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Ok, maybe that is an oversimplification, but I think half the threads in Dakka end up trashing GW for being "greedy"

Just because it is a hobby to you, doesn't mean it isn't a business for them. They want to make money, and actually don't make that much, even with the 'overpriced' models and codices.

Just remember, if GW didn't make money the FAQ's and Codex updates would go from infrequent to never. Because they would be out of business.

Huge oversimplication. I personally think they could make more money by reducing prices on everything. Do you actually think the difference between the $5 it takes to produce the contents of a box and the $50 they sell it for is reasonable? Their current business practice and pricing is driving people away.

The value for money is what people are complaining about, not that GW is making money. Your premise is flawed.

Agreed. Doesn't cost 5 bucks neither.

asmith wrote:Huge oversimplication. ... Do you actually think the difference between the $5 it takes to produce the contents of a box

I think claiming it costs $5 to produce the contents of a box is also oversimplification. I have no idea what they pay their sculptors, but odds are that it's a living full-time wage. In the UK too. So, you got that cost to consider, as well as the cost to produce the molds. Maybe the raw plastic in a box comes out to about $5, but you have to realize that there is overhead that the final prices have to cover too. I don't know the figures. But, you have to figure that as a multi-million dollar public company, they've done some financial research that tells them that at $50, they need to sell X to cover the overhead, and at $45 they need to sell Y. And, given that they're a multi-million dollar, publically traded company, and we're sitting here on the internet, they might also have some sort of a clue about the reality of their claim that their product is price-inelastic.

I don't think there is anything wrong with their pricing. I see plenty of new people joining the hobby. I think their problems stem from a lack of care about the quality of their rules. Not their minis. The quality of the miniatures is excellent. Trained monkeys could do a better job with the rules though.

Notice how Warbiker Nobs only get one wound? I didn't until someone on another forum pointed it out. Simple things like that should not slip past their proofreaders.

What most people get upset about, I think, is we, the consumer, end up suffering for their horribly poor business model.

I want GW to succeed and make money, I really do. I pay full price for everything I buy (for the most part) by buying directly from GW and GW stores, as opposed to the ludicrious amount of discounts I could get elsewhere. I support the company!

But that's also why I get so frustrated when they raise their prices. Not because I'm paying more (ok, not ENTIRELY because I'm paying more). But because it's another reminder of how BADLY every employee there must've flunked out of business school.

It's really simple. GW increases prices because of drop in demand, and thus drop in profit. Demand drops because GW increases prices. Do you see the horribly catch-22esque loop they've locked themselves into?

Right now I imagine GW Financial meetings consist mostly of trying to figure out where the price should be set so it's just barely under the point that would force most fans to just give up. They're bleeding out the die-hards and dedicated as much as possible, because they know we'll pay these ludicrous prices.

I want GW to make money. Not by extorting the fanbase, but by doing some honest to god sales, some good ol' fashioned marketing!

The Apocalypse stuff was a step in the right direction, so there's hope for them yet.

Just as a bit of background I'm a product design engineer. If I'm off on the $5 figure it's not by much.

Assuming they run their molding machines @ $150/hr to cover operating and price of the machine (a reasonable, on the high side really, figure in my experience) and a 20s cycle time it costs .83 cents per sprue to actually run the machine. multiply by 5 sprues = $4.17

Now you have the one time cost of making the mold. Lets say it takes 2 man months to make the mold and you pay those guys $100,000 each per year (both are probably over generous) that's about $17000 add in a few thousand for materials and we have a nice round number of $20,000. Now you divide that by the sales until you decide to stop running the mold (most molds will run between 50 and 100 thousand shots before needing rework). Let assume they decide to redo the mold and make anew version when the original mold runs out. Worst case to pay for the sculpting and molds you pay $20000/50000 = .40 per box

Total = $4.57/box + $1.00 for packaging lets say $5.57 per box.

oops math error 200,000/6 = 34000 so 37000 for the molds so 37/50 = .64 per box for NRE so the total would be $5.81/box

GW states in their financials their costs ar 4% of their profit.

