Simon Says

[Phil Parker]

I have seen someone mention the Dapol CKD models and people bemoaning the price rise of model coming from china due to wage rises over there. So my question is why don't Hornby make there own CKD version of models they are making and release them under the air fix banner? Would this not reduce the cost by missing out the assembly cost on the Chinese production lines? It might even open the door for more people to enter the hobby at cheaper cost than at present. And with the tails coming for china of the difficulty of staffing the assembly lines and staff poaching to the companies that can pay more, it would reduce a bottle neck in the production and allow some much needed cash flow?

My thinking was started by looking at the HAA wagon, the original version now to be sold under the railroad banner. This being mainly self coloured plastic and clip together would be a ideal candidate for this kind of CKD sales.

Because there are even more moans from people who don't want to gave to put detailing parts on models never mind put the whole thing together. I suspect that some models would require re-engineering to bring the skill level down far enough (Quick-build style?) for a lot of people. Personally, I love the idea nd think the Dapol coaches are excellent but can see why it would be a challenge for manufacturers to do.

[edcayton]

I suspect that the cost of making/assembling an item is a very small part of the final cost. There is packaging, shipping, warehousing and a trail of paperwork before manufacturer, wholesaler and retailer take their costs and profit out (oh, yes, and the Gov gets their cut).

 

This is why you can't get loose screws etc any more, but have to buy those bl00dy blister packs.

 

I would love to see CKD come back as it reminds me of my childhood. I will get some Dapol coaches when I can.

 

Ed

[Phil Parker]

According to both major manufacturers, through biggest cost for most models is manual labour putting the things together.

 

Loose screws are available from a couple of local hardware stores near me as well as nails by weight. It's just easier and cheaper for DIY sheds to stock blister packs as you don't need the staff to count screws at the checkout.

[Ron Ron Ron]

According to both major manufacturers, through biggest cost for most models is manual labour putting the things together.

 

Surely that's the costs at the point of manufacture though?

There was a lot of recent speculation that £120 locos are probably being knocked out for about £40 - £50 at the factory gates, inc. R&D, tooling, etc.

 

 

.

[Andy Y]

 

There was a lot of recent speculation that £120 locos are probably being knocked out for about £40 - £50 at the factory gates, inc. R&D, tooling, etc.

 

 

I've not seen that speculation or whether it's a credible source but even if that was happening the models aren't reaching the channel that commissions/distributes it so make no provision for the costs of the commissioning company's research, development and infrastructure, shipping and distribution within the marketplace, service and warranty support, profit margins and the retailers margin. All of those costs add to the price.

[dibber25]

I have to agree with Andy regarding the GBL magazine models. I thought I was the only one who felt that the exercise was a cynical one. Not 'Great British Locomotives' but 'Great British Locomotives we can rip-off easily from other people's work'. Make a list of great British locomotives and you'll find some important prototypes which aren't listed by GBL because there's no 'OO' model that can be easily copied. I don't think it is unethical to buy the magazine. It is there to be bought and everyone must decide for himself whether he's Ok with  it. There are certainly far more unethical things to worry about. It won't affect RTR sales, of course, so it would be a waste of money for Hornby or Bachmann to take legal action. (To the best of my knowledge there were far more serious instances of piracy in the hobby but it has never proved worthwhile for aggrieved parties to take legal action). If it affects anything it would affect sales of other model railway magazines, so this post could well be seen as 'sour grapes'. I thought long and hard before posting, because I'm sure some folk will say, "Well, he would feel like that, wouldn't he?" In truth, I might not object so much to the rip-offs, if I had seen some evidence of genuinely researched, newly-tooled models of other Great British Locomotives - GWR Firefly, 'Hardwicke', 'Saint' for instance, that aren't rip-offs, in among those that obviously are. What's the betting we won't see an original 'Merchant Navy'?

CHRIS LEIGH

[Revolution Ben]

 

Hello all

 

My understanding is that the *general* rule in business is that mark up doubles at each stage.

 

So if we consider your loco with an RRP of £120: First exclude VAT at 20% gives an "actual" RRP of £100. Trade price to retailers would be around £50, while the price the manufacturer would pay the factory would be £25.

