Ready-to-lay OO Track and Pointwork - moving towards production

[sub39h]

I was just playing with numbers, Joseph…:-)

 

VAT and higher margins through Distributors would worsen your profit figure. Taking the VAT off the £11.00 sell price takes the net price down to £8.80. Increasing the margin to 25% then takes the buy down even further to £6.60. 9% net profit is now down to £59,400 on sales of 100,000. Annual turnover is always taken before VAT is added and is not part of the net profit calculation.

Slight error in your maths there. An item must be £9.17 to cost £11 once VAT is added.

[gordon s]

Oops! That's what you get when you get gross margin and mark up crossed over....Thanks.

[Joseph_Pestell]

Joseph

 

If you were referring to my input regarding SMP (and C&L etc) I should have made it clearer I was talking about their plain track, which is a direct alternative to Peco flexi track in 4mm scale OO gauge.

 

I cannot understand the reference to copperclad turnouts ? as SMP, C&L and Exactoscale plain track sections can be used with Peco code 75 turnouts and crossings exactly the same as Peco code 75 flexi track (which also can be used with copperclad turnouts) all of which have to be cut to length !!

 

There are some good layouts out there which mix the two. But intuitively, it looks worse to use H0 pointwork with 00 track than to use H0 track.

[Joseph_Pestell]

I don't want us to get too bogged down in the accountancy at the moment. But as Martin pointed out earlier this thread is as much about the commercial reality of bringing this product to market as it is about the modelmaking aspect.

 

So the figures, and therefore the price, are key. As others have said, there are a great many 00 modellers out there who are not that bothered about running on H0 track, if only because they have become used to it. So one is not going to get them to change to 00 track if there is too great a price differential. And we need a good number of them to make the change if this is going to become a mass-market product - which it has to be to justify the tool costs.

 

My guess is that the premium that such modellers might be willing to pay would only be about 10% for FB and perhaps 20% for BH. So that sets the target retail price and we have to see if it is possible to get the manufacturing costs down to a level that can live with that. It won't be easy!

[hayfield]

Joseph

 

I can understand the logic behind in your opinion mixing OO and HO track and happy to accept what looks correct to one person may look wrong to another. But bringing in copperclad into the equation is unnecessary as there are plenty of examples of modellers using SMP/C&L with ready to lay turnouts, hand built chaired turnouts and yes copperclad turnouts. 

 

Please take a look at Coachmans layout http://www.rmweb.co.uk/community/index.php?/topic/58427-greenfield-in-the-mid-1950s-standedge-route/page-53&do=findComment&comment=1288566 here he has successfully married C&L 4mm track with Peco turnouts and crossings.

 

One could take the view that as long as modellers keep  buying HO flexitrack there is no need for Peco or anyone else to produce OO gauge scale (better looking) track, Rather than dismiss what's already out there (please forgive me if I have misunderstood what you were saying), lets big them up in the hope a commercial company will produce ready to lay turnouts to complement them.

 

Please note I am a satisfied customer of all 3 products/companies and I firmly believe they deserve our support. You could say if we don't buy OO flexitrack then where is the market for OO gauge turnouts. 

[Joseph_Pestell]

Joseph

 

I can understand the logic behind in your opinion mixing OO and HO track and happy to accept what looks correct to one person may look wrong to another. But bringing in copperclad into the equation is unnecessary as there are plenty of examples of modellers using SMP/C&L with ready to lay turnouts, hand built chaired turnouts and yes copperclad turnouts. 

 

Please take a look at Coachmans layout http://www.rmweb.co.uk/community/index.php?/topic/58427-greenfield-in-the-mid-1950s-standedge-route/page-53&do=findComment&comment=1288566 here he has successfully married C&L 4mm track with Peco turnouts and crossings.

 

One could take the view that as long as modellers keep  buying HO flexitrack there is no need for Peco or anyone else to produce OO gauge scale (better looking) track, Rather than dismiss what's already out there (please forgive me if I have misunderstood what you were saying), lets big them up in the hope a commercial company will produce ready to lay turnouts to complement them.

 

Please note I am a satisfied customer of all 3 products/companies and I firmly believe they deserve our support. You could say if we don't buy OO flexitrack then where is the market for OO gauge turnouts. 

 

I already follow Greenfield and seen Coachmann's relaying episodes, including the surprising use of Code 83 US turnouts. It would surely have been better for him to commission suitable ready-to-lay pointwork from Borg or similar.

