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 ZebioLizard2 wrote:

Did you ever take a course on economics out of curiosity?

Especially if someone took some economics he should understand why GW are acting the way they do. The relevant keywords are "demand function", "price elasticity", "opportunity/alternative costs" and "lock-in effect".

GW's advantage is - counterintuitively - that their prices are so high. Those who actually decide to get into the hobby and start an army have invested a considerable amount of money. Now the so called lock-in effect is simply that you can't just buy a few miniatures from another supplier and use them with your existing ones to play - you're locked with GW if you want to further use your previous 40k things.

The demand function in economics states (simplified) that you can either set a price and get a specific amount of demand in your market, or you want a specific amount of demand and have to set your price accordingly. What GW are doing is clearly setting the price. Price elasticity is a measure for telling how much more people will buy from you if you lower your prices or how much less if you raise them. Taken together you can find the settings for price and demand that optimise your turnover.

So what GW have with their customers is some sort of virtual monopoly, due to the lock-in. Sure, they will lose some customers at a given price level, but this is far less elastic ("price elastic") than in most other markets, cause the decision is not to go to a different supplier for an interchangeable good, but instead stopping 40k. And while some do this and/or do not buy stuff anymore from them, the tolerance with the rest is rather high, due to the high alternative costs (such people usually get called "fanboys" on internet boards ).

Most of the examples given in this thread do not really work. Gas stations have to do promotion actions and give aggregated rebates since the gas they are selling is interchangeable. You don't care from which station you get it. Same with Cinemas, you can see the same film. And so on.

So yes, in many cases bulk offers are a viable strategy. But I hope I could give you an understanding of a possible economic explanation of GW's behaviour.

That you might be pissing off those who you shouldn't piss off is a totally different story, though

I don't think anybody has doubted that they have a reason, just that their reason is ridiculous and just shows, IMHO, how out of touch and "ivory tower" they think they are. It's not only insulting to see a "collection" with zero savings, but it's also mind-numbingly stupid to present front and center such high prices for ultimately not a lot of things. A lot of their collections, not even getting into the outright insane "Who on earth would actually do this?" things like the entire SM Chapter for like ~$15,000, do nothing but show how expensive they really are. When you see something like 50 figures and 4 vehicles for $500 it makes you scratch your head because that's an awful small amount of models for a very high price that borders on ridiculous to expect someone has enough disposable income to just drop it in one shot on the collection versus buying the parts individually at a slower pace.

That last thing is what really gets me. I don't get who they are marketing those collections to. Not even getting into their prices, it's at least reasonable to expect somebody to make a purchase here and there for $100 or so, even a bit more than that if it's buying a bunch of things to get the core of an army. But paying a huge amount of money out of the door, especially for their collections which generally aren't even that good a selection for someone building a force, seems like it's just out there to be out there in the hopes some rich kid or person sees it and buys it just because they have that much money burning a hole in their pocket.

Here's something for you to consider. What constitues a discount?

How are GW being stupid and being out of touch in an "ivory tower"? That is ridiculous.

Think about it this way: If you want to field 2000 points why should they offer a discount? It is not a bulk purchase, it is one army.

One army.

Now if you were buying enough models to field ten 2000 point armies you might have a remote chance but what you think is bulk is, in reality, a simple small purchase.

I think your expectations are not really proportionate to the idea of what a "bulk" buy really is.

The easiest explanation would be that there are enough people buying it to justify doing those actions. Which would ultimately prove them right.

In the video game business, in conferences/talks it was always said that in Free 2 Play games you should always put in some ridiculously expensive (digital) item in your in game shop, since even if it is only 0.1% of all customers buying it, the turnover will already be more than 200 customers spending only 0.50 in average.

I guess we can assume that it pays for GW, or they wouldn't do it.

