Bachmann - why price increases are necessary

[richierich]

An interesting reflection on macro economics in action.

 

One thought I had, is ViTrains manufacture their products in Italy (although the precise content I'm not sure, as I would guess motors are produced in the far east, as a minimum). Their Class 37 and Class 47s (putting aside comparisons with other manufacturers), could well reach a point where they could be offered at a more competitive price to manufacturers who use Chinese based production, based on the current labour cost trend?

 

One thing is certain, as the Far East develops and looks for a Western lifestyle, it won't be the end of price increases for products made there.

[steve1023]

Sorry if this has been posted by someone else - I have only skimmed through the thread, but as somebody who is critical of the standard of factory weathering on RTR models including the vast majority of Bachmann's, could money be saved by not having weathering on models, after all if people want weathering then they can apply it themselves or pay a professional to do it (would look a lot better than the factory effort as well) - Bachmann may well earn themselves extra money from people like me who don't buy weathered models because of the poor standard.

 

Looking at Bachmann's website - x2 forthcoming class 45 models - £5 extra for weathering, previously available class 66 DBS weathered £10 extra over Colas non-weathered (would have thought the Colas would have been more complex than plain red) & Mk1 coaches £1.35 extra for weathered versions (all RRP).

 

Just my opinion - I'm sure some won't agree but if economics is the new buzzword here......

 

Edit - Thanks to Bachmann & Andy for the briefing.

[Legend]

Because they don't like the message?

It depends who the messenger is and how the message is delivered, which is why ,despite 20% increase! I still say thanks to Andy and Bachmann for the full and immediate release of details to the buying public. Such a contrast to Hornby

[Clive Mortimore]

When we  receive  a new 00  model,  what  do  we  do?  Well  in my  case  I give  the   sprung  buffers a couple  of depressions  to  see if  they  work  and  invariabley  that  is  it, they  probaly never  get  depressed  again!!

 

 

Hi Steve

 

Giving the buffers a few pushes after working out how to get the model out the box is the best part of any new model.

 

 

Hi All

 

If there is a means of cutting the cost of the production of the model without being to detrimental to the finished product then I am all for it.

[robertcwp]

Sorry if this has been posted by someone else - I have only skimmed through the thread, but as somebody who is critical of the standard of factory weathering on RTR models including the vast majority of Bachmann's, could money be saved by not having weathering on models, after all if people want weathering then they can apply it themselves or pay a professional to do it (would look a lot better than the factory effort as well) - Bachmann may well earn themselves extra money from people like me who don't buy weathered models because of the poor standard.

 

Looking at Bachmann's website - x2 forthcoming class 45 models - £5 extra for weathering, previously available class 66 DBS weathered £10 extra over Colas non-weathered (would have thought the Colas would have been more complex than plain red) & Mk1 coaches £1.35 extra for weathered versions (all RRP).

 

Just my opinion - I'm sure some won't agree but if economics is the new buzzword here......

 

Edit - Thanks to Bachmann & Andy for the briefing.

I did make the point about coach weathering but I agree it applies more generally.  I recently bought a weathered blue 46 with D number because it was the only way to have a model in that livery and number style short of a repaint.  I would have much preferred it to have been pristine as I don't think the weathering is very good, especially the ends.  However, there have been a few good weathered steam models, such as the WR 9F they did for Modelzone a few years ago.  Their weathered wagons aren't too bad either.  But if two things have to go to cut costs, for me they would be weathering and sprung buffers.  If there is a third, it's interior lights.  If there is a fourth, it's DCC-fitted locos (other than sound ones, which are no use to me but might appeal to others, albeit they are expensive even before the latest price rises).

[APOLLO]

One thing is certain, as the Far East develops and looks for a Western lifestyle, it won't be the end of price increases for products made there.

 

If 1,390,510,630 (end of 2013 & rising) Chinese get a "Western" lifestyle, then god help the world resource wise.

 

There simply is not the resource (of any commodity) on the planet to support the above, and don't forget the 1.237 Billion Indians either, who also want the same.

 

Something will give way, and soon, and it won't be nice.

 

Brit15

[LNER4479]

Over the last few years, review after review of superlative new RTR locos have ended with a comment along the lines of 'it's as good, if not better than a kit built alternative - so at the RRP quoted it's a steal'.

