. If I'd bought it knowing the problems then I would really have no grounds to complain, if you go to the shop for fruit and buy a bag of lemons you can't complain that they're sour, you've got what you bought. This doesn't even necessarily mean establishing a dealer network; and

 

-consider how they present their wares. The palbrick strikes me as a very decent railroad level model, if sold as such I'd consider the basic underframe and errors in painting much less of an issue than if selling it as a higher end model. Looking at the Fell and test 4DD, quite aside from issues with accuracy and shape they strike me as more railroad+ than high end models. And there's nothing wrong with that, but KR seem to present their models as something better. If you advertise something as a premium product then potentially customers will expect just that, advertise it as a good model which has been designed to balance detail and cost as per the Hornby Mk.1 coaches and people would be a lot more forgiving.

[adb968008]

I’ll flip this discussion upside down, and try to make it constructive.

 

What would make me more comfortable with KRModels..?

 

1. UK company registration, accounts and taxes

2. UK Address and contact

3. Some statement regarding product support and warranty

it is perfectly possible to be a Canadian company with a UK presence. It might already be, just opaque.. but if it is, why is it ?

That lack of transparency is what makes me cautious.

 

if this continuing the pre-paid path..

 

4. More clarity on specification and detail in advance

5. statement with regard expectations on research & sign off criteria

6. Confirmation of Ring fenced funds for each funded project*

7. Milestones and updates when they are passed

 

*of all things on the list above, 6 i want to expand..

I’m hoping if J am buying 1 model, it isnt supporting the development of another ?

So if its customer funded, is there a potential risk of pyramid building ? 
where layers of toolings are announced and funds soaked up from the latter to get older ones over the line…?

This is my biggest concern…its opaque to me… i dont know.
 

 

if I were to add a number 8, it would be price lower than retail RRP.

if i’m prepaying i’d expect a better price given I dont know what i’m getting, when i’m getting it and how good it will be.

 

One good example to follow is Pi and the Victory tank..

The company was clear, as was the product spec. The research and awareness was clear. After the cut off, the price went up, then it went to trade at the higher price. Whats more, i definitely recieved a higher spec model than expected.. 100% happy with it.

 

However notwithstanding all the above…

 

so far Everything actually made by KR has gone on to retailers …some in batch 1 some from batch 2.

So why take any risk at all ?

 

The 40 doesnt worry me. If they do it, I will wait until its released and buy batch 2 if its great. If its not great I know that the 40 will be done greater by someone else and doubt the announcement has affected anyone elses plans.

Ive supported all 3 models todate.

of course this is there business, not mine they do as they chose but as it stands i’ll not pre-fund further. I am happy to buy via Rails, or on a second run.

Also i’ll take solace that history shows, that companies come and go, but the toolings always persist.

They do have a track record of listening to feedback, GT3 v2 was improved. The consetts got interiors. Fell I believe could be improved. 4DD does look better on second pass. Bellerophron is going to polarise, but personally I think its ok, as is DHP1. Leader is await and see still, but its clearly had a lot of work put in…its the way things are done thats scaring me off.

Edited January 8, 2023 by adb968008

[No Decorum]

18 hours ago, Nova Scotian said:

 

However, GT3 was a good product, bar the upside down leaf springs... Fell not so much.

 

Don’t forget that the lights were a mess. If I vote for a Model of the Year, I begin by eliminating models with such flaws. One would have hoped that the lesson would have been learnt but the lighting on the Fell is also a mess, quite apart from all the other flaws.

[jjb1970]

On the website and place of registration for a business, I'm currently in a very different position from many RMWeb users, being outside the UK. I buy models from Japan and China. Japan is not really an issue as Japanese shops take pride in offering high quality service and play with a straight bat. What may surprise some in that over a few years of buying from model dealers using platforms like AliExpress and Tabao as well as more recent experience of Chinese dealers using Singaporean platforms like Shopee and Lazada my experiences have also been overwhelmingly positive. Yes, do a little due diligence but I now have two dealers in China with a history which I have a high degree of trust in and they've never let me down. To the point I have happily bought expensive factory finished brass models from them and been entirely happy with everything.