GW do offer bulk discounts to other traders, but what a regular collector calls 'bulk' probably isn't enough to peek their interest. Unlike many other commodities, such as food or electronics, miniatures don't really 'expire'. They also have a relatively high second hand value, and can even increase in value once OOP. If they gave large discount on armies then they would just get gobbled up by resellers and gaming groups splitting stuff, which would eat into their own sales. Most of their revenue comes from new players too. They expect to sell each person at least one army. It doesn't make sense for them to let people buy their entire collection at a discount.

I'm surprised they don't offer more of a discount on stuff like paint, but I don't see much point in discounting miniatures that they were probably going to sell anyway at full price.

You're conflating "discounts" with "wholesale."

GW offer their products at 40% off RRP before tax to third party retailers, in the context of this thread we're more realistically talking about 10-20% off.

Based on their own figures, they essentially double their money on their wholesale prices, so offering a discount to encourage greater spending and generate a little goodwill isn't really beyond them.

 Murenius wrote:
The easiest explanation would be that there are enough people buying it to justify doing those actions. Which would ultimately prove them right.

Given how rapidly their sales are falling I daresay GW have been proven very very wrong on this count.

I did not take any economics but some social psychology courses!
So did some research:

http://onlinebusiness.volusion.com/articles/using-the-psychology-of-discounts-to-make-more-money/
GW does remove the expectation of discounts which is a potential pitfall as outlined above.

http://www.psychologytoday.com/blog/consumed/201209/differentiating-discounts
https://www.linkedin.com/today/post/article/20130828112507-5670386-fuzzy-math-what-makes-something-seem-like-a-good-deal

https://medium.com/marketing-psychology/how-to-influence-consumer-buying-decisions-6aa4d51a598f
I like this article, think if GW increases prices across the board, waits a few months, then drops the price.
No "sale" just a change that is comparatively less than before.

http://trustedadvisor.com/articles/discounting-price-value-and-psychology
This completely backs-up the reasoning for no discounts.

http://www.psychologyofgames.com/2013/07/the-psychology-behind-steams-summer-sale/
Interesting techniques of putting things on sale, once a year and make it appear "random", "limited time".
Less "entitlement" behavior from the customer.

https://shopventory.com/blog/laws-of-price-strategy/
Some considerations for setting pricing, again, something GW appears to be following.

Just adds some bitterness to seeing GW is "doing it right" in some ways.

In a way, reading these articles we "deserve" the pricing we get due to the nature of customer we are.

It looks like the only logical reason for their decline is due to losing market share which this article outlines quite well:
http://hosted.comm100.com/knowledgebase/7-Ways-to-Increase-Market-Share-of-Business_A188.aspx?id=188&siteid=95439

Thanks all, this was of some interest!
Some of our "arguing" is understandable since much consumer behavior appears illogical (gasp!) and it is proven we are not reasonable when we set out to by our man dollies.

 jonolikespie wrote:

Given how rapidly their sales are falling I daresay GW have been proven very very wrong on this count.

Doesn't necessarily have a direct relation. Sales could be falling in other areas, but be ok with those bundles. Also, what the guy above said, a generally decreasing market or market share would result in falling sales throughout all sales channels.

 Azreal13 wrote:
discount to encourage greater spending.

If that were something they were interested in then they would do it across their entire range. Discounting army bundles would just enable customers to buy their stuff cheaper, which would essentially be the same thing.

It was not my intention to mislead. I was just pointing out that they may not consider an army bundle significant enough 'bulk' to discount. Wholesale is still a type of discount, which is presumably grounded in the idea of shifting a more significant amount (or range) of stock. While I understand there is a distinction, I don't think it is relevant. The end result in terms of money and stock is the same.

Around the initial launch of apoc a few years ago as their old retailer discount was much easier to get and if you brought in big enough numbers more generous. This lead to a large number of online only retailers selling at a big discount. This was further compounded by a small subset of retailers selling the sprues from the big apoc discount boxes separately doubling down on the discount (note this was against trading terms even then, most would stop once caught). Not every guard player wants or needs 9 leman russes at once, most would buy at least one at a compound discount of over 40%.

