Bachmann - why price increases are necessary

[Oldddudders]

 

I would expect a largish group of people in their 70s with inflation proof public and private sector pensions with no mortgage outstanding will still be in a position to indulge in the hobby.

 

I'm only 65, retired 10 years - on my terms from the railway industry without being offered a penny of redundancy - and that applies to me.

 

I have a very mixed collection of mainly-modern models. Among the more recent is this http://www.jura-modelisme.fr/locomotives/autorail-diesel-xbd-5539-livree-rouge-creme-toit-creme-du-depot-de-annemasse-8.html HO scale, with a decoder socket only and a full 7.5" over buffers. This seller is the leading French box-shifter - and his price is about £190. Does that make a Bachmann Derby Lightweight at £145 look expensive? The commissioner, Rail 87 - think Kernow more than Bachmann - made us wait more than year before the first model in the range actually appeared, but then the versions trotted out in fairly quick succession, until supply stopped last Summer, and the unpainted-aluminium version is still awaited. So, supply problems and a rather higher price than most UK modellers would expect for a very small model.

 

Bachmann's announcement is entry to the real world of 2014, that's all.

[Robin Brasher]

If Bachmann's prices continue to rise I expect some model railway enthusiasts will follow my example when I was young and on an income of 6d per week and  recently when I started in 0 gauge coarse scale. Coarse scale 0 gauge is at the cheap end of the market but an ACE Trains Evening Star at £745 or a set of three 6 wheel Darstaed coaches at about £300 is completely beyond my budget. In 0 gauge my total locomotive fleet consists of an old Hornby clockwork engine, an Ace Q class 0-6-0 for £250 and a Darstaed Jinty for £300.  Until recently all my rolling stock has been goods stock at prices ranging from £5 to a second hand crane truck to £40 for an Ace brake van. The only passenger stock is a rake of 3 old Hornby LMS suburbans for £20.

 

I think that most enthusiasts would continue to buy 00 gauge items even if the prices rose to the 0 gauge level but they would be much more selective about what they bought. Compared with 0 gauge the Bachmann items look like excellent value for money even with the 20% increase in price although I wish I had pre-ordered more models rather than wait until just before they came out to avoid paying the increase.

 

You may be interested to know that 0 gauge items are not normally made in China. I think that ACE Trains are made in the Czech Republic. There are similar production delays but ACE continues to make models as long as there is a demand so there is no supply shortage.

[Andy Y]

After 250 posts in little over 2 days, to close the thread would be considered extremely biased and do the forums' credibility no good in view of it's occupants.

 

Agree rant posts achieve little, but to close a passionate debate about something that ultimately affects anyone modelling british oo / n gauge will not close the matter..

it will just move the discussion to another forum downgrade the status of this one.

 

Its a fine line between saving face with the industry leaders who have given the forum a credible recognition and slapping the inhabitants when they disagree with the party line those leaders are proposing.

 

tbh, compared to some forums the threads here are very respectable and the membership seems to be a pleasure.

 

At the heart of it is people all heading in the same direction, the moderators here would do well to summarise some of the more valuable posts and give it as feedback to Bachmann.. it's doubtful they get it from magazines etc.

Bachmann do read the content so that's why I'd like it to be more focussed and less ranty please.

[Brian Indge]

There is no denying that Bachmann need to increase their prices to keep in business and I have no complaints about that.

 

However, one comment in their statement about currency fluctuations was interesting. They state that goods are paid for in US$ and since the beginning of the year our GB£ has increased significantly against the US$ and yet we never ever see a benefit. If our currency drops against the US Dollar, there is always a mad scramble by manufacturers to put up prices, quoting the poor exchange rate. It would be nice, just for once, to see us gain something.

[The Stationmaster]

One point which doesn't seem to have been raised is that in Andy's OP he referred to price increases 'averaging around 20%'.  To me this means, or more correctly might mean that some increase will be less than 20% while others might be more and in fact I have heard from one retailer that one price change he had been quoted (possibly incorrectly?) was considerably more than 20%.

 

It would be interesting to know - beyond the original illustrative examples given by Andy - if there was any sort of indication about the possible spread of percentage increases and where any higher percentages are likely to come (assuming they do come of course).  Or are we waiting fro Bachmann's new price lists to fully inform us?

