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Deadnight wrote:

However, I would add the caveat that I expect gw to be polite, but when I walk out the door, they don't care what I do with their stuff, and I dont care that they dont care. I actually mean that nicely, gw and I don't have an emotional relationship, the hobby is my own, and how I interact with it and how I enjoy it is up to me.

Yep, by "nice" I meant in a business decisions sense, not the interaction with their employees. Which, by the way, was been abysmal during the pandemic. I have simply stopped ordering from them because not only you pay a premium on the product (not even considering 3rd party or recasts, official product), but their webstore simply sucks (lost deliveries, delays, etc.).

Deadnight wrote:

Gw gaming, and tabletop gaming itself can be frighteningly expensive and also surprisingly affordable and with great value. It depends on how you approach it. I was stripping some iron fang pikemen the other day for repainting (I know, pp models but the principles are the same). Metal tab said 2003, and I've had those dudes since the mid naughties. And I'm still planning uses for them. I can't say my fancy trainers will be in use 18 years from now.

Oh, I also have lots of old models. Still, when I say expensive, I mash together cost per model and the fact that GW are making out like bandits, their margins are gross. All products could be discounted 50% overnight and it would still be viable.

Deadnight wrote:

Regarding the shark pool, you have to realise gw wanting our cash for their products is only one side of the coin. The players are just as ruthless if not more so. If there are sharks, in my mind a lot of them are our peers, not just evil.corporate gw and swimming with the sharks, or not, is our choice.

Consumers, shark-like? Possibly, but they are far less organized and scary than a large corporation. I have no sympathy for them over us.

Grey40k wrote:

Deadnight wrote:
Gw gaming, and tabletop gaming itself can be frighteningly expensive and also surprisingly affordable and with great value. It depends on how you approach it. I was stripping some iron fang pikemen the other day for repainting (I know, pp models but the principles are the same). Metal tab said 2003, and I've had those dudes since the mid naughties. And I'm still planning uses for them. I can't say my fancy trainers will be in use 18 years from now.

Oh, I also have lots of old models. Still, when I say expensive, I mash together cost per model and the fact that GW are making out like bandits, their margins are gross. All products could be discounted 50% overnight and it would still be viable.

While I have no doubt that GW's prices could be lower and the company still be viable - and without having access to their financials - I doubt a 50% reduction is realistic.

That retail network costs a pretty penny, for one thing.

There’d also be peeps understandably pissed they paid the old price immediately before the lower one kicked in.

GW’s prices are what they are.

 Mad Doc Grotsnik wrote:
There’d also be peeps understandably pissed they paid the old price immediately before the lower one kicked in.

GW’s prices are what they are.

Not to mention there are some people who keep projects, still in shrinkwrap, until they get to them.

 Dysartes wrote:
While I have no doubt that GW's prices could be lower and the company still be viable - and without having access to their financials - I doubt a 50% reduction is realistic.

That retail network costs a pretty penny, for one thing.

Their shareholder reports have consistently shown them making money hand over fist despite the costs of the retail network. The non-R&D production and transportation costs of raw product are comparatively minimal (especially when so much isn't carried in stores and ships directly from the warehouse), so their income is largely a function of volume and price.

The report doesn't distinguish between revenue from different sources, but even if model sales account for 100% of it and they're not getting income from anywhere else, they could cut prices to 75% of current value- with no increase in sales, and no reduction of operating costs- and still turn a profit. If they cut prices in half and increased volume of sale by 40%, they'd still remain profitable. It's more plausible than you might think.

GW's prices aren't based on what they need to keep the lights on; they're based on being a publicly traded company with a goal to grow year-after-year by maximizing profit. It's more profitable to keep high prices and sell to a smaller customer base of whales than it is to price towards accessibility and optimize for volume of sale. How sustainable this is in the long run remains to be seen, and if market forces dictate that the loss from driving customers out with higher prices becomes greater than the gain from higher per-sale revenue, they'll readjust.

 catbarf wrote:
GW's prices aren't based on what they need to keep the lights on; they're based on being a publicly traded company with a goal to grow year-after-year by maximizing profit. It's more profitable to keep high prices and sell to a smaller customer base of whales than it is to price towards accessibility and optimize for volume of sale. How sustainable this is in the long run remains to be seen.