When GW had a rethink over their dealings with online retailers tightening up the trading terms and reducing discounts they also cut back on most of the discount boxes as well. We've seen a long price readjustment upwards from GW since this period and more and more restrictive online terms for retailers. I suspect this period they considered how much cash they were losing "letting" other people sell their goods as one online store is as good as another for a customer when the product and the price is the same, and decided that they wanted a far bigger piece of that pie. An online only store wouldn't help grow the hobby in an area or be anywhere near the hard work that a good FLGS is.

The final stage is to offer either additional value (that stupid cardboard box or the badges for example), loyalty schemes (service skulls) or discounts. Discounts are going to be tricky in the EU as there are rules, but elsewhere it seems to be fair game.

Buy two - get two full price!

And this is why I will never buy anything direct from GW. Massively overcosted.

I seriously wonder how they ever sell anything direct when you can just go to an independent and get stuff 25% cheaper. Or in my case, ebay.

Sad thing is I remember back in the day a lot of deals they would have in the back of White Dwarf. Armies at like 30% or more, buy two boxes get the third 50% off, not to mention that you could call up the Mail Order Trolls and sometimes they could get manager approval to give you a discount or deal on something if you were buying in bulk. Like hey I'm starting a new army and buying $200 worth of stuff, maybe throw in a free blister pack with a commander, or give me the codex at half price. And they would do that stuff all the time.

Of course that was also when their stuff was reasonably priced. When they increased the scale of the game, prices should have stayed roughly the same as they were then. $25 for 10 guys would be fine even nowadays.

Do you realize that $25 in 1995 had the same buying power as $38.82 in 2014, due to inflation?

So the current tactical marine squad for $40 is the same worth as $25.76 in 1995.

 Smacks wrote:

 Azreal13 wrote:
discount to encourage greater spending.

If that were something they were interested in then they would do it across their entire range. Discounting army bundles would just enable customers to buy their stuff cheaper, which would essentially be the same thing.

It was not my intention to mislead. I was just pointing out that they may not consider an army bundle significant enough 'bulk' to discount. Wholesale is still a type of discount, which is presumably grounded in the idea of shifting a more significant amount (or range) of stock. While I understand there is a distinction, I don't think it is relevant. The end result in terms of money and stock is the same.

Technically yes, but I've held trade accounts where I've set them up on the off chance of needing an alternate supply, and never used them, equally, if I called one of those accounts up and ordered one, low value item on one occasion, I'd still pay the wholesale price. Now, it isn't unusual for wholesalers to offer bulk discounts either, and I believe there is a tier system with GW for independents to that effect, but while. Bulk discount and wholesale do have a lot in common, they are different animals.

With regard to discounted army bundles, that isn't necessarily the only way to do things. Take the Land Raider for instance, they're what, £45 a pop right now? So you charge £90 for two, but perhaps £110 for three. By GW's own figures, a Land Raider costs them about £10 to make (actually a lot less, because I'm sure the Land Raider kit has long since recovered it's development and tooling costs, but we'll stick to averages for simplicity)

So two Land Raiders = £52 gross profit approximately at RRP once VAT and production costs have been accounted for.

Now, if I need two Land Raiders in this hypothetical situation, disregarding outside factors such as other retailers offering discounts etc, what incentive do I have to buy a third? Absolutely none.

Now, if there's a three pack available, that essentially offers the third kit for half price, the dynamics of my decision making as a customer change. I only require two, but for a relatively small amount extra, I can has three. The financials still work in GW's favour, they are making more money selling you three than selling you two, but simultaneously I'm gaining from the deal too. So I decide to spend £20 extra than I intended, I get an extra LR and GW earn more cash.

This is why discounts are a good thing, they encourage the customer to spend more, but solicit a feeling of good will at the same time because they're getting increased value, and make the company more too.