[No Decorum]

51 minutes ago, adb968008 said:

 

Also i’ll take solace that history shows, that companies come and go, but the toolings always persist.

 

For the GT3, I think an amended PCB would sort the lighting problems out but I take no solace from the thought of the tooling of the Fell persisting.

[zoomer1979]

7 minutes ago, No Decorum said:

Don’t forget that the lights were a mess. If I vote for a Model of the Year, I begin by eliminating models with such flaws. One would have hoped that the lesson would have been learnt but the lighting on the Fell is also a mess, quite apart from all the other flaws.

Also on GT3 the front handrails did not line up with the holes in the bufferbeam so that it was squint, and the front bogie casting was wrong. They promised a replacement bogie and bufferbeam and what we got was a bogie with a sticker on it saying "bofferbeam". The lack of quality in the documentation is also a basic requirement and an easy fix, it doesn't even seem to get spell checked. Lots of little things point to a lack of professional quality control.

Neil.

[adb968008]

10 minutes ago, No Decorum said:

For the GT3, I think an amended PCB would sort the lighting problems out but I take no solace from the thought of the tooling of the Fell persisting.

I think the Fell could be made right.

 

Looking inside the body shell, the usual tooling lines that suggest the bonnet and sides are separate tooling pieces to the roof are there. Further the cab air vents are a separate piece.

if that is the case, duplicating both sides could make 2 different more accurate representations  possible in the future.

Edited January 8, 2023 by adb968008

[adb968008]

14 minutes ago, jjb1970 said:

On the website and place of registration for a business, I'm currently in a very different position from many RMWeb users, being outside the UK. I buy models from Japan and China. Japan is not really an issue as Japanese shops take pride in offering high quality service and play with a straight bat. What may surprise some in that over a few years of buying from model dealers using platforms like AliExpress and Tabao as well as more recent experience of Chinese dealers using Singaporean platforms like Shopee and Lazada my experiences have also been overwhelmingly positive. Yes, do a little due diligence but I now have two dealers in China with a history which I have a high degree of trust in and they've never let me down. To the point I have happily bought expensive factory finished brass models from them and been entirely happy with everything.

I use Ali-express all the time.

That said youve several layers of protection using it.

Everything Ive bought is tracked, everything is UK tax paid at time of purchase.

 

it hasnt escaped my notice if you want to comission your own loco, in any scale there are several vendors there offering it. Also noted that a certain, increasing amount of rtr models are being offered from there too, mostly US / EU prototypes.

 

Some UK retailers are also stocking brands from those Ali-outlets.

 

[Bucoops]

If I recall correctly (which sometimes happens) - didn't the voting for the "model of the year" competition close before the GT3 was in the hands of buyers - only reviewers?

[The Stationmaster]

23 minutes ago, Bucoops said:

If I recall correctly (which sometimes happens) - didn't the voting for the "model of the year" competition close before the GT3 was in the hands of buyers - only reviewers?

Exactly so - the Model Rail poll (which is obviously the one which has been quoted) is based on a list of models which the magazine has reviewed since its previous poll.  That is made absolutely clear in the magazine and online voting also refers to the poll as being in respect of models which the mag has reviewed.

 

If you vote in any poll run by anyone you will be voting on several possible potential grounds. Objectively you would vote on either personal acquaintance with a model judging it, albeit subjectively, against your own standards and in comparison with the other listed models.  Logicially you could be similarly objective when voting in relation to the conclusions of the reviews published in the magazine  (where the GT3 would have been some way down the scale compared with the conclusions of other reviews).  On the other hand you can vote purely on personal bias be it one way or another - but that is hardly going to give an objective result.  But it will inevitably happen in some polls unless the basis of voting is very clearly spelt out and not ignored.

Edited January 8, 2023 by The Stationmaster

[Ouroborus]

26 minutes ago, Bernard Lamb said:

 

Could somebody justify the idea that it is OK to post an early EOI on here and to then pick people's brains for information , rather than paying a researcher?

I await a response with interest.