Don't worry about small details, look at the overall picture.

Despite such fantastic 'return', they are doing very poorly.

I know my loyalty to them is in investment, not to the company.

so really that $50 box costs them $2.00 to make? sounds reasonable to me. I estimated everything on the conservative side in the analysis above.

Wait 4% of profit or gross?

Profit if i remember correctly.

You can see the statement on the web on their investor site.

I think I found the "4%" you're refering to. Year-End 07 report, Page 7, Paragraph 2.

"The cost of raw materials, such as metal and
plastic, represents no more than 4% of our sales"

If that's the case then it's not profit and it's not addressing the overhead Asmith was demonstrating.

So using that estimate, it'd be about 7.81 per box.

Just a note.



And they're still losing money.

I want GW to make money. That's why I'm annoyed that their current policies seem so intent on losing money.

@ AlexCage: Actaully in that case it doesn't affect my estimates at all as the raw material cost is figured into the $150 per hour figure and the $1.00 for packaging. If I remember correctly polystyrene is roughly $1 per pound.

BTW metals are much much more expensive to mold. I don't really know the specifics since the molding done to produce these figures is pretty much only used to produce decorative figures and nothing really useful so I don't know cycle times etc.. So it really pisses me off when GW takes an all metal box, makes it all plastic, and INCREASES the price.

asmith wrote:Just as a bit of background I'm a product design engineer. If I'm off on the $5 figure it's not by much.

Assuming they run their molding machines @ $150/hr to cover operating and price of the machine (a reasonable, on the high side really, figure in my experience) and a 20s cycle time it costs .83 cents per sprue to actually run the machine. multiply by 5 sprues = $4.17

Now you have the one time cost of making the mold. Lets say it takes 2 man months to make the mold and you pay those guys $100,000 each per year (both are probably over generous) that's about $17000 add in a few thousand for materials and we have a nice round number of $20,000. Now you divide that by the sales until you decide to stop running the mold (most molds will run between 50 and 100 thousand shots before needing rework). Let assume they decide to redo the mold and make anew version when the original mold runs out. Worst case to pay for the sculpting and molds you pay $20000/50000 = .40 per box

Total = $4.57/box + $1.00 for packaging lets say $5.57 per box.

oops math error 200,000/6 = 34000 so 37000 for the molds so 37/50 = .64 per box for NRE so the total would be $5.81/box

Fantastic, and they must deliver it on the lollypop express and have dwarfs working for them day and night for no pay.

I own an import/export company and I do both wholesale and retail.

An item that costs me $.10 for has about $2.50 in overhead when selling single pieces retail, same item has less than $.001 overhead when selling selling 10,000 wholesale. I put $.10 per on the wholesale business, make about $1000 and do that in a couple of hours. For the retail, I have to sell the item for $5 to even be worth my time and I still make less per hour than I do on the wholesale side.

If all their costs were plastic and cardboard their stock would be worth 100x what it is today.

Asmodai wrote:I want GW to make money. That's why I'm annoyed that their current policies seem so intent on losing money.

This is probably the sentiment you hear most often. People
don't want GW to fail. If it fails, then 40k stalls at this moment,
the moment they all hate.

Now if 40k gets better they want it to fail then

I know what you guys mean. But I think GW is taking a stp in the right direction with the new ork boxes. You get 10 Orks one is a nob and 1 is a rokkit/big shoota and all that is only 22$. I'm pretty sure that's cheaper than orks were before. If only because you don't need nob and rokkit blisters anymore. If they keep lowering the contents of boxes but also lowering the price proportionally they might get back on track. As people (newbies) will see a box with 10 minis instead of 20 but 20$ instead of 35$ as cheaper.

I want GW's current plan to fail. As I am not happy with the way things are.
If GW was successful they wouldn't see fit to change anything, and that is bad.