GW don't appear to share that attitude, they appear to view selling a third kit at a discount as money lost, rather than money gained, because why wouldn't you buy three anyway?

Of course, if I wanted three Land Raiders, then GW have made less from me than they would if selling me three single kits, but then you have to factor in all the intangibles - am I predisposed to spend more in the future because I feel better treated as a customer? Do I spend just as much anyway on some other products because the cash is now "free money?" Do I start a whole new army because the multi purchase discounts tip the cost in favour of what I can spend and result in me spending hundreds of pounds?

One cannot ever accurately assess how much or how little of an impact those sort of factors have, because one cannot accurately assess all of the product one doesn't sell,but these sorts of factors are definitely at play.

Now, I'm not saying every single item that GW sell should be offered at a discount if bought in multiples, but to offer key things that are required to build a typical army as a multi buy discount makes sense for all involved. Someone at GW obviously agrees, we've seen the squad + transport deals recently, hell, it isn't even alien to GW, Rhinos used to come three to a box, and further development in that direction is likely to be positive for everyone.

 Murenius wrote:
Do you realize that $25 in 1995 had the same buying power as $38.82 in 2014, due to inflation?

So the current tactical marine squad for $40 is the same worth as $25.76 in 1995.

I was making the point that they've always been overpriced, but $25 would be acceptable today as opposed to 10 years ago.

WayneTheGame wrote:

 Murenius wrote:
Do you realize that $25 in 1995 had the same buying power as $38.82 in 2014, due to inflation?
So the current tactical marine squad for $40 is the same worth as $25.76 in 1995.

I was making the point that they've always been overpriced, but $25 would be acceptable today as opposed to 10 years ago.

What is difficult is to compare what is "fair" pricing, some quotes from my above links:

Price-Quality Effect- Customers worry less about the price if higher prices denote higher quality. Creating a perception of exclusivity, rareness or quality will persuade the buyer to be ok spending more. The product itself doesn’t need to be of the highest quality. If the branding denotes a high-quality ethos, customers will spend.

Looks like Kirby is trying this method to justify cost, all we have to do is believe him...

And plenty of people do, just check out the most-recent "why do you like 40K?" threads.

And obviously they do this well since we've got a lot of people here who claim to be pissed off by GW, yet spend their precious life time bashing them instead of just ignoring it. I guess that's part of why GW feel like they can get away with everything - people not talking about their stuff is worse than people trash talking about it.

 Murenius wrote:
And obviously they do this well since we've got a lot of people here who claim to be pissed off by GW, yet spend their precious life time bashing them instead of just ignoring it. I guess that's part of why GW feel like they can get away with everything - people not talking about their stuff is worse than people trash talking about it.

Likelihood is that for every person on here grandstanding about how gak GW are and how they're quitting, there's a good number more that simply slip quietly away.

 Murenius wrote:
And obviously they do this well since we've got a lot of people here who claim to be pissed off by GW, yet spend their precious life time bashing them instead of just ignoring it. I guess that's part of why GW feel like they can get away with everything - people not talking about their stuff is worse than people trash talking about it.

Seriously, why does every pro-GW post inevitably boil down to dismissing anyone critical about the company as haters who just bash GW to bash GW?

GW is acting as if it is operating in a vacuum, that nobody else operates in their market. That way there is no need to compete and offer deals, etc to win and retain custom.

In the strict sense they are right, in that nobody else makes actual 40K miniatures BUT there are many competing wargames which GW customers can switch to playing.

GW clearly take the attitude that their own brand is so much better, in terms of quality and range of figures, fluff, community, etc, etc that they are not really competing with the 'lesser' games, that people who are 'fickle' enough to move aren't worth retaining.