 

Incidentally some pages back comment was passed about Bachmann being able to brief in this way because unlike Hornby it is not a publicly quoted company.  Bachmann Europe is of course a PLC and there is considerable information about its financial situation available on the internet including its shareholding (which is basically 100% owned by Kader Industries).  Kader Industries is a publicly traded company, albeit not in the UK, so in reality the situation is little different from that of Hornby but it is noticeable that nothing has appeared in the report which opened this thread which differs from the most recent accounts and statements presented by Kader Industries other than to flesh out detail in which we are specifically interested.  

 

My point?  Simple - Bachmann have been very informative and presented the facts in a way which is directly relevant to us although there are still shareholders involved; thanks to them for taking the trouble to do so and one can but hope their major competitor in the UK could be similarly forthcoming once its organisational dust has settled.  Maybe it comes back to PhilH's point and Bachmann clearly recognise where their main market lies?

[Andy Y]

It would be interesting to know - beyond the original illustrative examples given by Andy - if there was any sort of indication about the possible spread of percentage increases and where any higher percentages are likely to come (assuming they do come of course).  Or are we waiting fro Bachmann's new price lists to fully inform us?

The full price list should be due out sometime next week but it's my understanding that wagons and coaches may generally be affected, in percentage terms, more than a loco. Simplistically it costs as much to stick a 'bit' on or print a number on a loco as it does a wagon but it obviously forms a larger percentage of the cost on the wagon due to its lower base cost.

[Jol Wilkinson]

There is no denying that Bachmann need to increase their prices to keep in business and I have no complaints about that.

 

However, one comment in their statement about currency fluctuations was interesting. They state that goods are paid for in US$ and since the beginning of the year our GB£ has increased significantly against the US$ and yet we never ever see a benefit. If our currency drops against the US Dollar, there is always a mad scramble by manufacturers to put up prices, quoting the poor exchange rate. It would be nice, just for once, to see us gain something.

Brian,

 

you also have to take the USD/Yuan rate into account as discussed previously - see posts #138 and #148.

 

This has become a long topic quite rapidly and is not too easy to follow if you have joined in later. There are a lot of comments some of which appear to be based upon a lack knowledge about the commercial reality of running a "multi national" business (or unwillingness to accept it). That's not unexpected in a consumer based forum, but the negative views expressed about some of the more considered and balanced comments is disconcerting.

 

We should remember that Bachmann, Hornby et. al. have to do what is necessary to survive and be successful/ profitable (there's that naughty word again). Whatever we may want in terms of models, quality and price it is not solely a decision based upon what RMweb members think.

 

Although this will adversely affect some peoples ability to amass the collection of models that they want, some will adapt to different circumstances while others will - after a period - simply accept it. That's the way it has always been.

 

Perhaps we will also see some more focussed modelling, with people concentrating on buying what suits a model of a particular era/area/interest rather than buying stuff because they simply like it, it's fashionable or a good investment.

 

Jol

[The Black Hat]

It's ludicrous isn't it? Especially as all this banging on about a Q6 completely misses the point. Graham raised the Q6 issue, loud and clear. He mentioned no other locomotive. Graham and Simon have one thing in common - they like to fly kites. Remember Graham said "We'll never do a Blue Pullman, it would be too expensive." He also said "We don't do AC electrics because they don't sell." In due course, they did both. Say something controversial, provoke a bit of debate, sit back and watch the fur fly...........Then gauge whether your gut feeling was right or wrong. It's the one area where you can say something, do the opposite and lots of people will love you for it! I'm just guessing but I've sat in enough of these kind of meetings to recognise a kite.....

CHRIS LEIGH

 

I did find it odd that the Q6 suddenly was specifically mentioned.

 

Personally, Id be happy paying 20% increase, even more if got pushed to around £150 per model if it meant that the Q6 was made. I would simply not buy other products for the railway and build up the funds for the fleet of Ravens machines Im after.

 

Take note Bachmann, Im putting my money where my mouth is, but sadly commissioning them myself isnt an option. If I had those kind of funds Id be after the real thing!

[Andy Y]

I did find it odd that the Q6 suddenly was specifically mentioned.