I'd say GW has been "overpriced" for at least 2 decades, so it seems pretty viable. Is it getting worse, in inflation adjusted prices? I have seen all kinds of examples one way or another, I'd love to get a recent reference.

In any case, this is just the plain truth. GW is owned by a bunch of investment funds and is committed to "market domination", with the "high margins" that brings. Which, for the consumer, is pretty bad.

And yes, astonishingly high margins, just compare across industries.

Welcome to capitalism.

Shock horror....it's almost like your hobby is not their hobby.

Radical thought;
1) Stop producing codexes in their current format. You don't need about 75% of the stuff in them anyway, or do you need paintings and regurgitated info to play the game?

2) Compile the rules into booklets and release them in White Dwarf. I reckon that with all the non-relevant information codexes contain removed you could have all the booklets done in three months.

3) How many codexes do you need anyway? Basically they are just released to compile faqs for their errors which they expect us to pay for and them to make more money.

Simplistic? Maybe. But I've been searching for missing bits from my Darkshroud for the past week and I haven't found them. I'm on a mission! And I'm not happy about it!

 Mad Doc Grotsnik wrote:
Welcome to capitalism.

Capitalism? Welcome to market power 101. No economist I know who defends market based approaches defends market power (as in the quasi-monopoly GW has).

Slipstream wrote:
Radical thought;
1) Stop producing codexes in their current format. You don't need about 75% of the stuff in them anyway, or do you need paintings and regurgitated info to play the game?

2) Compile the rules into booklets

Welcome to Warhammer 40,000 3rd Edition!

Seriously though, the lack of lore, art and painting examples would be a big turn off for me. Not everyone has stacks of previous editions to draw on. Last time I played the Great Rift was only a glimmer in the Eye of Terror and the Necrons had just become an army as opposed to a trio of Androids in Space Crusade. Having it all in the Codex is the obvious place for all the lore/art to live.

 Horla wrote:

Slipstream wrote:
Radical thought;
1) Stop producing codexes in their current format. You don't need about 75% of the stuff in them anyway, or do you need paintings and regurgitated info to play the game?

2) Compile the rules into booklets

Welcome to Warhammer 40,000 3rd Edition!

Seriously though, the lack of lore, art and painting examples would be a big turn off for me. Not everyone has stacks of previous editions to draw on. Last time I played the Great Rift was only a glimmer in the Eye of Terror and the Necrons had just become an army as opposed to a trio of Androids in Space Crusade. Having it all in the Codex is the obvious place for all the lore/art to live.

The better way to go about codexes would be to have a nice glossy background book per faction which would remain in print across multiple editions (rather than most current codex background being copy-pasted from previous books), and then a cheap/free rules document which could be updated as required.

 catbarf wrote:

 Dysartes wrote:
While I have no doubt that GW's prices could be lower and the company still be viable - and without having access to their financials - I doubt a 50% reduction is realistic.

That retail network costs a pretty penny, for one thing.

Their shareholder reports have consistently shown them making money hand over fist despite the costs of the retail network. The non-R&D production and transportation costs of raw product are comparatively minimal (especially when so much isn't carried in stores and ships directly from the warehouse), so their income is largely a function of volume and price.

The report doesn't distinguish between revenue from different sources, but even if model sales account for 100% of it and they're not getting income from anywhere else, they could cut prices to 75% of current value- with no increase in sales, and no reduction of operating costs- and still turn a profit. If they cut prices in half and increased volume of sale by 40%, they'd still remain profitable. It's more plausible than you might think.

GW's prices aren't based on what they need to keep the lights on; they're based on being a publicly traded company with a goal to grow year-after-year by maximizing profit. It's more profitable to keep high prices and sell to a smaller customer base of whales than it is to price towards accessibility and optimize for volume of sale. How sustainable this is in the long run remains to be seen, and if market forces dictate that the loss from driving customers out with higher prices becomes greater than the gain from higher per-sale revenue, they'll readjust.