Either that or they take the Aston Martin approach, that their's is the luxury brand in the market, the aspirational range and to discount actually undermines that. Let the 'lesser' brands compete and scrabble for business, our stuff sells itself and gamers aspire to the luxury element, showing off their wealth and success by buying GW products. If they want to position themselves in that niche then they actively don't want either to enter any kind of discounting as it devalues the luxury element or want those customers, "if you have to ask the price you can't afford it".

Sadly I think they are mistaken. They have locked themselves into a position where they don't and won't discount, but have not achieved the desired luxury, aspirational position. Their drop in sales indicates that their prices, offering and/or business practices are putting off customers.

For my money they are a company locked into an old-fashioned position. They were the only game in town for years, their products were so far ahead that they were aspirational, serious gamers wanted their figures which were hugely superior in design and quality than others. Their products sold themselves. their management took this for granted and a few years ago decided to take advantage and begin a steep price increase. Their timing was wrong. This came at the time when PP and others were starting to really get going and there now was an alternative. Any players not absolutely loyal to GW who wanted to just play a wargame and collect minis could switch and the price pressure encouraged them to do so.

Since then the situation has only grown worse, high prices and no offers have locked them into a reliance on charging large sums in order to keep up profits and pay dividends. Any sane company with some operating capital and no debts would respond to falling sales by trying to broaden sales, looking for strategies to increase sales even if it meant less unit profit. Their management must know that they need to broaden their sales base and actual sales numbers. Otherwise they will become dependent totally upon high prices to keep them afloat and their room for manoeuvre will be gone.

Personally I have zero interest in anyone else's games, it's GW or nought for me. However, many of my friends don't feel like that. They like games and aren't totally wedded to GW's brand and background. They are willing to switch if they feel they can get more bang for their bucks, so guess what - they've switched. They don't aspire to return to GW forced away by a lack of wealth on their part but always aspiring to be GW buyers. They see PP and see less £$ and go for it.

GW had a golden opportunity to open up to outside influences and learn from experts in other retail fields, infuse themselves with new blood and change things - they needed a new CEO. BUT instead of sensibly looking outside and recruiting, a brave and sensible company would have poached the CEO of the most successful rival who'd eaten into their profits, learn and adapt. The fact that they promoted from within is a poor reflection. 20% sales fall, so let's have more of the same? Are they mad? Clearly the guy is Tom's puppet and he will continue in charge from behind the scenes.

The way they run the company still leads me to believe that the senior people see it as a mine. they have no interest or empathy with games and merely bought it as a vehicle to maximise their pensions. Bizarre shenanigans like spending £4m on a website that should have been far cheaper suggest clever-clever money flows, etc. I'm not suggesting any wrongdoing, merely a leadership who see GW as a way to mine out cash for their pensions. They don't care what happens after they retire, there is no long-term planning as far as I can see. They operate like a firm trying to maximise profit now sacrificing long term growth and stability. It's as if the price rises coincide with someone at the top thinking "I'm not getting any younger, let's go up a gear and take as much as possible before I have to retire".

However, there are some encouraging signs for me. The new release schedule, the End Times, etc. Miniature quality is as high as it's ever been. Still the CEO thing left me stunned and upset if I'm honest. I genuinely fear that GW have lost their chance of reform and survival, picked Tom's clone and effectively committed long-term suicide.

WayneTheGame wrote:

Seriously, why does every pro-GW post inevitably boil down to dismissing anyone critical about the company as haters who just bash GW to bash GW?

I'm not pro-GW. I just see the world in a bit more complex way than "pro GW" and "contra GW". I never stated that I find it good what GW does. In fact I'd prefer cheaper models and more friends in the hobby. But I understand why they do their strategy. And I hate it when people try to make the world easier for themselves by ignoring facts and dividing everything in "for me" and "against me".

 Azreal13 wrote:
Now, if there's a three pack available, that essentially offers the third kit for half price, the dynamics of my decision making as a customer change. I only require two, but for a relatively small amount extra, I can has three. The financials still work in GW's favour, they are making more money selling you three than selling you two, but simultaneously I'm gaining from the deal too. So I decide to spend £20 extra than I intended, I get an extra LR and GW earn more cash.