The worse GW's financial position gets, the better, as many they might finally make some changes to their horrific design team.

I didn't read the whole thread.

The point is that GW does not live vets, or else can't find a way to do what vets want it to do, and most of Dakka is full of vets who are naturally Wiied off by the direction they see the company taking.

happypants wrote:

asmith wrote:Just as a bit of background I'm a product design engineer. If I'm off on the $5 figure it's not by much.

Assuming they run their molding machines @ $150/hr to cover operating and price of the machine (a reasonable, on the high side really, figure in my experience) and a 20s cycle time it costs .83 cents per sprue to actually run the machine. multiply by 5 sprues = $4.17

Now you have the one time cost of making the mold. Lets say it takes 2 man months to make the mold and you pay those guys $100,000 each per year (both are probably over generous) that's about $17000 add in a few thousand for materials and we have a nice round number of $20,000. Now you divide that by the sales until you decide to stop running the mold (most molds will run between 50 and 100 thousand shots before needing rework). Let assume they decide to redo the mold and make anew version when the original mold runs out. Worst case to pay for the sculpting and molds you pay $20000/50000 = .40 per box

Total = $4.57/box + $1.00 for packaging lets say $5.57 per box.

oops math error 200,000/6 = 34000 so 37000 for the molds so 37/50 = .64 per box for NRE so the total would be $5.81/box

Fantastic, and they must deliver it on the lollypop express and have dwarfs working for them day and night for no pay.

I own an import/export company and I do both wholesale and retail.

An item that costs me $.10 for has about $2.50 in overhead when selling single pieces retail, same item has less than $.001 overhead when selling selling 10,000 wholesale. I put $.10 per on the wholesale business, make about $1000 and do that in a couple of hours. For the retail, I have to sell the item for $5 to even be worth my time and I still make less per hour than I do on the wholesale side.

If all their costs were plastic and cardboard their stock would be worth 100x what it is today.

The average consumer dosent give a fig what it costs the company to make though, they only care about the bottom line-these 5 terminator models are costing me 10 dollars a piece. I dont want to pay that much money. I play with a regular group down at my lfgs, and every one of them-even the rich guy- complains about the cost. When I asked them what would they do if GW suddenly cut the price of the items in half, so 25 dollars for 5 termies or 5 dollars for a 10 dollar blister, every one of them said they would start a new army or greatly expand on their favorite, especially with the new apocolypse rules out.

Surely in their business they have to compare the lost profit of each individual item with the gain of greater bulk sales and new customers generated by removing fear of huge prices. There is no way with the way their business is set up that cutting the cost of their items by a substancial amount would not generate more profits in the long run.

Since you know more about business than me as I do not work in manufacturing, can I ask your honest opinion. Knowing what you know and with the information given from GW, dont you think lowering there prices substantially would turn more profits for them in the long run?

Fantastic, and they must deliver it on the lollypop express and have dwarfs working for them day and night for no pay.

I own an import/export company and I do both wholesale and retail.

An item that costs me $.10 for has about $2.50 in overhead when selling single pieces retail, same item has less than $.001 overhead when selling selling 10,000 wholesale. I put $.10 per on the wholesale business, make about $1000 and do that in a couple of hours. For the retail, I have to sell the item for $5 to even be worth my time and I still make less per hour than I do on the wholesale side.

If all their costs were plastic and cardboard their stock would be worth 100x what it is today.

I don't know what you think you are proving here... That GW should charge $20 instead of $50 for the box? If so then I agree 100%. A reasonable markup to cover overhead and a reasonable profit margin are perfectly fine. So $5 for the contents $5 for overhead and a 100% markup, all reasonable, is still offering good money for value. If you are thinking that the 500% markup is reasonable you've got your head in the sand.

AlexCage wrote:But because it's another reminder of how BADLY every employee there must've flunked out of business school.