 

I suspect some will feel that's a rip off. But is it? The manufacturer mark up pays salaries, R&D costs, warehousing, shipping, etc etc and, most importantly, keeps them in business. The retailer mark up enables them to pay their staff, maintain a street presence and to stock less profitable items that are nonetheless useful to their customers.

 

The hugely discounted prices offered by some retailers are usually taken from their own margins. So those with a small shop, and fewer staff, in a cheap location, can afford to take a bigger hit than companies with retail outlets in more expensive areas, or where staff need to earn more because local costs are higher. It's why there's no decent model shop in Central London now.

 

I find that almost tragic, that a supposedly vibrant hobby enjoyed by thousands and thousands of people cannot sustain a single retailer in the capital. But that's where the obsession with price and the paranoia that somehow we are being ripped off, the fear that someone, somewhere got the same item a pound or two cheaper, has taken us.

 

Cheers

 

Ben A.

[edcayton]

I've not seen that speculation or whether it's a credible source but even if that was happening the models aren't reaching the channel that commissions/distributes it so make no provision for the costs of the commissioning company's research, development and infrastructure, shipping and distribution within the marketplace, service and warranty support, profit margins and the retailers margin. All of those costs add to the price.

 

I think that is the point that Ron and i were making Andy.  I certainly wasn't commenting on the GBL thing, although surely something similar has been going on for years with the "coal" loco's available everywhere?

 

Ed

[Igor]

Ben A has got this spot on in his post above.

I have read numerous threads and replies about price. The real issue here is what the manufacturers judge to be an 'acceptable' margin.

After all, if they reduced their margin, prices would come down. All these press announcements about China are a bit of a smokescreen. If sales figures plummet, watch the margin reduce.

When I walk into any other business, and the conversation turns to price, I am generally not confronted with a full-on PR campaign that gives me the whole gamut of excuses as to why prices have gone up.

I don't see Waitrose complaining that cattle feed or fertilizer has gone through the roof, or BMW warning me that the cost of raw materials and labour have doubled...

 

Regards

Igor

[edcayton]

I have to agree with Andy regarding the GBL magazine models. I thought I was the only one who felt that the exercise was a cynical one. Not 'Great British Locomotives' but 'Great British Locomotives we can rip-off easily from other people's work'. Make a list of great British locomotives and you'll find some important prototypes which aren't listed by GBL because there's no 'OO' model that can be easily copied. I don't think it is unethical to buy the magazine. It is there to be bought and everyone must decide for himself whether he's Ok with  it. There are certainly far more unethical things to worry about. It won't affect RTR sales, of course, so it would be a waste of money for Hornby or Bachmann to take legal action. (To the best of my knowledge there were far more serious instances of piracy in the hobby but it has never proved worthwhile for aggrieved parties to take legal action). If it affects anything it would affect sales of other model railway magazines, so this post could well be seen as 'sour grapes'. I thought long and hard before posting, because I'm sure some folk will say, "Well, he would feel like that, wouldn't he?" In truth, I might not object so much to the rip-offs, if I had seen some evidence of genuinely researched, newly-tooled models of other Great British Locomotives - GWR Firefly, 'Hardwicke', 'Saint' for instance, that aren't rip-offs, in among those that obviously are. What's the betting we won't see an original 'Merchant Navy'?

CHRIS LEIGH

 

I wonder how many they need to produce their copy. If only one, then a kit-built one for a few hundred pounds wouldn't make too big a hole in their budget would it?

 

Ed

[The Stationmaster]

I've not seen that speculation or whether it's a credible source but even if that was happening the models aren't reaching the channel that commissions/distributes it so make no provision for the costs of the commissioning company's research, development and infrastructure, shipping and distribution within the marketplace, service and warranty support, profit margins and the retailers margin. All of those costs add to the price.

I think it might have been me   Some while back I did a calculation which is very similar to the one posted here by BenA using what I knew to be a then trade discount figure (somewhat less than 50%) and postulating a level of margin at the 'UK manufacturer' level taken from information available in the public domain.  It all depends on where you start with the recommended retail price of course but the figure Ron has quoted is very much in the region of the one I calculated.  Jason Shron has also posted some very useful information on manufacturing costs as well.