[Richard Lee]

The main competitors for points to use with SMP, C&L or Exactoscale flexi-track are likely to be Peco Code 75, and the smaller radius Marcway points. 

 

It is unlikely that Peco can be beaten on cost, although if the product is better, some people would be prepared to pay a bit more. There is a lot of information available about wiring Peco in the preferred manner, so I think any new competitor would be wise to make it simple to wire-up their product to DCC standards.

 

Marcway look extremely good, in my opinion, although some people are worried by the lack of chairs.  There are other issues with using a copper-clad construction.  I get the impression that they are not intended for novice modellers.  On the whole I am happy with them, but, because I am on a limited budget, I cut the number of points to 8 when I planned my layout.

[Ron Ron Ron]

Having just caught up with the thread this afternoon, I read this.....
 

.....However some on this topic have made it clear that they are not interested in kits -- they want ready to lay turnouts straight out of the box, as in the topic title. This is a topic about consumerism, not model-making.

 

For a start, as stated at the beginning, this topic is not about kits but about Ready-To-Lay (RTL) track. The stuff that 90%+ of all modellers in 00 use.

That was made very clear at the beginning and repeated on later pages.

 

However, it's the second part of that sentence and the next that I find most revealing !

 

It appears from that post, that everyone who uses or has used a Peco turnout (code 75, 100, 83, 55 or whatever), or a turnout from Tillig, Roco, Atlas, Shinohara, etc, etc; are not really modellers. Apparently we are just into consumerism !

It must go without saying, that the same applies to anyone who's bought made up turnouts from Marcway. You are not a modeller either.

Is buying RTR locos and rolling stock included as well?

 

It's nice to know that one is considered (along with 90% of the hobby) as almost below contempt, by certain sections of the hobby.

 

Apologies to all the good folk on RMWeb. I don't want to break the house rules, but the words contemptuous and arrogance could have been applied in my response.

 

 

.

Edited January 4, 2014 by Ron Ron Ron

[gordon s]

Here's a question for you that may have some relevance when calculating the sales numbers.  

 

How many lengths of plain track would you estimate is sold versus a turnout?  I'm guessing the ratio is 10:1.  

 

Miles out?  This is simply based on my own experience with ET, but that's a large roundy roundy.  The ratio may be different for a BLT.

 

Any input?

[Joseph_Pestell]

i wonder if anybody could glean anything from the chap (maybe if you know him even better) that got FiNetrax off the ground with his lovely n gauge turnouts?  Arent we looking along similar lines so apart from the obvious size difference it might be a good barometer regarding costs of tooling up/getting the ball rolling.

 

Let me be right up front BTW - I like the discussions aim for better track but I wont be in any position to make an investment.  Many people may contribute to the thread and just as many may be in a similar boat to myself that doesnt enable them to put their money where their mouth is but hopefully that doesnt continue to cloud the judgement of those that are forever implying that something like this wont fly or would lack paying customers/investors.

 

With the bottom of the RTR loco barrel getting drier by the year wiith most diesels now ticked off (for starters with still one or two areas that could be gaps to fill) surely better track is the next move by somebody out there?  

 

Since what little personal modelmaking I get to do these days is in N, I have followed fiNetrax development closely including some direct correspondence with Wayne Kinney. I have a large box of sleepering and rail waiting for my attention.

 

fiNetrax has informed some of my thinking about RtL track and pointwork for 00. A key difference of course is that fiNetrax points are in kit form.

[Metr0Land]

Must admit I would have though the ratio of plain track to points would be lower.  I'm luckier than most with the space available though can't do a complete circle.  I have a fan of 8 storage sidings off one end and 9 the other.  Even though these are relatively long it means there's no more than 2 yards of track per turnout at either end, plus the visble layout which makes me think my ratio is more like 2 to 1 or at most 3 to 1

 

HOWEVER all the storage roads can be cheaper track/turnouts so I would only rip up the visbile areas and re-lay (at least initially).  Even so, for the 'quality areas' I'd say 2 yds plain track per turnout.

[Joseph_Pestell]

Having just caught up with the thread this afternoon, I read this.....

 

 

For a start, as stated at the beginning, this topic is not about kits but about Ready-To-Lay (RTL) track. The stuff that 90%+ of all modellers in 00 use.

That was made very clear at the beginning and repeated on later pages.

 

However, it's the second part of that sentence and the next that I find most revealing !

 

It appears from that post, that everyone who uses or has used a Peco turnout (code 75, 100, 83, 55 or whatever), or a turnout from Tillig, Roco, Atlas, Shinohara, etc, etc; are not really modellers. Apparently we are just into consumerism !