It's really simple. GW increases prices because of drop in demand, and thus drop in profit. Demand drops because GW increases prices. Do you see the horribly catch-22esque loop they've locked themselves into?

Right now I imagine GW Financial meetings consist mostly of trying to figure out where the price should be set so it's just barely under the point that would force most fans to just give up.

Just to preface I am an account manager at an ecommerce company for consumer product manufacturers.

The above makes no sense. Decreases in demand means the price goes down. What really is going on is that GW goods are very price inelastic. This means that when prices are raised, profit goes up... to a point. The reason GW is raising prices is because doing so makes them MORE money, not less. They are probably hitting the point though where they can't raise them too much higher based upon the fact that they haven't had a real increase in awhile except for the army books (I don't include the so-called stealth increases).

GW is in trouble now because the economy is a little soft and a lot of specialty product manufacturers are not as strong as they were 3-4 years ago. Plus they are facing some new competition in the form of other miniature games and video games that are siphoning off some of the money that before was flowing to them.

Also, anyone who says that the $50 box of minis only costs GW $5 has no idea what they are talking about.

Ozymandias, King of Kings

$5 to manufacture is all I claimed, no more no less. Everyone likes to put words in my mouth though...

Decrease in demand means the price goes down if the person selling the item chooses for it to go down. This isn't the freaking stock exchange. GW sales has been going down for multiple years now because of this very reason.

asmith wrote:BTW metals are much much more expensive to mold. So it really pisses me off when GW takes an all metal box, makes it all plastic, and INCREASES the price.

Yep.

Charging the same $50 price as metal for those 5 SM Terminators is just criminal. Should be 5 for $35 like a standard squad...

After all, if you look at the mixed-metal Cavalry, they went from $8+ each to <$5 each as all plastic when boxed.

And they are putting NONE of that money into R&D??? Let's be reasonable here.

I agree GW overcharges, but they aren't making 900% profit on box sets. Or else their fiscals reports would be a bit brighter, now wouldn't they?

As for whether they'd make more if they charged less...this might come as a shock, but they do market research and run projections. While I think they are pricing themselves out of real sales, I think they should go with the research and not some customers on the board. That's what businesses do. Considering how much other items are sold for compared to what they cost, GW probably runs pretty average. And they haven't outsourced to child labor yet, have they? Is that worth something to you?

asmith wrote:$5 to manufacture is all I claimed, no more no less. Everyone likes to put words in my mouth though...

Decrease in demand means the price goes down if the person selling the item chooses for it to go down. This isn't the freaking stock exchange. GW sales has been going down for multiple years now because of this very reason.

You said it cost $5 to produce. You may have meant to manufacturer, so its either wrong or a huge over-simplification.

They have been increasing prices for a long time, only in the past couple of years have their sales started to slip. Claiming that the sales increase is causing the decline is simply not true.

Ozymandias, King of Kings

production and manufacture are the same thing.

Sales have started to slip in the overall picture only in the last couple of years. You are forgetting they added LOTR as a core game. They are below where they were pre lord of the rings. So sales of the other two games have been slipping before that.

Since I work in the industry I can give you some insight into why GW doesn't make that much money despite their high prices and the fact that they sell more miniatures than any other company.

The material costs for a $50 box is in fact about $5, so you might think GW makes a ton of money. Here is some things people don't think about:
1. The cost of producing a new model. Have you seen the quality on old school cheapo lead soldiers? They're not very detailed. There's a reason for that. You've got to pay the sculptors, and in the case of plastic kits the plastic engineers and design. You have to buy software, and of course buy tooling. On top of that, warehouse fees, store costs, employee fees, etc make a huge chunk. The material cost, I'd argue, especially without Chinese labor like my old company had, would be the LEAST of the expenses. Considering the baneblade has guns with the holes already in it and is a new type of kit, how much do you think the design and tooling cost? And if you think that plastic tooling is only a 10k expense, think about why no other company does plastic models of this size and detail...it's expensive. There's a reason why Reaper doesn't do plastic. It also helps that they don't have shops and that they rely on Chinese labor.