 

As you have said all these numbers are about people covering costs and trying to make enough money to both stay in business and pay the mortgage.  I do, without repeating them, have issues with the way Hornby has gone with trade terms and discounts this years and that would severely impact some of both my and Ben's numbers, but it is a separate issue and doesn't alter the manufacturing cost element nor does it alter all the upstream costs.

 

Ben is of course absolutely right about the deep discounters - some of whom have made so little, per item, on some things it has paid other traders to buy from them and resell even with their own small discount - and where figures are available the impact of such deep discounting on their bottom line in percentage terms is quite frightening, they only remain in business and supporting such deep discounting by volume.  But apart from distorting the end customer markets view of prices none of this alters the costs of production or manufacturers overheads.

[dibber25]

I wonder how many they need to produce their copy. If only one, then a kit-built one for a few hundred pounds wouldn't make too big a hole in their budget would it?

 

Ed

 

I think it might have been me   Some while back I did a calculation which is very similar to the one posted here by BenA using what I knew to be a then trade discount figure (somewhat less than 50%) and postulating a level of margin at the 'UK manufacturer' level taken from information available in the public domain.  It all depends on where you start with the recommended retail price of course but the figure Ron has quoted is very much in the region of the one I calculated.  Jason Shron has also posted some very useful information on manufacturing costs as well.

 

As you have said all these numbers are about people covering costs and trying to make enough money to both stay in business and pay the mortgage.  I do, without repeating them, have issues with the way Hornby has gone with trade terms and discounts this years and that would severely impact some of both my and Ben's numbers, but it is a separate issue and doesn't alter the manufacturing cost element nor does it alter all the upstream costs.

 

Ben is of course absoluterly right about the deep discounters - some of whom have made so little, per item, on some things it has paid other traders to buy from them and resell even with their own small discount - and where figures are available the impact of such deep discounting on their bottom line in percentage terms is quite frightening, they only remain in business and supporting such deep discounting by volume.  But apart from distorting the end customer markets view of prices none of this alters the costs of production or manufacturers overheads.

Back in the 1980s, when Hornby insisted on minimum order quantities of 6, a retailer whom I knew well, told me that, when a customer ordered a locomotive, he would go to the cash and carry and buy it because he made more money that way than if he ordered 6 from Hornby and then had five of them sitting on the shelf for years.

CHRIS LEIGH

[edcayton]

 

 

Ben is of course absolutely right about the deep discounters - some of whom have made so little, per item, on some things it has paid other traders to buy from them and resell even with their own small discount

 

When my Dad had his corner shop back in the 70's/80's he could buy stuff like sugar cheaper from Sainsburys than through his wholesalers, and did so until sainsburys started limiting the amount per customer.

 

Ed

[Smiffy2]

Still a common sight in our bit of France to find a small restaurant owner in the supermarket with a trolley full of cheese, or something else on offer. And the plat du jour often represents what was on offer yesterday.

 

I once saw my cousin (chef) in his kitchen take an order for grilled pork chops, knowing he had none in, and send his daughter to the co-op two doors down to buy some. Obvious, really, 'Just In Time' stocking...

[Phil Parker]

Ben A has got this spot on in his post above.

I have read numerous threads and replies about price. The real issue here is what the manufacturers judge to be an 'acceptable' margin.

After all, if they reduced their margin, prices would come down. All these press announcements about China are a bit of a smokescreen. If sales figures plummet, watch the margin reduce.

When I walk into any other business, and the conversation turns to price, I am generally not confronted with a full-on PR campaign that gives me the whole gamut of excuses as to why prices have gone up.

I don't see Waitrose complaining that cattle feed or fertilizer has gone through the roof, or BMW warning me that the cost of raw materials and labour have doubled...

 

Regards

Igor

Prices paid to farmers by supermarkets for milk are widely reported to be less than the cost of production. No need to do a PR campaign when you can screw the producer.

 

If manufacturers and retailers are making such massive margins, how come we have so few manufacturers (at least one making a loss) and there isn't a model shop on every corner? Don't people want to get rich?