Selling more increases overhead. Not sure I understand the 75% point, either.

Last yearly they pulled in 269.7 of which 16.8 was royalties, so 252.9. If they made 75% of that ( 63.2 ) and with overhead costs of 179.7 that would make them in the red by 116.5.

Am I missing something?

Slipstream wrote:
Radical thought;
1) Stop producing codexes in their current format. You don't need about 75% of the stuff in them anyway, or do you need paintings and regurgitated info to play the game?

2) Compile the rules into booklets and release them in White Dwarf. I reckon that with all the non-relevant information codexes contain removed you could have all the booklets done in three months.

3) How many codexes do you need anyway? Basically they are just released to compile faqs for their errors which they expect us to pay for and them to make more money.

Simplistic? Maybe. But I've been searching for missing bits from my Darkshroud for the past week and I haven't found them. I'm on a mission!

That is a radical thought, and also one of absolutely no benefit/attraction to GW.

 Lord Damocles wrote:

The better way to go about codexes would be to have a nice glossy background book per faction which would remain in print across multiple editions (rather than most current codex background being copy-pasted from previous books), and then a cheap/free rules document which could be updated as required.

The problem is that the man-hours spent working on rules are the expensive part. The fluff and art provide GW with the opportunity to sell the product for a higher price because of 'production values', but it actually makes very little difference to the costs.

 Daedalus81 wrote:
Selling more increases overhead.

With plastic injection molding, especially for product being stored in a warehouse on-site and sold online, it's basically irrelevant. The overhead comes from R&D, game designers, the massive retail business, and corporate costs, while the actual per-unit cost of manufacture and sale is negligible. It's very different from resin casting, which being a labor-intensive process with expensive raw materials has a significant cost of manufacture that sets a price floor.

 Daedalus81 wrote:
Not sure I understand the 75% point, either.

Last yearly they pulled in 269.7 of which 16.8 was royalties, so 252.9. If they made 75% of that ( 63.2 ) and with overhead costs of 179.7 that would make them in the red by 116.5.

Am I missing something?

I was going by some older figures. It now seems that in the six months prior to Nov 2020, they had a total revenue of 188.2 million, and a reported operating profit of 93.2 million. So I take it back: The most recent numbers indicate that GW could, at present, cut their revenue exactly in half, and still be profitable. I doubt the current situation will sustain long-term, but it is what it is.

I am not arguing that GW 'should' be slashing prices across the board, only that the idea that their prices reflect somewhere near the minimum to sustain their business does not track with their wild profitability over the last few years. There's just no objective way to say what a product like this 'should' cost; the same goes for movie DVDs, music MP3s, or any other product where the cost of manufacture is minimal but has to offset large fixed costs.

Edit: Also you just calculated them making 25% revenue. 75% of 252.9 is 189.7, putting them ahead of the operating costs by exactly 10 mil, plus the 16.8 for royalties.

 catbarf wrote:
Edit: Also you just calculated them making 25% revenue. 75% of 252.9 is 189.7, putting them ahead of the operating costs by exactly 10 mil, plus the 16.8 for royalties.

Ah, ok that's where I screwed up. So reduce prices by 25%, effectively.


Automatically Appended Next Post:

 catbarf wrote:
75% of 252.9 is 189.7, putting them ahead of the operating costs by exactly 10 mil, plus the 16.8 for royalties.

That's razor thin and leaves little room for re-investment, salary increases, material / shipping increases, etc. Royalties you never count on having.

 Mad Doc Grotsnik wrote:
There’d also be peeps understandably pissed they paid the old price immediately before the lower one kicked in.

I don't think that's a big enough concern to be a reason against lowering them.

 Daedalus81 wrote:

 catbarf wrote:
Edit: Also you just calculated them making 25% revenue. 75% of 252.9 is 189.7, putting them ahead of the operating costs by exactly 10 mil, plus the 16.8 for royalties.