 

 

I don't.

[railroadbill]

 

 

As I will be spending less time opening boxes I better go and have a look at what unfinished projects are awaiting my attention in the manshed.

Just read your post, Clive, and your comment on "manshed" really made me laugh. I've now renamed the loft as my manloft. Great stuff!

 

1. The last piece of modelling equipment I bought was an Antex low temperature soldering iron, to encourage me to  dig into that stash of  kits I seem to have acquired over the years and half finished. Apparently it's made in England.

 

2. I spent most of yesterday in what is now the manloft tinkering with bits of scenery, tweeking cvs on chips (Bachmann ones) (thanks to data from RMweb) and watching a (Bachmann) sound equiped diesel chug slowly round the layout pulling a rake of wagons I'd built from kits some years ago. Point I'm trying to make is that as a hobby my day involved scenic stuff (very cheap),  kits I'd made (not bad for the creative hours spent making them) and more expensive locos (whether they are out of the box or kit/scratch built). So for good running and authentic appearance some money has to be spent. I couldn't make my own sound chips, for example.

 

3. Overall, compared to other interests, railway modelling can be reasonably priced (or very expensive if say you collect top price gauge o or 1 locos etc.)  If I smoked say 20 cigarettes a day I'd spend 2.5k to 3k a year.  So all those years I've never smoked should let me buy quite a few new locos.....  My friend who has a vintage car (1917)  recently bought a newly manufactured gear ring for the dynamo drive from an American company for several hundred pounds. So he spends far far more on his hobby than I do. Until recently we were doing the same job so we're in the same income bracket.

 

4. Oh, well back to the manloft.

 

 

edit for typo, and spelling

[Oldddudders]

Why are we being nudged towards comparing our prices to European models ?

 

US models seem to be quite nicely priced and largely unaffected..

 

 

European models use exactly the same Chinese manufacturing base, so the fact that the models in Europe already sell at a significantly higher price seems a reasonable comparison to make.

 

As far as the US market is concerned, I think it is all about volume, with costs being spread across bigger batches. And of course for some years some US "manufacturers" have been touting round the market to get sufficient orders before committing to manufacture - in China, again. Guaranteed sales lowers the risk factor, making the investment a surer bet.

[Xerces Fobe2]

As in many, many previous cases it's not what you're saying but the way that you go about it. Your post made it appear you'd disregarded the time and effort expended in crediting readers with a full and frank briefing so that it would reduce the likelihood of sensationalised irrelevancies. People were congratulating Bachmann on their approach and not necessarily the price rise. But in all such topics there's always someone who misses the point in their bid to say 'something'.

 

If you think of the "management" as a friendly uncle that tells you off sometimes when you are rude and praises you when you contribute something good you will get on fine. Maybe 2 adition buttons should added, the "lollipop" and the "spank" ,for the good and the bad RMwebers - the problem is some RMwebers miight like these options a little bit too much!

 

XF

[Coombe Barton]

 Would we then also need an "Ooooohhhhhh!" button? 

[davidw]

A question that I keep coming back to is what price is too much? What can I afford? What can I justify along side other household expenses?

 

I'm not asking is the item value for money?

I'm not asking could I build it myself to the same quality? 

I'm not asking how this compares with the loco's of the 60's/70's /80's etc.?

I'm not asking is it a fair salary to be paying chinese workers?

 

Though all these are valid questions.

 

Will I put my hand in my pocket? And this must be the concern uppermost in the minds of Bachmann and Hornby, that they can continue to produce loco's and rolling stock that us punters will find sufficiently attractive to do just that?

 

It isn't long ago that it was possible for me to purchase a loco or more every other month. Those days are over. These days it's likely that I may get one for special occasions. 

 

What's true for me must be true for others.  The spending potential and the disposable income has reduced UK wide and  most if not all have felt this. Our hobby is a luxury item. 

 

Purchases will become more and more strategic - in initial decision and outlay, and even procrastination 

 

Apologies if this is too simplistic.... 

 

Ps. Many thanks to Bachmann  Andy and BRM for the thread

[JohnR]

Since everyone else have had their tuppence worth (sometimes more!) I thought I would add my own.