[Ian Hargrave]

Ben A has got this spot on in his post above.

I have read numerous threads and replies about price. The real issue here is what the manufacturers judge to be an 'acceptable' margin.

After all, if they reduced their margin, prices would come down. All these press announcements about China are a bit of a smokescreen. If sales figures plummet, watch the margin reduce.

When I walk into any other business, and the conversation turns to price, I am generally not confronted with a full-on PR campaign that gives me the whole gamut of excuses as to why prices have gone up.

I don't see Waitrose complaining that cattle feed or fertilizer has gone through the roof, or BMW warning me that the cost of raw materials and labour have doubled...

 

Regards

Igor

. But you are talking about large concerns which are able to a degree to absorb the rise in costs,not minnows such as all the model railway concerns.Yes,sales figures will plummet quite naturally....but we cannot yet predict a reduction in margin.We are in uncharted waters here.In practical terms,do you buy on release or wait to see if prices will reduce ?

[S.A.C Martin]

I have to agree with Andy regarding the GBL magazine models. I thought I was the only one who felt that the exercise was a cynical one. Not 'Great British Locomotives' but 'Great British Locomotives we can rip-off easily from other people's work'. Make a list of great British locomotives and you'll find some important prototypes which aren't listed by GBL because there's no 'OO' model that can be easily copied. I don't think it is unethical to buy the magazine. It is there to be bought and everyone must decide for himself whether he's Ok with  it. There are certainly far more unethical things to worry about. It won't affect RTR sales, of course, so it would be a waste of money for Hornby or Bachmann to take legal action. (To the best of my knowledge there were far more serious instances of piracy in the hobby but it has never proved worthwhile for aggrieved parties to take legal action). If it affects anything it would affect sales of other model railway magazines, so this post could well be seen as 'sour grapes'. I thought long and hard before posting, because I'm sure some folk will say, "Well, he would feel like that, wouldn't he?" In truth, I might not object so much to the rip-offs, if I had seen some evidence of genuinely researched, newly-tooled models of other Great British Locomotives - GWR Firefly, 'Hardwicke', 'Saint' for instance, that aren't rip-offs, in among those that obviously are. What's the betting we won't see an original 'Merchant Navy'?

CHRIS LEIGH

 

Oh undoubtedly it is cynical Chris, very much so. I think we're all agreed on that.

 

It's also - sadly in my view - a godsend for modellers because of the sheer lack of spares available.

 

I would not be amassing the spares I am in anticipation of the D11 providing some very much needed tenders, cabs, and other parts for potential GCR kit bashes if Bachmann provided certain parts separately. Same goes for the A4s and Hornby.

 

At the end of the day I - and others like me - are modellers and we see practical solutions to problems such as a lack of 1928 corridor tenders or potential for modelling, as the K3 is proving and the D11 no doubt will too.

 

The issue is twofold - it's a cynical exercise in producing approximations of RTR models, but equally the demand wouldn't have been generated if spares and general products from the major manufacturers were more readily available and in greater numbers. Gone are the days that tenders had their own R number in the Hornby catalogue, and trying to get hold of their limited stock is sometimes futile - or as with the Great Gathering A4s, has a number of issues in terms of QC.

[dibber25]

Yes, cabs, tenders and detail bits - a useful source of bits for the spares box, as Kitmaster and Airfix kits used to be. We're not likely to see the great boxes of RTR spares like East Kent used to have now that production runs are much more tightly managed and over-production of parts is not good practice any more. Shipping them round the World is also too expensive, compared to just picking them up from Margate. If one was going to rip -off existing models, though, it wouldn't have cost a fortune or taken much effort to find, say, a Kitmaster Stirling single to copy, which would broaden the range of Great Locomotives and, as a defunct model, wouldn't be likely to offend many people.

CHRIS LEIGH

[Adam1701D]

I wonder how badly the sales of the Corgi 1:120 static locomotives have been dented by GBL?

[Oldddudders]

 

I don't see Waitrose complaining that cattle feed or fertilizer has gone through the roof, or BMW warning me that the cost of raw materials and labour have doubled...