It must go without saying, that the same applies to anyone who's bought made up turnouts from Marcway. You are not a modeller either.

Is buying RTR locos and rolling stock included as well?

 

It's nice to know that one is considered (along with 90% of the hobby) as almost below contempt, by certain sections of the hobby.

 

Apologies to all the good folk on RMWeb. I don't want to break the house rules, but the words contemptuous and arrogance could have been applied in my response.

 

 

.

 

Ron, I don't believe that Martin intended any slight to people who use RtL track. If he felt that way, he would not have taken so much time and trouble to make useful contributions to this thread.

 

What I take him to mean is that this thread is mainly about the commercial viability (consumerism if you wish) of RtL track rather than the technicalities of it as an accurate model of the real thing.

[Joseph_Pestell]

Must admit I would have though the ratio of plain track to points would be lower.  I'm luckier than most with the space available though can't do a complete circle.  I have a fan of 8 storage sidings off one end and 9 the other.  Even though these are relatively long it means there's no more than 2 yards of track per turnout at either end, plus the visble layout which makes me think my ratio is more like 2 to 1 or at most 3 to 1

 

HOWEVER all the storage roads can be cheaper track/turnouts so I would only rip up the visbile areas and re-lay (at least initially).  Even so, for the 'quality areas' I'd say 2 yds plain track per turnout.

 

A "Minories" is probably closer to 1:1.

 

But Gordon raises an interesting issue. If we knew what an "average layout" involved, we could make a better assessment of the total market to include in the business plan. But that could be difficult. I had it more in mind to make an estimate based on sales at a sample of retailers.

[Kal]

Well lets see, If 20% of Peco's sales are in the UK and 20% of 00 modellers would be interested in this new track (which seems to me generous) then the potential sales would be of the order of 4% of Streamline sales. Sorry, but I can't see Peco seeing this to be worth their efforts.

If more accurate track was available along side existing streamline in the UK and at the same price, then I believe much more than 20% would buy it rather than streamline.

I suggest 95% would buy it, accounting for people who are always contrary, why would they not??

So on that basis, nearly 20% of existing sales cited above would be covered. I also think some people, would replace existing track, those are bonus sales that do not exist today.

They could even ask a small premium, say 10% and I still think Streamline would die in the UK for UK outline modelling.

Of course you can make figures fit whatever you want to argue, but why would my assumption be anymore wrong than any of the other figures discussed here?

 

I don't see it happening, but I live in hope.

Edited January 4, 2014 by Kal

[gordon s]

The reason I ask this question is it should then be possible to look at Peco's sales figures, take a carefully judged view of what their track sales are and then work backwards from sell prices to provide a guestimate  of the approximate sales of track to turnouts.  Of course this is really finger in the air thinking, but it might just give us an fairly intuitive set of numbers to play with in the absence of accurate figures.  

 

A yard of track costs £2.80 from Hattons.  Less VAT = £2.33.  20% margin for Distributor = £1.86 ex Peco.

 

Likewise a basic turnout is £11.00 from Hattons.  Less VAT = £9.17.  20% margin for Distributor = £7.33 ex Peco.

 

I'm guessing, but feel free to disagree that track is 75% of Peco sales (or higher).  With sales of £6601k, track sales would be £4950k.

 

Using a ratio of 3:1, you end up with a unit cost of (£1.86 x 3) + £7.33 = £12.91.  Divide £4950k by £12.91 and you get 383,423.

 

At a ratio of 3:1 that's 1,150,269 lengths of track and 383,423 turnouts.  Of course there are more expensive turnouts and slips etc, so the turnout figure would come down.

 

My best guess therefore be around 1.2m lengths of plain track and 250-300k turnouts in total...

 

Of course I might be miles out, but it was fun playing with the figures…:-)

 

Pure guestimation, but many businesses have to take a stab now and again.

 

How much of that business you could achieve as a new entrant is a moot point.

 

For those reasons, I keep thinking that convincing Peco to do something is the right way to go, but then my sensible head says they know their business and as such there must be something we don't know or understand behind the fact that they haven't done it before now anyway…:-)

[gordon s]

If more accurate track was available along side existing streamline in the UK and at the same price, then I believe much more than 20% would buy it rather than streamline.

I suggest 95% would buy it, accounting for people who are always contrary, why would they not??

So on that basis, nearly 20% of existing sales cited above would be covered. I also think some people, would replace existing track, those are bonus sales that do not exist today.