 

I have just bought (well, had bought for me actually as it's a pressie) a kit from a well-known manufacturer of a pre-grouping prototype that is unlikely to appear in RTR form any time soon (famous last words!). For the kit and motor/gears there was next to no change out of £150. And I still have to source the wheels! By the time I've spent many hours of my spare time, amateurishly putting it together (expected to be a pleasure, not a chore incidentally!), I would put a value of £300-400 on it. Were I to ask a professional model maker to make it for me, that price would be well north of £500.

 

Compared to that, a scale, detailed RTR model for £150, £200, maybe even £250, represents tremendous value and shows just how good we've had it for such a long time now.

 

Finally, a 20% price rise year on year will never be sustainable in the longer term. In other manufacturing sectors, UK firms that moved production out to the far east are already beginning to move it back as the margins reduce.

[steve1023]

I did make the point about coach weathering but I agree it applies more generally.  I recently bought a weathered blue 46 with D number because it was the only way to have a model in that livery and number style short of a repaint.  I would have much preferred it to have been pristine as I don't think the weathering is very good, especially the ends.  However, there have been a few good weathered steam models, such as the WR 9F they did for Modelzone a few years ago.  Their weathered wagons aren't too bad either.  But if two things have to go to cut costs, for me they would be weathering and sprung buffers.  If there is a third, it's interior lights.  If there is a fourth, it's DCC-fitted locos (other than sound ones, which are no use to me but might appeal to others, albeit they are expensive even before the latest price rises).

Hi Robert. I agree - not wishing to diversify off the topic too much but an example for me would be the forthcoming Mainline freight blue class 37 - I would most definitely purchase it if it were minus the weathering, the cost would presumably be cheaper for the model's production and then lower prices in the shops may entice additional purchasers. As it is I won't be buying and that's roughly £100 (at RRP) less going into Bachmann's pockets.

 

I also agree there have been very good weathered models - I'm thinking Dapol's class 22 & 52 models but I believe the cost was much higher than Bachmann's efforts also.

 

I don't deny that I dislike them and as such biased but if we are trying to keep costs down then ditch the fancy extras and let the customer do it him/herself if that's what they like - after all you can add dirt to a clean model a lot easier than removing it from a dirty one.

 

Steve

[Captain Kernow]

I agree that a smooth running mechanism is the foundation of a good model, whether highly detailed or more basic, but I don't think that it's necessary to pay a premium price for that. I shop at the budget end of the market and have had some most pleasing mechanisms through my hands in the past few years. If Kato can can deliver a silky smooth, four wheel, n gauge chassis for fifteen quid and a bogie one for a shade under twenty than it's obvious that there's something other than price that determines how good or bad a mechanism is.

Perhaps the readiness to pay a bit more for a decent runner is born out of a creeping desperation that some manufacturers don't seem able to get it right, consistently, whereas others (like Kato), clearly can.

[Foulounoux]

Having come late to this thread I apologise if I repeat anything already stated

 

Posts 85 and 101 make a good point about Eastern Europe

 

However having worked in an industry that faced the same labour cost issues perhaps I can shed some light based on my previous employment

 

We in the early 90's manufactured in the UK All be it in areas supported by grants

Production was moved to Poland

7 years on moved to Romania and just recently polish factory closed

Romania production then started to get expensive

Result moved to North Africa and further east towards Russia the latter partly driven by the market for finished goods

Romania would have followed I'm sure however having transferred production to one of the countries in North Africa currently having some instability (Egypt) and the Eastern Europe being Ukraine you will understand that sometimes cost based decisions don't always follow the plan

 

However we calculated the life of a new plant was around 8-10 yrs before labour costs made it unattractive and we didn't have the option of putting prices up

 

Man times we were asked to look at production in Far East but logistics costs and the lack of flexibility made that a non starter

 

So China will become non competitive in terms of costs as they increase standard of living

 

I agree with the Bachman view that for mass volume production the UK will never be able to compete, however I'm not sure I agree they are in the volume area that supports that. Tooling needs replacing and I believe that cost will be significant so the calculations that Bachman quote may be accurate now in favour off Far East production but not necessarily true in 3-5 years time.

 

I do see manufacturing coming back to the UK. I currently work for a company that has machining in the UK and we have done make v buy on a number of products and we get mixed answers sometimes low cost countries win sometimes they don't. But local manufacture close to the market has other advantages inventory,flexibility and better control of the operation

 

The UK also offers stability and an ability to more accurately predict pricing and costs that low cost countries in growth phases can't

The answer maybe a mix of UK and offshore production.