2. What does walmart or target do if a product doesn't sell? They get rid of it permanantly. Also, does walmart offer game tables? How about paint stations? Painting classes? If you want to play your playstation, can you go to walmart or target and plug into one of their TV's and play? Hey, right now sisters of battle don't sell well right now, let's DUMP them from our inventory. Hey, no one is playing at a game shop, let's dump the tables and turn off the lights. Doesn't work like that. When you return product to Costco, Costco just throws them back at the suppliers...it cost Costco nothing...which is why they are willing to offer such an insane return policy. GW doesn't have that luxury, but has just as nice a return policy.

3. If GW lowered prices 20%, would they get 20% more sales? If plastic terminators were 20% off, would you guys run out and buy a whole bunch of terminators? GW has learned that no, most players do not. Starting players buy the most stuff, and GW knows it. I have offered to all my friends brand new stuff below wholesale price. However, they already have a bunch of stuff, so no, they don't buy it. We're talking better than 50% and 20+ people who play the game have turned it down. Lowering prices gets ton of short term sales, but after a month or so, sales return to normal.

3. 3 employees and a manager work at a shop. Let's say the 4 make an average of 10 dollars an hour. It's probably higher than that, but it makes the math easier. If each person works 40 hours a week:
40*10 = 400 dollars a week * 4 people = $1600 a week. That's 83,200 a year from salaries alone. I can think of at least 5 shop in California alone. THat's already over $400,000 in Employee salaries. What's scary is if you read their financial report, the vast majority of their sales (over two-thirds) of their sales are from GW opened stores. The internet sales, which is kind of surprising considering you get the biggest discount on the internet, is the SMALLEST slice of the pie.

4. Lastly, this is not a mainstream industry. It is not for everyone. When people need money, they save their money for gas, food, and other necessities. People regularly buy vacuum cleaners, toasters, and computers. People do NOT regularly buy tabletop mini's. This is a niche industry. Tabletop mini's are not hollywood dvd's or gasoline. Only a few select people will buy it, and only in certain circumstances. Everyone talks of GW the big corporation in terms of standard economic practices. They're failing to understand how the toy industry works, especially a non-mainstream one.

Ozymandias wrote:

They have been increasing prices for a long time, only in the past couple of years have their sales started to slip. Claiming that the sales increase is causing the decline is simply not true.

Sales were so big in recent years because of the LOTR boom, I believe sales of WFB and 40K have been declining even before the recent woes of GW. LOTR was just a patch to cover that.

Competition does that. I think that's a good thing, because the pressure has forced GW to become a better company and rethink much of what happens. Lots have changed, but people have short memories and only tend to remember the bad, especially the bad of the past. Although honestly 3 years ago I'd say the company had some serious issues that are only being addressed now.

Oh, easiest illustration about why pricing is they way it is. Currently, the internet has the cheapest prices on brand new Gamesworkshop stuff. Warstore, battlewagon, wholesale stuff, etc.

Games workshop stores have the most expensive prices (full retail) on brand new Games workshop stuff.

Even though that is so, how come the vast majority of sales come from GW stores? Don't you think if selling to Independent retailers and the Internet made more money GW would abolish their stores?

I think GW has been slow to deal with the fact that it is no longer undisputed in the miniatures gaming industry. I understand that their business model primarily targets newcomers, however this is very short sighted due to a few factors:

1. Veterans promote the hobby. When veterans leave the hobby, they take their fully painted, and coverted armies with them. Instead, of having lovingly constructed armies as ambassadors of the hobby, you have little joey, and his pewter, plastic and red army of dual bolter wielding marines battling against his brother with his Necron shoebox horde of doom.