They could even ask a small premium, say 10% and I still think Streamline would die in the UK for UK outline modelling.

Of course you can make figures fit whatever you want to argue, but why would my assumption be anymore wrong than any of the other figures discussed here?

 

I don't see it happening, but I live in hope.

 

We know from their published accounts, Peco sales are 73% UK and 27% Overseas...

[Metr0Land]

Gordon S:  Absolutely right that you should be trying to do some figures and that some startup businesses have to simply take a stab at things.

 

A couple more ways of looking at this:

 

a/ What would you need to do to break even?  ie how many units at what (premium?) prices - assuming you can reasonnably accurately determine the startup costs of tooling etc.

 

b/ What would your distribution method be?  I think this is something you'd need to think about sooner rather than later if you are seriously going to take a stab at this.  All too often we see model shops closing, and those that are left being squeezed.  They are likely to be reticent about committing funds to an unproven product line.  If you are doing it solely online then you need to be able to fulfil orders (ie emply staff and/or work 27 hours a day!)  If you are supplying retailers then you need the organisation to fulfil orders quickly (I believe Peco are very good at turning round orders quickly and dispatching to small retailers but I haven't had the personal need to test this recently).

[hayfield]

Having just caught up with the thread this afternoon, I read this.....

 

 

For a start, as stated at the beginning, this topic is not about kits but about Ready-To-Lay (RTL) track. The stuff that 90%+ of all modellers in 00 use.

That was made very clear at the beginning and repeated on later pages.

 

However, it's the second part of that sentence and the next that I find most revealing !

 

It appears from that post, that everyone who uses or has used a Peco turnout (code 75, 100, 83, 55 or whatever), or a turnout from Tillig, Roco, Atlas, Shinohara, etc, etc; are not really modellers. Apparently we are just into consumerism !

It must go without saying, that the same applies to anyone who's bought made up turnouts from Marcway. You are not a modeller either.

Is buying RTR locos and rolling stock included as well?

 

It's nice to know that one is considered (along with 90% of the hobby) as almost below contempt, by certain sections of the hobby.

 

Apologies to all the good folk on RMWeb. I don't want to break the house rules, but the words contemptuous and arrogance could have been applied in my response.

 

 

.

 

 

You need the support of those like Martin whose knowledge of the subject would be of great assistance to anyone who wants produce a product of better looking track in 4mm scale. After seeing Martin take so much time and trouble on many other threads to assisting those wanting help with track related whatever their modelling ability, I think you are being a bit unfair.

 

Please note there are a few from ready to lay users who are too quick dismiss anything outside their own personal requirements or from suppliers they disprove of. Shame as by grouping together we could perhaps achieve more,  

[Budgie]

One could take the view that as long as modellers keep  buying HO flexitrack there is no need for Peco or anyone else to produce OO gauge scale (better looking) track, Rather than dismiss what's already out there (please forgive me if I have misunderstood what you were saying), lets big them up in the hope a commercial company will produce ready to lay turnouts to complement them.

 

Please note I am a satisfied customer of all 3 products/companies and I firmly believe they deserve our support. You could say if we don't buy OO flexitrack then where is the market for OO gauge turnouts.

Once again let me say that I am not too bothered about using existing products, and I will continue to do so until something better comes along. So if anything is going to be produced it has to be very different than what is currently available. What I am thinking of is something like a cross between Peco's code 83 line and their code 75 stuff, but with improvements: points with numbered and semi-curved V crossings and diverging track curved all the way to the end, diamond crossings to continue those curves over a parallel track, all with sleepers, timbers and bearers to UK spacing for OO. Anything else and I might as well buy what's already out there (like it or lump it) or build it myself, even though I don't want to.

[billbedford]

A yard of track costs £2.80 from Hattons.  Less VAT = £2.33.  20% margin for Distributor = £1.86 ex Peco.

 

 

Retailer's discounts are usually 30% with another 15% for bulk orders i.e full cases.

[sub39h]

I'm sorry but are we not complicating this slightly? Surely the price of a point to produce per unit would be between the price of a Marcway point that has been hand built before being shipped and the price of a Peco RTL mass produced point (but closer to the RTL price)?

 

Yes there are start up costs as there are with ANY venture, and those need to be ascertained. And the price you sell a point for would be dependent on the balance between how quickly any investor wished to recoup his outlay and the elasticity of the product. But the cost of manufacture per unit is easily identifiable based on the price points of the two benchmark products listed above.