 

Firstly, like everyone, I dont like or want price rises. My hobby at the moment is restricted thanks to a young family, but - price increase are a fact of life in every field. 

 

Secondly, I think it is acknowledged by most people that Bachmann produce some of the highest quality models that we have seen in the UK market - as evidenced by them regularly topping the "Model of the Year" polls. We wouldnt want to jeopardise that level of quality, although if it could be achieved more economically (eg by not having sprung buffers which wont be used?) then so be it. 

 

Thirdly, in terms of value for money, Bachmann have always been recognised as providing this in spades, compared to a certain other manufacturer. This isnt a criticism of Hornby - thats for another thread - but it is true. Any increase in prices from Bachmann probably bring them more into line with Hornby pricing. So they are not pricing themselves out of the market, nor are they reducing the level of sales - that will be determined more by choosing suitable prototypes to make (whether cute models we will all buy, or models that fill a requirement).

 

Lastly, there is the way they have communicated it. Not too long ago, suppliers (in any field, but perhaps especially in ours) would have simply announced their price rises with a curt press release, or a note at the bottom of a revised price list. Although it was a long time ago (and I was very young!) I am sure that one year Hornby increased prices half way through the year, and all me - and my retailer - knew about it was when the new price list was issued. What Bachmann have done is open, upfront and transparent. This has to be commended and encouraged.

[martin_l_jones]

I would really be intrigued to see the Bill of materials and cost breakdown for a Bachmann loco, to see how they can justify the prices, whether they are benchmarking against Hornby would be interesting as the newer range of Hornby loco's do sell at a higher price.

 

During the last year or so I guess we have all reduced our purchases and going forward will just become even more selective in what we buy...

 

For what they are, they just seem a lot of money...

[dibber25]

One point which doesn't seem to have been raised is that in Andy's OP he referred to price increases 'averaging around 20%'.  To me this means, or more correctly might mean that some increase will be less than 20% while others might be more and in fact I have heard from one retailer that one price change he had been quoted (possibly incorrectly?) was considerably more than 20%.

 

It would be interesting to know - beyond the original illustrative examples given by Andy - if there was any sort of indication about the possible spread of percentage increases and where any higher percentages are likely to come (assuming they do come of course).  Or are we waiting fro Bachmann's new price lists to fully inform us?

 

Incidentally some pages back comment was passed about Bachmann being able to brief in this way because unlike Hornby it is not a publicly quoted company.  Bachmann Europe is of course a PLC and there is considerable information about its financial situation available on the internet including its shareholding (which is basically 100% owned by Kader Industries).  Kader Industries is a publicly traded company, albeit not in the UK, so in reality the situation is little different from that of Hornby but it is noticeable that nothing has appeared in the report which opened this thread which differs from the most recent accounts and statements presented by Kader Industries other than to flesh out detail in which we are specifically interested.  

 

My point?  Simple - Bachmann have been very informative and presented the facts in a way which is directly relevant to us although there are still shareholders involved; thanks to them for taking the trouble to do so and one can but hope their major competitor in the UK could be similarly forthcoming once its organisational dust has settled.  Maybe it comes back to PhilH's point and Bachmann clearly recognise where their main market lies?

A number of price increase examples were given - see my post on Model Rail's Facebook page - with a two-car DMU going up by £30 from £114.95 to £144. 95. My maths is not good but that is something more than 20%. All multiple units are going to suffer large percentage increases due to the complexity of the electrified inter-coach couplings to accommodate a 1-decoder system. The Blue Pullman was expected to reach nearly £600 and for that reason a proposed 'grey' version has been dropped. Model Rail's proposed Class 450 in SWT livery is still awaiting pricing, but is doubtful at this point in time. Bachmann's main concern in organising the press presentation was to avoid the criticisms that Hornby suffered for its lack of transparency, although Hornby was not specifically mentioned by name. There has been, despite comments elsewhere in this thread, a long-standing relationship between Bachmann and the model railway press involving exchange of information, ideas and feedback from the readers. It dates back at least to the days of Airfix when I bumped into Merl as he climbed out from under 2818 at the NRM and told me, "you haven't seen me here." 

CHRIS LEIGH

[Stevelewis]

I would really be intrigued to see the Bill of materials and cost breakdown for a Bachmann loco, to see how they can justify the prices, whether they are benchmarking against Hornby would be interesting as the newer range of Hornby loco's do sell at a higher price.