Bernard

 

 

You perhaps need to be more careful in your wording.   I could only find two posts (Bulleid and Clayton) that were made "on here"  that sought an EOI.   Other EOIs postings were not made by KR Models and linked from elsewhere.

 

Regards your second point, do you have any evidence that that they haven't paid for a researcher?

 

Seeking opinions "on here" and elsewhere (they are more active elsewhere), seems fraught with faded photos and dimming memories.  There are plenty of threads where opinions were divided about whether the roof/lining/etc was dark grey/black/primrose yellow/etc.   The problems of recollection must only be worse when you're fishing from a barrel of increasing obscurity.

 

Finally, the tired argument of 'their doings have stopped someone else'.   If there is sufficient demand and people sufficiently prepared to stump up, then surely someone else will have a go?    I think some people really need to take their blinkers off - the runaway success of the lo-fi Hornby 66 showed that for many, 'good enough' will do if the price is right.  KR Models are a business out to make money, not to appease the high standards of a minority and i would have thought that keeping production costs low was sensible practice when the number of units sold will be a tiny fraction of, say, a class 37.  

[Colin_McLeod]

2 hours ago, adb968008 said:

So if its customer funded, is there a potential risk of pyramid building ? 
where layers of toolings are announced and funds soaked up from the latter to get older ones over the line…?

 

What you describe is a ponzi,  not a pyramid.  While not necessarily starting out to be such a scheme, many companies that get into financial difficulties can end up in a similar mode as they try to keep their head above water. I'm not suggesting that applies to KR Models nor am I suggesting that they are in any financial difficulty.

 

 

[melmoth]

14 minutes ago, Colin_McLeod said:

 

What you describe is a ponzi,  not a pyramid.  While not necessarily starting out to be such a scheme, many companies that get into financial difficulties can end up in a similar mode as they try to keep their head above water. I'm not suggesting that applies to KR Models nor am I suggesting that they are in any financial difficulty.

 

 

 

Indeed. The last days of DJM might prove illustrative here. Again, I have no knowledge of KR Models financial situation, so I am not making any observation on their business.

[cctransuk]

45 minutes ago, Ouroborus said:

Finally, the tired argument of 'their doings have stopped someone else'.   If there is sufficient demand and people sufficiently prepared to stump up, then surely someone else will have a go?

 

Tired it may be - but perfectly valid!

 

Let's say that company XYZ decides to produce a crowd-funded model of the Kitson-Still steam / internal combustion loco.

 

The potential market will comprise the following :-

 

i] the 'Oh - that's an odd-looking thing; no idea what it is but I'd like one' sector;

 

ii] the 'Ah - I came across a picture of that; don't know much about it but it'd be cool to have one on the layout' sector;

 

iii] the 'Crikey - never expected to see that RTR - I was going to scratchbuild one' sector.

 

Company XYZ goes on to produce the model, but major errors in the CAD renders are not corrected; and appear on the finished model. How will the model be received?

 

Sectors i] and ii] will mostly accept the model as delivered, reasoning that, if it hadn't been for posts on RMweb they'd have been none the wiser.

 

Sector iii] will be pretty p*ssed-off; either returning the model as not of merchantable quality, or puttting the whole episode down to experience; sell the model on Ebay; and vow never again to touch company XYZ with a disinfected bargepole!

 

As for another benevolent company coming along to produce a better model - with a large (majority) part of the potential sales already fulfilled in the 'don't know / care' sectors, they'd be on a hiding to nothing!

 

The activities of thes fringe companies really do affect the overall market - and not for the good.

 

John Isherwood.

[Bernard Lamb]

1 hour ago, Ouroborus said:

 

You perhaps need to be more careful in your wording.   I could only find two posts (Bulleid and Clayton) that were made "on here"  that sought an EOI.   Other EOIs postings were not made by KR Models and linked from elsewhere.

 

Regards your second point, do you have any evidence that that they haven't paid for a researcher?

 

Seeking opinions "on here" and elsewhere (they are more active elsewhere), seems fraught with faded photos and dimming memories.  There are plenty of threads where opinions were divided about whether the roof/lining/etc was dark grey/black/primrose yellow/etc.   The problems of recollection must only be worse when you're fishing from a barrel of increasing obscurity.