2. Veterans provide -steady income- as opposed to spike income. Steady income = cash flow and turnover of product. This is what keeps a business afloat as you turn product into money that can be invested into new product. Product that doesn't move is lost money. While having mass influxes of cash might seem tempting for GW management, it sucks for independents, since to be able to take advanage of the new player profit, they need to stock the whole line, and have a strong GW presence in the store to stimulate such buys - otherwise, the product doesn't move and becomes a millstone around the owner's neck.

3. Strength of word of mouth. GW time and again underestimates the power of word of mouth. I think they management is finally figuring out what guys like Jeff Hall, Dave Taylor and Rich Curen have known for years. You should -listen- to your veterans. You don't have to necessarily do what they say, but hell, these days, just knowing that GW listens is huge! The trouble with disaffected veterans is that they go to other systems.

I left 40k three years ago for Warmachine and am now only looking back because I had to move to an area with no Warmachine support. The entire time I was gone, I must have spent AT LEAST $2500 on Warmachine. THat's $2500 more than I spent on Warhammer. If 40k hadn't failed me 3x with the 4th Edition transport rules invalidating my Biel Tan Swordwind, having to wait 3 years for my new dex, and when it came out, the Codex shoehorned all the competitive lists into a Flying Circus... they could probably have kept my patronage, and that $2500 would have been theirs. While I was gone, I became an enthusiastic ambassador for Warmachine. Hell, we went from 1 player (me) and the store-owners at my FLGS to over 20 regulars in the course of a summer! - And the kicker was that the owner had been trying to sell 40k to his magic regulars for years, and we did it with Warmachine over the course of a few months.

Other problems with GW:

Pricing is a huge problem. Not the expense, (though it wouldn't hurt for them to lower prices 20%) but the horrible discrepancies in cost across regions. For example GW product is around 50% cheaper in the US than in AUS, and around 30% cheaper in the US than in CAN. Recently, the contents of the Canadian Apocalypse deals were cheaper to obtain by buying from the Warstore at 20% off US MSRP rather than through GW Canada. That's after the 42% savings off Canadian MSRP the deal offered!

Special rules supplements not only keeps veterans interested, but it gets new players excited as well. Privateer's NO QUARTER magazine has preview rules in it, and as such, keeps newbies and veterans interested in the game.

I did buy some stuff recently to try and "fix" my now illegal Chaos army, and the first band-aid fix cost me around $200 CAD (some more men to make my squads 10 men, a rhinos and the codex) and didn't even come close to fixing all the problems. While I know that every codex revision will require some purchases, I think it will be at least another hundred if not more, to get my army back into tournament shape. That's the cost of a COMPLETE WARMACHINE ARMY from scratch. GW's competition isn't going away any time soon, and if I didn't have to move way out into the middle of nowhere, I would never have come back to the hobby.

First off, thanks to everyone for making this such a wonderfully interesting thread.

Scuddman really says it all, although I think that his costing is WAY low. The toronto GW pays no less than $15k a month for rent, I know this because I know someone else who has a shop at the eaton centre which is slightly bigger and he pays $20k.

IMHO the biggest thing that holds people back isn't money, it is TIME. How many hours do you have to commit to the hobby? 5, 10, 15? If you have more you probably don't have a lot of money anyway and are using most of your funds to pay rent and food so if you have $100-$200 a month to drop on the hobby you are going to drop it, GW lowering their prices isn't going to make you get a higher income. And it isn't going to make anyone else have more free time.

I am probably one of the most guilty people, the ONLY thing I buy new is books. Everything else is either bartertown used or eBay used. I prefer it because I can play with the figs right away and paint them as time permits, oh and the fact that I can get them at 70% or more off retail, especially if I am able to get a half painted army, and move the unpainted stuff for double what I get painted stuff from people from on bartertown and they get new figs and I get my painted (often poorly) models that I can table the next day, although it is often after a bit of glue and TLC.

Anyway, I think that Apoc. will do a lot for their bottom line as well as being great for players, you can now table 2-3 times as many minis and play in near the same amount of time.