Ah, ok that's where I screwed up. So reduce prices by 25%, effectively.


Automatically Appended Next Post:

 catbarf wrote:
75% of 252.9 is 189.7, putting them ahead of the operating costs by exactly 10 mil, plus the 16.8 for royalties.

That's razor thin and leaves little room for re-investment, salary increases, material / shipping increases, etc. Royalties you never count on having.

https://investor.games-workshop.com/wp-content/uploads/2021/01/001-v-1-2020-21-half-year-report.pdf

Check the income statement, page 9. There is no "razon thin" margin for price cuts, nice profits from selling plastic crack from the pandemic.

As catbarf said, they could slash prices in half (sort of assuming all revenue is from sales), and even if that didn't lead to more sales, they would just break even.

Obviously these are silly theoretical exercises, it is just meant to illustrate that high pricing is reflective of market dominance, not high production and distribution costs.

 Daedalus81 wrote:
That's razor thin and leaves little room for re-investment, salary increases, material / shipping increases, etc. Royalties you never count on having.

Razor thin? That's a 13% profit margin. Even without royalties (and you don't just ignore those, it's still revenue), it's about 6%. The average profit margin in the US is under 8%, and 5% is usually what's considered 'thin'.

If GW were showing a 13% profit year-after-year, they'd be considered a successful company, beyond the 10% figure considered healthy. The 33% for last year is, by all accounts, astronomical success.

They're not riding the margins. They could cut their revenue to 3/4 of its current value and they still wouldn't be riding the margins. They're doing great. The prices are set where they are because they can and we keep buying it, not because it's what they (currently) need to stay in business.

Grey40k wrote:


Check the income statement, page 9. There is no "razon thin" margin for price cuts, nice profits from selling plastic crack from the pandemic.

As catbarf said, they could slash prices in half (sort of assuming all revenue is from sales), and even if that didn't lead to more sales, they would just break even.

Obviously these are silly theoretical exercises, it is just meant to illustrate that high pricing is reflective of market dominance, not high production and distribution costs.

I'll preface this by saying that GW can certainly cut prices but, but a 25% cut basically means they can't grow the business. 50% isn't even remotely feasible. I'm NOT stating that GW is in any sort of difficult financial position.

Bear in mind that 52% of revenue is through Trade. Trade is already 50% off. GW doesn't pocket the portion that the FLGS keeps. That means GW sells two thirds of its kits through Trade. This is why you see them pushing those limited keys and such online to drive some sales to the highest profit business ( retail is really low ).




Automatically Appended Next Post:

 catbarf wrote:

 Daedalus81 wrote:
That's razor thin and leaves little room for re-investment, salary increases, material / shipping increases, etc. Royalties you never count on having.

Razor thin? That's a 13% profit margin. Even without royalties (and you don't just ignore those, it's still revenue), it's about 6%. The average profit margin in the US is under 8%, and 5% is usually what's considered 'thin'.

If GW were showing a 13% profit year-after-year, they'd be considered a successful company, beyond the 10% figure considered healthy. The 33% for last year is, by all accounts, astronomical success.

They're not riding the margins. They could cut their revenue to 3/4 of its current value and they still wouldn't be riding the margins. They're doing great. The prices are set where they are because they can and we keep buying it, not because it's what they (currently) need to stay in business.

??

Their costs were 197.5M. 75% of 269.7 in revenue is 202M. That means 4.5M profit or 2.2%. A 2% increase in costs would almost put them in the red.

Cutting prices by 25% is not practical in the least. Unless I've done some math wrong again?

 Daedalus81 wrote:
??

Their costs were 197.5M. 75% of 269.7 in revenue is 202M. That means 4.5M profit or 2.2%. A 2% increase in costs would almost put them in the red.

Cutting prices by 25% is not practical in the least. Unless I've done some math wrong again?