 

Finally, the tired argument of 'their doings have stopped someone else'.   If there is sufficient demand and people sufficiently prepared to stump up, then surely someone else will have a go?    I think some people really need to take their blinkers off - the runaway success of the lo-fi Hornby 66 showed that for many, 'good enough' will do if the price is right.  KR Models are a business out to make money, not to appease the high standards of a minority and i would have thought that keeping production costs low was sensible practice when the number of units sold will be a tiny fraction of, say, a class 37.  

Please only make an ‘expression’ if you are certain you intend to invest in the model development, as your ‘expression’ may be the one that puts the model into production. Numbers are tight and anyone who drops out or in fact does not have any intention of ordering will be doing the whole project a disservice. Pre-orders will not open until the ‘expression of interest’ level reaches a break-even figure. Once that limit is reached, we will open the system for pre-orders secured with a £50 deposit.

 

Keep it civil please, there is no need for the veiled threat.

Re your second point. I quote above from a post alleged to quote KR  in respect of the GT3. That souns very like a reqest for EOI to me.

Also I did not say that they did not pay for a researcher. I said that they picked the brains of members on here. I did not say or imply exclusively. Please do not try to twist what I write.

Bernard

[The Stationmaster]

37 minutes ago, Bernard Lamb said:

Please only make an ‘expression’ if you are certain you intend to invest in the model development, as your ‘expression’ may be the one that puts the model into production. Numbers are tight and anyone who drops out or in fact does not have any intention of ordering will be doing the whole project a disservice. Pre-orders will not open until the ‘expression of interest’ level reaches a break-even figure. Once that limit is reached, we will open the system for pre-orders secured with a £50 deposit.

 

(snipped)

Bernard

The whole 'expressions of interest' thing seems to create pitfalls for the unwary or over optimistic.   DJM was happy it seems to go charging into taking orders on very limited/bare evidence of interest.  And then adding yet another project and robbing project Peter to pay project Paul in terms of funding.  I'm not even suggesting that KR are doing that.  But it will always be a temptation when re-tooling, or tooling alterations, are necessary as comments are made about EPs and the profit margin or even insufficient sales don't fund availability to put things right.  Oh, and it is definitely not something which short form accounts will show even a whisper of.

 

I know of one concern which allows for a 10% drop out rate on pre-orders between the placing of order and the moment when payment is asked while another concern I know of doesn't make any such allowance at all.  10% doesn't sound much but if you are working on tight margins it can make a big hole in somebody's money box.  All the more reason for only making an 'expression', and even more so placing a pre-order, if you are certain that you will buy.  Yes I accept that sometimes circumstances can change and cause folk to drop out but that will be a very small number and an experienced concern will take that into account in its pricing by allowing some headroom to cover such an eventuality.

 

Incidentally if KR has ever paid any sort of researcher for the initial research and specification development for any of their models all I can say is that they were done - patrticularly in the case of the Fell..  

 

Purchase of photos and drawings is one thing and is clearly a research cost.  And the cost of somebody within a company carrying out R&D can result in taxation benefits for the concern, e.g in Alberta depending on the size and status of a company although the research money has to have been spent in Alberta.  There are similar schemes in operation in Britain - again depending on various factors.  In the end it all depends what you classify as ;research' and where/how it is carried out.  

 

But let's not forget that plenty of companies in the model railway business ask various folk they know or know of to help with information and normally no ayment is involv ed apart from the offer of a resultant model free of charge.  Expenses being met are of course rather different but I'm talking about simply helping with knowledge.  So no doubt in some cases, if they were prepared to accept it, KR could find similar help at no, or minimal, cost to them.

 

But overall I still remain of the view that KR would be far better off spending their time recognising and resolving the various structural issues as already noted by several of us posting in this thread.

[Nova Scotian]

4 hours ago, adb968008 said:

I’ll flip this discussion upside down, and try to make it constructive.

 

What would make me more comfortable with KRModels..?