 

Logistics cost also vary significantly, sudden growth and you try getting hold of a container vessel. I had a colleague who had to reduce the freight contract period down from 3 years to 3 months such was the fluid situation

 

So I just say watch this space its a dynamic and changing world

 

 

 

Colin

[Doughnut]

Having received a plethora of disagree notices at the top of my page, as well as an equal amount of agree notices, I have to admit that curiosity has gotten the better of me and I have had a look at this thread, once again.

I have been a member of this site for 7 years and the only thing that has consistently disturbed me about it, is the utter intollerance the 'management' and his friends seem to have for any commercial dissent. The the arrogant and off-hand dismissal which I appear to have received from him, on this topic, is along the lines of those I've seen given before, should anyone have the temerity to critcise the manufacturers or other vested interests. Your bias is quite embarassing! It would be very very refreshing, if, just once you actually supported the point of view, of those of us without un-limited funds when we criticise the manufacturers, instead of issuing the usual slap-down. 

If you would like a pointer as to who is in the majority on these sorts of issues, I would point you in the direction of your very own 'Bargain Hunters' thread, which, with a viewing total of over 200000, is I believe, the most popular thread.

In spite of the reams of detailed explanations, given at the beginning of this thread, a 20% increase on £100 - £150 model is a lot of money to some of us! The notion that 'if we can't afford a 20% increase, we shouldn't be looking at models of £100 and over, I also found very offensive and utterly snobbish!

This is a great site and very informative, but attitudes like this do nothing for you.

 

Dave

[dibber25]

I've decided I want an 'HO' S160 2-8-0. I can wait for the promised Roco model announced earlier this year but it will doubtless be quite a wait, or I can order a DJH kit and they reckon I can have it in 4 weeks. The price is not a lot different, so I've decided to go with the kit. If we want to buy British - and it does seem to be the cry from a number of modellers - most of the available kits are made in the UK. 

Bachmann's press conference was a genuine attempt to inform customers, via the press and this forum, about what they are doing and why. They wanted to avoid the criticism that Hornby received for not coming clean about the problems they face. Now, it seems, there are those who feel that wasn't the right course, either. The golden era of cheap, highly detailed RTR is over. Some of us have been saying that for at least a year. Now both the major manufacturers have said it in their own ways and there are still those who don't believe.

CHRIS LEIGH

[Xerces Fobe2]

Of course consumer power could be used to put pressure on a company - Hypothetically, what happens if no one buys their products for 6 months?

 

Nigel

[Ron Ron Ron]

Of course consumer power could be used to put pressure on a company - Hypothetically, what happens if no one buys their products for 6 months?

 

Unless the reasons given for the price hikes are a sham, then they are not going to sell their wares at a loss.

If sales plummet, they'll either reduce the scale of their operations and focus on specific products that render an appropriate return, or they'll just pack up shop in the UK market. i.e. no more RTR models.

 

 

.

[Andy Y]

 the only thing that has consistently disturbed me about it, is the utter intollerance the 'management' and his friends seem to have for any commercial dissent. The the arrogant and off-hand dismissal which I appear to have received from him, on this topic, is along the lines of those I've seen given before, 

 

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'.

[andyman7]

Having received a plethora of disagree notices at the top of my page, as well as an equal amount of agree notices, I have to admit that curiosity has gotten the better of me and I have had a look at this thread, once again.

I have been a member of this site for 7 years and the only thing that has consistently disturbed me about it, is the utter intollerance the 'management' and his friends seem to have for any commercial dissent. The the arrogant and off-hand dismissal which I appear to have received from him, on this topic, is along the lines of those I've seen given before, should anyone have the temerity to critcise the manufacturers or other vested interests. Your bias is quite embarassing! It would be very very refreshing, if, just once you actually supported the point of view, of those of us without un-limited funds when we criticise the manufacturers, instead of issuing the usual slap-down. 

If you would like a pointer as to who is in the majority on these sorts of issues, I would point you in the direction of your very own 'Bargain Hunters' thread, which, with a viewing total of over 200000, is I believe, the most popular thread.

In spite of the reams of detailed explanations, given at the beginning of this thread, a 20% increase on £100 - £150 model is a lot of money to some of us! The notion that 'if we can't afford a 20% increase, we shouldn't be looking at models of £100 and over, I also found very offensive and utterly snobbish!

This is a great site and very informative, but attitudes like this do nothing for you.

 

Dave

I don't think anyone is trying to argue that the price increase is welcome or good news - but there is a difference of opinion over whether it is necessary. Most of us can see that major manufacturers have to increase prices if they are to earn enough to make a return and stay in business. Making a profit is not 'profiteering'. I don't think however that it is reasonable to claim that anyone is being priced out of the hobby - it is just that there may need to be a shift towards buying fewer models or more secondhand/kitbashing/modifying. That isn't snobbishness, just economic reality to anyone on a budget.  