I would just buy three and put one on ebay for ~£30, or go splitsies with a friend. As I said before, landraiders don't expire, and there would probably be enough people selling their extra that you would never be able to NOT get a new land raider for £30. Why would anyone buy the £45 one? It's just gonna eat straight back into their own sales.

You can't underestimate this. The thriving 2nd hand market is a big issue for GW. Stuff that's 20 years old and painted is still circulating, being stripped down and resold, competing with new stuff.

I don't disagree that discounts generally would lead to more sales. If land raiders were £15 each I'd probably buy about ten. At £25 each I'd get a couple. At £45 I won't buy any. I have always wanted one, but I never quite felt they were worth splurging on. I don't know what the optimum price point is. My instinct tells me that it is a lot less than they are charging now, but I see a lot of people on dakka who are still buying and starting new armies, so what do I know? If their current price is optimal, then I see no reason to undermine that by offering discounts and saturating the market further with cheap stuff.

A thriving second hand market cannot exist without a thriving primary market.

Where would all those Land Raiders people are buying on eBay for £30 come from?

If people weren't buying them new from GW, then the supply would start to dry up, prices would rise and people would start buying them new again.

The web bundles shouldn't be thought of in the context of "3 for the price of 2" style offers, but more akin to a mannequin in a shop window wearing a combination of clothing items to show the consumer what a whole "outfit" may look like.

 Bottle wrote:
The web bundles shouldn't be thought of in the context of "3 for the price of 2" style offers, but more akin to a mannequin in a shop window wearing a combination of clothing items to show the consumer what a whole "outfit" may look like.

Meh...I think its a bit dishonest. I don't begrudge them the right to do it or anything, but when people see bundles, they assume discounts, and it's a pretty clear trap for people without enough common sense to check the pricing, or especially for people unfamiliar with the game trying to drop a load for that special 40k gamer in their life.

Its an impulse buy sell. Or a knowledge-less customer sell.

AllSeeingSkink wrote:

 Ailaros wrote:
This is all just an entitlement mentality, nothing more.

No it's not, it's reality. You are doing the retailer a favour by buying in bulk. The retailer does you a favour by offering you discounts and benefits. This is how it works more often than not. Hell, I'm not even a retailer, but we offer services on a day by day basis. If someone employs our services for several days instead of just one, we offer them a discount, we go the extra mile to tailor our services to them, we are more inclined to put in a few hours of overtime to make sure they're going away happy.

It's not entitlement mentality at all. It's the reality of how goods and services work, if you buy in bulk you are making the retailer more money faster and for less work.

When a retailer offers a bundle that gives no discount it's not only surprising for people but it's insulting the customer base's intelligence.

GW act like selling miniatures would be awesome if it weren't for all the pesky customers getting in the way of those wallets.

Several times in the past I have advanced the notion is that GW's ideal business model would to have a web store and customers put their credit card in and spend money.

The money goes to GW's account, nno models or rules result, and that is Teh HHHobby.

 Azreal13 wrote:
A thriving second hand market cannot exist without a thriving primary market.

Where would all those Land Raiders people are buying on eBay for £30 come from?

As I said, land raiders don't expire. I've bought and sold stuff on ebay that I know has been owned multiple times. But that is beside the point. I already explained where the £30 land raiders come from. They come from people buying the cheaper three pack and splitting it instead of buying three single packs.

If people weren't buying them new from GW, then the supply would start to dry up, prices would rise and people would start buying them new again.

I didn't say people wouldn't buy new. I said they wouldn't buy new for £45.

GW is expensive enough that many people will view bulk buying and splitting as a means of saving money. This means rather than selling more land raiders, they would just be selling roughly the same amount for less money. A few extra impulse buys probably isn't going to offset all the people who would stop buying a single pack for £45.