 

1. UK company registration, accounts and taxes

2. UK Address and contact

3. Some statement regarding product support and warranty

it is perfectly possible to be a Canadian company with a UK presence. It might already be, just opaque.. but if it is, why is it ?

That lack of transparency is what makes me cautious.

 

if this continuing the pre-paid path..

 

4. More clarity on specification and detail in advance

5. statement with regard expectations on research & sign off criteria

6. Confirmation of Ring fenced funds for each funded project*

7. Milestones and updates when they are passed

 

*of all things on the list above, 6 i want to expand..

I’m hoping if J am buying 1 model, it isnt supporting the development of another ?

So if its customer funded, is there a potential risk of pyramid building ? 
where layers of toolings are announced and funds soaked up from the latter to get older ones over the line…?

This is my biggest concern…its opaque to me… i dont know.
 

 

This was a really good post. 

 

There are a few of us that have stated such actions (1-3) would make them feel more comfortable. I guess the question for their business model is whether that matters or not. The fence sitters will see if there's leftover product at the end of the run, so may end up buying anyway.

 

Believe it or not, Canada does have consumer protections. Frustratingly the equivalent of companies house is split across federal and provincial (you can incorporate in province or federal) - and many of the registries require payment to search. It adds up very quickly at $3 a search, especially if the company incorporates under a different name (or variant) than you expect. There are notable exceptions, including Nova Scotia, where it's free to access :)

 

On the ring fenced... it does mitigate some risk and I agree it would be useful. But it doesn't eliminate all risk (which I can get into later) and it does impact development time. A manufacturer in "growth phase" might borrow from Peter to pay Paul to get that product across the line and realize their profits, which can then enable them to accelerate the other project with new cashflow. Ringfencing would potentially slow down the development cycle by making the allocation of funds inefficient within the company. It is of course risky, you have to hope you realize those profits and your production run doesn't just sit on the shelves gathering dust, because then you didn't generate the cash you need and you're into the cycle of more EOIs and deposits to replace cash tied up in inventory just to get another project moving. On balance I would agree, the "reward" is greater than the risk.

However, another residual risk is if we treat the first deposit, or two payments, or whatever as only "variable" (cost of goods sold) expenses. Eg. it can only go to CAD and tooling. Most of the smaller manufacturers are run by people - those people need to take a paycheque from their business at some point. With no allowance for overhead you could feasibly have a business (or owner, or both) go bankrupt, unable to access funds needed because it's ringfenced for COGS. You could probably come up with a % that's reasonable and figure out how to make it work, but it's important to note that the people developing our models deserve to get paid!

[The Stationmaster]

12 hours ago, Ouroborus said:

 

 

Accurascale *does* quote ex-vat, at least initially.  Attached screenshot is class 89.    However, it then updates to an inclusive vat price.  I would guess this is a cookie issue and is detecting the country of your ip and amends the website accordingly.  Certainly the Accurascale website is very well polished and impressive 

 

KR models website is a complete mess and lists prices in both £ and $.  Shipping is calculated prior to knowing where its going to, so for Bellerophon i ended up with two different prices and two different shipping rates.   In my dim and distant memory i seem to recall being in a McDonald's in LA and finding that the price on the board wasn't what you pay - sales tax was added on separately and after you'd ordered.  Maybe thats how KR models operate, but i agree, its confusing.

 

Sorry for messy screenshots, editing these on Android isn't much fun.

 

 

 

 

They do?????  I read this and immediately looked at their website - where every Class 89 price they show includes VAT, and says so.  What exactly are you looking at and where are you looking from; somewhere outside the UK perhaps where no doubt they would exclude VAT because UK Vat doesn't apply?

 

And yes - we seem to be in agreement that KR's website is a mess.  It still strikes me as weird, and unprofessional, that somebody selling British outline models into the UK from a foreign country - or indeed selling to any other country - does not make clear on their headline ('come on') price that it does not include VAT. (or any other local sales tax).  And of course none of this explains where that extra 25%, on top of UK VAT, has come from.

 

Maybe I'm used to UK shopping procedures but when I have occasionally bought on line from the USA (not model railway items) it has always been made clear  right from the start that the price does not include the appropriate sales tax.