[AngryMeerkat]

Of course consumer power could be used to put pressure on a company - Hypothetically, what happens if no one buys their products for 6 months?

 

Nigel

Depending on the size and markets that company is selling into, they either close the company or move out of the market that isn't making them money and focus more on the profitable markets.

 

Let's not just pass over the fact Bachmann have admitted to MAKING A LOSS on some models. They are a business, not a charity. Would you go to work every day if it cost you money but you didn't get paid? Of course you wouldn't, so why do some people expect Bachmann to do so? Why should they spend 2 years doing research, creating CAD drawings, making a prototype, making moulds, building the model, creating the packaging, arranging shipping and export/import, and supporting retailers, only to make a loss? No business will do this for long.

 

We have Dave from DJM Models on here, do any of you expect him to sell you models at a loss? Should he run his business into the ground until he loses his house just so you can pay £90 instead of £100 for a model? Of course none of us expect him to do this, we all wish him well and are willing to pay his RRP or not buy the model because we can't afford it. Bachmann are no different.

 

Mark

[The Black Hat]

Is it really necessary to again remind the grieving LNER/NER community of the reasons behind the SECR C and LBSCR E4 being modelled? These are locos in full running order on one of the nations most successful preserved railways - the Bluebell. Their sphere of operations in BR days has nothing to do with it. Their visibility to enthusiasts now is the reason they are a commercial stone-bonk certainty to sell.

 

-------------------------------

 

So what is there to disagree with in my post? What have I said that is "tosh"? Are the E4 and C Class not on the Bluebell? Is the Bluebell not one of the nation's most successful preserved railways? More importantly, is it not one of the longest-established lines, having closed for the second time (despite the best efforts of Miss Bessemer etc) in 1957, and conveniently close to London? If you were Bachmann, manufacturing in tough times as we have now, wouldn't you model locos from a line that is in the heart of the most affluent part of the country, with greater chances of spin-off sales to people with jobs and spare cash?

 

Sorry, it if your logic holds out to be true then the Q6 should have been made years ago.

 

Yes the E4 and C Class are on the Bluebell, and yes its a nice preserved railway down south. But... if your idea of viewing people is what counts then the NYMR trumps the Bluebell. Last year with the extension Bluebell managed to carry 188144 passengers. The NYMR was 315,000 and that was 2009 when the Q6 was in traffic (as its under overhaul/repair at present). Thats a lot more.... a lot more people looking at a Q6, a lot more seeing it work and a lot more prospective modellers wanting an example of Ravens engine on their layout.

 

Its also a reason why the Goathland Station has been made by BOTH Hornby and Bachmann. TMC have commissioned buildings for the village and surrounding area and have sold well. Most people modelling the Bluebell that Bachmann have made wont be living nearby. They will choose a location to model they might have been to, but for which the buildings, stock and engines are ALL available. That doesnt mean they have to be from down south. Someone down south could be enlightened and choose to buy the buildings of the NYMR and model that instead. Theres nothing to stop them.

 

What the NYMR in model form doesnt have are recent high standard pregrouping engines inginous to the line in the way that Bluebell has with the E4 and C-Class. Bachmann already have done 80135, and 76079, years ago but if your reasoning is that for the E4 and the C-class then the case for the Q6 is stronger.

 

As for others saying the Q6 isnt pretty and thats what counts...?? Sorry but Id be thinking that for a freight machine the Q6 is a well laid out, balanced and gorgeous peice of engineering. Its a match for the E4, C-Class and any other out there. Personally, Id say that E4 looks ugly, and the Q6 gorgeous and having a sense of magestic power. But then I would... thats a case of each to their own...

 

Hence yet more reasons, why the Q6 would be a good idea for Bachmann to make it. But.... thanks for helping to point them all out.

 

I'll just leave you with this.... I doubt a E4, or C-class would be able haul this as easily up the 1 in 39...

 

[Xerces Fobe2]

I think Bachmann may well be pleased at the prices some RMweb members are asking for second hand locos in the Classifieds section!!. If this is the case maybe some of friends have in fact helped Bachmann formulate their pricing strategy?

 

I also wonder what the impact will be on the well known large box shifters as they are people who might well not play ball and when the going gets tough, then the brinkmanship starts!