 

 

Both operate in a truly competitive market place. If you don't like the John Lewis (Waitrose) prices, you can go elsewhere, with a real range of choices. Similarly, BMW has several perceived competitors in the various levels of the market in which it sells, including other German marques. Hornby has traditionally dominated RTR OO modelling, is now on the back foot. Its key rival on affordable quality, if not volume, is similarly expressing concerns about how costs are moving - and adjusting prices accordingly.

[The Stationmaster]

. But you are talking about large concerns which are able to a degree to absorb the rise in costs,not minnows such as all the model railway concerns.Yes,sales figures will plummet quite naturally....but we cannot yet predict a reduction in margin.We are in uncharted waters here.In practical terms,do you buy on release or wait to see if prices will reduce ?

My view is that if you want it and can afford it then don't take a chance - not that such a course always works!  I think we can see quite clearly what happens in a number of examples - initial run is insufficient to satisfy the market so a second run follows and if the manufacturer gets the numbers right (far, far easier said than done) the second batch also sells out at the original price.  But if the manufacturer gets it wrong with the second batch and over-produces beyond what the market will buy then he will cut prices to clear his stock and/or he finishes up chewing into warehouse space.

 

A Hornby example is probably the Hawksworth coaches - big initial demand and a second batch followed, and have subsequently appeared in what amount to warehouse clearances and low prices at various retailers.  BTW that is just an example - Bachmann are no more immune from this kind of thing than are Hornby, hence their 'warehouse clearance' offers to the trade.  In reality prices are only likely to fall substantially if supply exceeds demand, and if a manufacturer gets into that position they are on the road to ruin but at least the closing down sale might bring some much lower prices.

[Legend]

Yes, cabs, tenders and detail bits - a useful source of bits for the spares box, as Kitmaster and Airfix kits used to be. We're not likely to see the great boxes of RTR spares like East Kent used to have now that production runs are much more tightly managed and over-production of parts is not good practice any more. Shipping them round the World is also too expensive, compared to just picking them up from Margate. If one was going to rip -off existing models, though, it wouldn't have cost a fortune or taken much effort to find, say, a Kitmaster Stirling single to copy, which would broaden the range of Great Locomotives and, as a defunct model, wouldn't be likely to offend many people.

CHRIS LEIGH

Yes customer service has gone out the window. Spare parts are not available only because manufacturers choose not to make them available, preferring modellers to buy a second or third model at full price instead. That's why Jason (and I think Dave ) are such refreshing changes in the market!

 

I do wonder as Hornby has outsourced manufacturing, and now logistics as well. What is left? Would they perhaps outsource management as well , and give it to Jason (don't fancy pre ordering, though) or Dave and do us all a favour. All that's left is the brand and it seems the current incumbents are bringing that into disrepute!

[Bernard Lamb]

All that's left is the brand and it seems the current incumbents are bringing that into disrepute!

It was the previous boss that did that.

The new fella does seem to be making an effort to improve the situation going by recent statements.

Bernard

[Paul Cram]

I can't claim to offer any representation for any party in saying this but I have had conversations, not just on this issue but previous debatable elements and they could end up spending a lot of money (which nobody has at present) chasing ghosts and shadows over who may have carried out any breach with unclear consequential losses and arbitrary opinions whether something is a copy if it differs in some respect. Look at how much money Apple and Samsung chuck at lawyers with no clear outcomes as an extreme example.

 

I know annoyance has been caused to those who we purport to support and it's alright saying that it hasn't cost the originator of the intellectual property any damage but, averaged out, it means the buyers of the product may spend less on other elements of the hobby so the loss potentially lies elsewhere, all because someone thinks it's OK to do it and a blind eye is turned to it by the beneficiary buyer.

As far as I am concerned when they start producing ready to run P4 models they will  have something to complain about by me buying the GBL ones. I buy very little ready to run as I throw most of it away and replace with scale parts.

[Andy Hayter]

Quote:

 

 

I don't see Waitrose complaining that cattle feed or fertilizer has gone through the roof, or BMW warning me that the cost of raw materials and labour have doubled...

 

Regards

Igor

 

Unquote

 

Exactly.  They just put up their prices in the knowledge that their competitors are in the same boat.