The figures you gave for last year a few posts ago were 269.7 mil in revenue, of which 16.8 million is royalties, with overhead costs of 179.7 mil. So that's 252.9 mil in non-royalty revenue. Cut that to 3/4 (I specifically said non-royalty revenue, since we're talking about model costs), and it's 189.7 mil. Add back in the royalties, hypothetical revenue is 206.5 mil. Over 179.7 mil costs, that's 26.8 mil profit. 26.8 / 206.5 = 13% profit margin.

In the latest report, the one I and Grey40k were referring to, they show 188.2 mil in revenue over the last six months, of which 93.2 mil is profit. That's a straight up 50% profit margin. That's nuts. At 3/4 current revenue they'd still have a 33% profit margin.

Where does the 197.5 come from?

 catbarf wrote:

 Daedalus81 wrote:
??

Their costs were 197.5M. 75% of 269.7 in revenue is 202M. That means 4.5M profit or 2.2%. A 2% increase in costs would almost put them in the red.

Cutting prices by 25% is not practical in the least. Unless I've done some math wrong again?

The figures you gave for last year a few posts ago were 269.7 mil in revenue, of which 16.8 million is royalties, with overhead costs of 179.7 mil. So that's 252.9 mil in non-royalty revenue. Cut that to 3/4 (I specifically said non-royalty revenue, since we're talking about model costs), and it's 189.7 mil. Add back in the royalties, hypothetical revenue is 206.5 mil. Over 179.7 mil costs, that's 26.8 mil profit. 26.8 / 206.5 = 13% profit margin.

In the latest report, the one I and Grey40k were referring to, they show 188.2 mil in revenue over the last six months, of which 93.2 mil is profit. That's a straight up 50% profit margin. That's nuts. At 3/4 current revenue they'd still have a 33% profit margin.

Where does the 197.5 come from?

The 269.7 is excluding royalties. 73.2 is operating profit. That gives us 197.5 in expenses.

The half year you guys are looking at is pretty exceptional given they got 25% of their revenue from online due to COVID. It was 16% previously. That's their highest margin business. Cost to sales also went from 36% to 28% likely due to not having to pay stores to be open.

What you're looking at is a pretty exceptional sales outcome that isn't likely to stay as is.

 Mad Doc Grotsnik wrote:
There’d also be peeps understandably pissed they paid the old price immediately before the lower one kicked in.

GW’s prices are what they are.

We have this problem in Magic: The Gathering. There are players who have expressed anger when cards they spent large amounts of money are reprinted, and sell for significantly less. I have seen some of them express their dislike in such away that it is clear they possess a feeling of entitlement.

People have no right to complain if something they purchased becomes cheaper. They chose to pay that amount.

Blastaar wrote:
...People have no right to complain if something they purchased becomes cheaper. They chose to pay that amount.

While you're not wrong, there is an issue of incomplete information here. If the price change isn't telegraphed or announced ahead of time, I don't think it's unreasonable to be upset - had the buyer known of the change, they would have been able to make an informed decision (buy now at a known price, or wait to see what the new price is). Outside of designated announcement dates (think "Patch Tuesday") I don't think there would be a way to effectively avoid that (and I'm not sure it would be worth trying to avoid anyways), but I don't think it's entirely fair to say that people have no right to complain of price changes.

Happens in the computer games industry all the time.
Sales happen, permanent price drops happen.
Very few people get bent out of shape about it- its simply expected that the price will drop after the first several months of sales surpass costs and start garnering a profit.

That GW models actually go up with irregular price rises is frankly ridiculous. Its long after the cost of the moulds are paid, and the materials are peanuts. They can happily rake in profit even if they slashed a few percent off each year after the kit has paid for itself.

GW as an investment can be pretty good. Take care of it, paint it well, have half a brain when assembling it all and you could make out from the point you bought it , used it, at least break even by the time you sell it. You could even profit from cashing out of the hobby. I can say I wouldn't mind at all if they lowered prices.

That said, I have seen the glory, we are actually agreeing GW could lower prices and still stay good. Another sign of hope for us all. Way to go Dakka community, bringing the good stuff. You all earn a gold star today and a cookie.