 

Nigel

[robmcg]

With the certainty of more expensive RTR models I think the s/h market will be very interesting, especially for those collectors such as myself who enjoy buying rarer or more desirable models. These days I have to restrain myself! I am interested in the demographic of RTR buyers of top-standard models too. Are they m,ostly over 60 yrs old?

 

I see that mint as-new Hornby RTR models such as Bulleid Light Pacifics from reliable sellers regularly exceed £100 on Ebay, not so sure about Bachmann, but the latter produces models perhaps aimed at a slightly different market... more black or goods engines at least.

 

Also of interest to me is that some of the top standard Chinese-made models, to my eye, were tooled up and produced in 2001-2004 like the BR Standard 5MT 4-6-0, also the Std 2-6-4T., which you would be hard pressed to sell for £70 and free p+p.. my point being to keep producing from existing tooling will be expensive, I imagine a new production run of the above, even with tooling already amortised, might well exceed £100, and are very close or equal to the quality of anything new in catalogues. So I am not overly worried by the increase in prices, except that I want occasional new models.

 

Just a few thoughts there, anyway.

[muddys-blues]

In truth this will be like Smokers and Drinkers over the many years of Fags and booze price hikes ......... many people say "right that's it, I am not drinking again, or right that's the fags being stubbed out now they can go and whistle" and what happens, almost everyone carries on smoking and drinking.

 

And most of those kicking off about Bachmann's costings will be buying their models again very very soon, as it has been said a few times in this thread, we have had it good for a long time, so don't worry be happy, and think on, when you are handing over your extra 20%'ish for the next Bachmann loco, you are helping someone at the other end getting a peg up in the lifestyle stakes !!!

[The Stationmaster]

I think Bachmann may well be pleased at the prices some RMweb members are asking for second hand locos in the Classifieds section!!. If this is the case maybe some of friends have in fact helped Bachmann formulate their pricing strategy?

 

I also wonder what the impact will be on the well known large box shifters as they are people who might well not play ball and when the going gets tough, then the brinkmanship starts!

 

Nigel

The 'well known box shifters' might not be left with much choice.  Hornby has pared retailers' margins to the bone, and then some, so there won't be much discounting there - assuming that the retailers actually want to make enough money to remain in business?  Bachmann already impose a minimum discount on new releases which has probably helped to level the retail playing field a bit.  

 

Simple fact is that prices have risen and if we are working to a buying budget in cash terms all we can do is spend it in a different way - the hobby won't necessarily become more expensive but might well change as people live within their means and spend with greater forethought on things they need rather than on things they want.

[The Stationmaster]

Sorry, it if your logic holds out to be true then the Q6 should have been made years ago.

 

 

I'm sorry but this reminds me of 'Just a Minute' on Radio 4 - I'm going to shout 'repetition' and claim my bonus point.  

 

Bachmann have said they aren't going to produce one, although you never know and someone else might - but keeping on about in this thread is a somewhat missing the point.  If it's going to be such a surefire success do the easy bit and get out there and press some cash into DJM's hands and commission one.  Surely something that successful must be well worth taking out a second mortgage or tapping up your bank for £100,000 plus to kick-off the project while sit back waiting for the profits to come in?

[Ozexpatriate]

Wow, ten pages of comments in just a day or so. This really caught people's attention.

 

I have read Andy's OP (thank you Andy for sharing this with us) but not read any comments after page one.

 

I hope no one was surprised by this announcement by Bachmann Europe PLC. This was inevitable.

[Mel_H]

This shows, IMHO, the basic core differences between Bachmann's approach and that of Hornby.  Being upfront about production problems, price increases and viability of models in that light is a mile away from the sorry state that Hornby bumbles along in. 

 

I personally wouldn't want some poor, benighted individual to be slaving to produce my 'toys' just so I can get them cheaper.  20% of 'bu&&er all' is still 'bu&&er all', just ask anyone on zero hour contracts in the UK how they feel about exploitation.

 

If we can continue to get highly detailed models, even if at a higher price, it has to be worth it.  The wonder is that the market has continued to provide such splendid models for a narrow (pun intended) specialist gauge for so long at such low prices.

Yes, but you have to remember that Hornby is a quoted PLC, whereas Bachmann isn't. This causes companies (in all sectors) to behave differently. If Hornby made such an announcement, their share price would take a hefty hit. Hornby, of course, would also be duty bound to predict the impact on sales. It's NOT a criticism of Bachmann, but they don't, and they haven't. It's just one of the many perils of being a quoted PLC...