 

As it would be a better product than Peco it is not unreasonable to charge a little more, and I don't feel it would affect overall sales. In terms of potential market I still feel the entire of Peco's Streamline customer base is up for grabs because anyone who has made the leap to Streamline has done so for improved looks and accuracy and once you've made that leap then wanting to spend proportionally a little more and get something significantly better is a very easy step to make. It is one that I would make and I'm a student and a tight fisted Yorkshireman to boot.

[trisonic]

That depends on how fast Peco want a return on their investment - and really we are just guessing.

I still think the biggest stumbling block to get over is sheer marketing inertia - they've already marketed their code 75 range as "Fine Scale".....

 

Best, Pete.

[Paul Cram]

Must admit I would have though the ratio of plain track to points would be lower.  I'm luckier than most with the space available though can't do a complete circle.  I have a fan of 8 storage sidings off one end and 9 the other.  Even though these are relatively long it means there's no more than 2 yards of track per turnout at either end, plus the visble layout which makes me think my ratio is more like 2 to 1 or at most 3 to 1

 

HOWEVER all the storage roads can be cheaper track/turnouts so I would only rip up the visbile areas and re-lay (at least initially).  Even so, for the 'quality areas' I'd say 2 yds plain track per turnout.

The layout I am building has 9 points and 30 yards of track admittedly it is P4 and of an actual location but that is 3:1 and end to end.

[ZiderHead]

For those reasons, I keep thinking that convincing Peco to do something is the right way to go, but then my sensible head says they know their business and as such there must be something we don't know or understand behind the fact that they haven't done it before now anyway…:-)

 

I don't think there's any great mystery here - the reason that Peco haven't created a Streamline OO range is simply that doing so would in all likelihood dent their profitability by a tiny, but measurable, amount. They have no incentive to do so because their existing competitors haven't produced a OO range which would eat into their sales, and the barriers to entry for a new competitor are so immense that a new player is very unlikely to appear. The minute that someone releases a OO range which is a direct competitor to their HO range, Peco could introduce their own OO range without missing a step and crush them.

[Paul Cram]

C&L and SMP plain track is more expensive than PECO  because of the cost of production. It is also sold direct and therefore has no makup for a retailer. Is it the price that reduces the demand for this product or the lack of RTL points?

 

I do not use RTL plain track for one reason and that is that the key is wholly contained within the chair and does bot protrude like the individual components. I therefor prefer to make my own plan track. I have to make the points anyway. How many others are making this decision?

 

Ron Ron Ron asserts that whether it is commercially viable is a decision for the manufacturer rather than him as a consumer of the product, If that is the case then it will not happen as they have already decided that it is not worth their while to produce.  The only way the situation will change is if a persuasive business case can be made or a manufacturer like Len persuaded to take a chance.

 

I first met Len at the Barking exhibition in the early 80s. He was demonstrating his formcraft bricks and we were exhibiting our layout Hawnby. I invited Len along to the ELAG of the S4 society and we spent an evening discussing injection moulding. The group suggested that  a plastic track system for P4 would be a good idea as the whitemetal chairs were time consuming to add cosmetically and at that time not viable as a complete chair. Len did commercial injection moulding but was also a railway modeller interested in P4. Formcraft bricks was his first foray into 4mm production. He was not convinced that there was a sufficient market but we manage to convince him enough to come up with a chair that was used as the basis for the first 3 bolt chairs. These were produced and shown to a number of people. The EM and S3 societies agreed to sell them as their own products. It was only when Alan Gibson got involved that the number of chair sales took off, presumably because EM and OO modellers were buying them. A 2 bolt mould was produced and the moulding machines were running 24/7 to keep up with demand. Eventually Len decided to stop supplying via Alan Gibson and to sell direct. The demand was at this point tailing off. The business was sold on to John Pottinger (another member of the ELAG) and a 4 bolt chair produced. Len then got involved with Exactoscale and produced new moulds for bridge chairs and the Exactoscale products in competition with C&L.. The business was subsequently sold twice to end up where it is today. The prices have had to be increased as the Exactoscale prices were not covering costs and the original tooling was wearing out.

 

Some where within the above pandrol clips were produced for flat bottom track and PECO responded by introducing their own I can't now remember what happened in that direction as flat bottom track was and is of no interest to me.

 

I would think to be siuccesful then a early return on investment is necessary. What that means in respect of numbers I do not know but a minimum of 2 points a diamond and a slip would be the minimum requirement and I would hazard a guess that the costs of these would be in the region of a £100k. Is that enough items to satisfy those building a layout? Would you be able to generate enough sales to recoup the investment in 3 to 5 years?