 

During the last year or so I guess we have all reduced our purchases and going forward will just become even more selective in what we buy...

 

For what they are, they just seem a lot of money...

If  you  go  back  several  years  say to  the  late  60s early  70s  and  do  a  price  comparison  of  the  cost  of  00 model railway  items  Vs  average  wages you will see that model railways  were  expensive in real terms  then  compared  with  today. 

 

Also  as  i  have  stated  earlier in this  thread, UK  outline 00  is  good  value  for  money  even  with  price  increases, when compared  with  European & USA  outline  H0,  take  a  look  for  example  at  Hattons  Lilliput  HO loco discount  prices.

 

I feel  that  some  modellers  continue  to  expect  the  manufacturers should  not  be  able  to  make  a  reasonable profit  and  hence  a  living  for  their  employeees

[Fenman]

... a two-car DMU going up by £30 from £114.95 to £144. 95. My maths is not good but that is something more than 20%. ...

 

... The Blue Pullman was expected to reach nearly £600 and for that reason a proposed 'grey' version has been dropped ...

 

For the sake of pedantically confirming your maths, I make it about 26%.

 

Pity about the grey/blue Pullman: that would have been the one I'd have bought.

 

Paul

[Astockfan101]

Not a valid comparison as those economies aren't growing at the same rate as China. But perhaps you have pointed the way for Hornby and Bachman to move their production to Romania.

So the 56's will be made in the same place as the real ones!

[gordon s]

I would really be intrigued to see the Bill of materials and cost breakdown for a Bachmann loco, to see how they can justify the prices, whether they are benchmarking against Hornby would be interesting as the newer range of Hornby loco's do sell at a higher price.

 

During the last year or so I guess we have all reduced our purchases and going forward will just become even more selective in what we buy...

 

For what they are, they just seem a lot of money...

 

I'm sorry but Bachmann don't have to justify their prices to anyone.  They have made a market decision based on their costs and it is very unlikely that will change.  They will wait to see how their financial projections stand up to possible reduced sales, before making a change to their strategy.

 

We all have a similar decision to make.  If it represents good value, we may buy one.  If it is a loco that fits our modelled era and location and there are few alternatives, the odds are still that we will still buy one.  Of course it may mean selling something or putting off another purchase to fund it, but if our purchase criteria are met, it is likely a sale would still be made.

 

If few or none of our requirements are met, then we don't buy one.  

 

I don't see how justification of their price structure is part of our decision whether or not to buy.

[Dave47549]

So the 56's will be made in the same place as the real ones!

 

Hopefully with better quality control, not by candle light, or dropping power units into ravines.... 

[Glorious NSE]

All multiple units are going to suffer large percentage increases due to the complexity of the electrified inter-coach couplings to accommodate a 1-decoder system. The Blue Pullman was expected to reach nearly £600 and for that reason a proposed 'grey' version has been dropped. Model Rail's proposed Class 450 in SWT livery is still awaiting pricing, but is doubtful at this point in time.

 

Obviously not my business, but it seems a bit odd to me to allow existing tooling which could be earning an income to gather dust, there's a lot of already sunk development costs there, if you're writing those costs off by decreeing the models to be uneconomic to produce, why not write them off to offset some of the rise and actually still make the profit...

[Bernard Lamb]

If this sort of price increase does continue as predicted for several years I can see my family taking a much greater interest in my models.

It will certainly make a big difference to what they can flog them for when I pop my clogs.

Bernard

[John B]

US models seem to be quite nicely priced and largely unaffected..

 

take Gresley's inspiration for its LNER 4-6-2's..

http://www.walthers.com/exec/productinfo/160-84101

$225 / £133 rrp (can be had for under £100.. produced by the same parent in the same factory, presumably by the same workforce).

 

[big Snip]

 

Not a good comparison, I'm afraid. The Spectrum K4 tooling has been earning it's keep for Bachmann for upwards of 20 years now.

 

A fairer comparison would be a newer Athearn Genesis model - say a SP Mountain - made in China, announced 2010, only just generally available: list price $299.98. Add $100 to that if you want DCC & Sound.