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happypants wrote: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.

I agree with you on most points except that more time equals less money. I work at a state job where the pay is pretty much average to low average for my field, but I have lots of time and regular hours. Thats the trade up of the job, I'm trading a larger salary for more time and not having to work night shifts. Did I just not just agree with what you said?? Kinda...I'm not broke, but I still have a great deal of time compared to many people, I have to be honest there. Plus because of the low property values in Appalachia its very livable. But getting in to the state of economic development and the prevalence of poverty in my area is a thread hijack and really beside the point.


Yes, there are certain downsides to the GW corporate giant, however, because of the raw size of GW I can go in pretty much any game store in the United States and the UK, if not the world, and probably catch a game of 40k.

I would like to see the data that suggests that there was a spike in sales due to LOtR and that 40k/fantasy sales have been declining. I have never seen a game of LOtR being played, and everyone I talk to doesnt like it. I do not have a GW store in my area, however, so I dont see what is going on there. I also shudder to think how much they had to spend on IP rights.

I have been in this crazy hobby for going on 13 years now. I think GW has improved its rapport with "veteran" players immensely over the past couple years ( I'm defining veteran as either A. Someone who has played for at least three years, B. Someone who has painted armies or is a regular at tournaments, or C. Pretty much anyone over 25 ). I think the business guys have finally talked to the hobby guys and brought every point keezus made to the forefront. You might be cynical and think that Jervis' little column in WD is cheesy and ultimately meaningless, and it may be, but it "feels" like it is aimed toward the veteran or older player to me. I dont doubt that is good marketing technique, but I dont care, as I think it helps keep the hobby alive.

I don't know much about being an independent retailer of GW product, and in fairness I have heard horror stories. I also know, however, some very successful businessmen, particularly in light of their age, marketing GW product. I dont know if it is significant, but the most successful near me is in a fairly small town that is far enough from Atlanta to be an inconvienent drive to go play with toy soldiers.

I do find it distressing that the product is so heavilly marketed to the 16 and under set, at least in some ways. I feel that many, though certainly not all or even most, of these players have the potential to bring the hobby into disrepute or reflect poorly on the participants. Unfortunately, I think it is a smart move to put most of their focus on this group. However, I think GW has taken the necessary step, retention, and that means veteran players. I get frustrated with the general infantile and unsportsmanlike behavior I see, but like many things, the best thing is to lead by example. Today's wolf claw is tommorrow's long fang. Also, if I had a child, I think I would much rather see them get heavy into miniatures than sitting in front of a television or video game all day. While many forms of entertainment for youngsters are attention sapping, I can't help but think that miniatures are attention focusing.

I appologize for pretty much going from a GW corporate rant into a state of the hobby rant, but I fully intend to be playing miniatures 50 years from now, in the nursing home, drooling over my dire avengers between spoonfulls of pureed peas. I think GW can probably stay in for the long haul, and like most things in life, there are setbacks and outright heartbreak, but things at least stay interesting. It is what keeps me going. Makes sense to me, to you?

All I know is current pricing means I've haven't drop a dime on GW in a year. They aren't getting any of my money. I'd love to flesh out my Tau and especially now that new orks are coming. But I just don't see the value in the product that I'm getting for what it is costing me to get it.

Jayden63 wrote:All I know is current pricing means I've haven't drop a dime on GW in a year. They aren't getting any of my money. I'd love to flesh out my Tau and especially now that new orks are coming. But I just don't see the value in the product that I'm getting for what it is costing me to get it.

And that is what you should do if you don't feel you're getting your money's worth. Vote with your wallet. To me, I still feel I get my money's worth for GW purchases. Though I buy a lot less than I did when I started, and I'm getting more out of the hobbby spending time on what I have rather than getting more.

I think the folks trying to slap the Macroeconomics 101 stuff on this situation are deluding themselves.

GW isn't selling grain, or crude oil, or some other commodity that responds to macroeconomic forces like supply and demand. The concepts apply, but only very minimally.

Given that the supply/demand curve barely even applies here, it's doubly ridiculous to see people telling GW that they're not properly calculating where they need to be on this curve. It doesn't apply, and if it did, why would you be better qualified to calculate pricing then the people who actually have access to the full financials, and who depends on the success of the company to continue collecting a paycheck?

They're actually professionals in the field, they actually know the real numbers, and they have a much greatever interest in success than you do.

It's not about pricing. Yes, there is a price point at which GW would drive people away from the hobby, but this is really a secondary factor.

The primary factor is appeal of the game. All you guys whine and cry about the pricing, but when Apocalypse came out, people mysteriously had money to buy Baneblades and Vindicator Linebreaker Squadrons, and all sorts of other $100+ items.

Pricing isn't the issue, appeal is. If GW keeps putting out products that get players fired up, that attract new players, that create interest in the game, they will sell product. If people don't find the game interesting, it doesn't matter what you charge.

$10 for a box of Marines! WHEEE! Ok, well a box of tampons is $5, but I don't need or want tampons. Now it's $2.50? Still don't want. Now it's free? STILL DON'T WANT.

Again, SURE, if they wanted $500 for a box of 10 Marines, people wouldn't play, pretty much no matter how sweet the rules were. But as long as the prices are reasonably in line with costs for similar products (and they are), it all comes down to the appeal of the game itself.

Just FYI, in microeconomics there is a supply and demand curve...

Ozymandias, King of Kings

But what if buying tampons meant Jessica Alba was your girlfriend/wife? Is that worth $5?

All that the costing shows is that GW should exit the retail business as quickly as possible. As a manufacturer, GW definitely makes money. As a retailer, it's a disaster.

GW sells those $5 Terminators for $30 wholesale. So they make over 80% Gross Profit on them. That's a very good rate.

As for GW profits, GW is pumping that into massive tooling. GW turned a profit while buying 3-D scanners, Rapid-Prototyping machines, CNC digital milling machines, and large production systems for injection plastic. They are using this technology to cut their own metal molds that *never* wear out and running production 24x7 "lights out". GW profit was high enough that they paid for this out of cash, and *still* were able to pay a dividend to stockholders.

With the vast amount of plastic GW now sells, their long-term profitability is guaranteed.

scuddman wrote:But what if buying tampons meant Jessica Alba was your girlfriend/wife? Is that worth $5?

She's pregnant. No more tampons.

JohnHwangDD wrote:GW sells those $5 Terminators for $30 wholesale. So they make over 80% Gross Profit on them. That's a very good rate.

You need to check your math, John.

Since I don't have access to GW's full figures I can't tell whether their retail arm is a disaster. But based off my degree in business management I am going to give an opinion.

1. GW is what is called vertically integrated. They design and make a product that they distribute into retail and sell directly to the end user. That means all the middle-man money goes straight back to GW. (So do the costs, but they know and can reduce the costs.)

2. Retail is the ultimate customer interface. Even more so for GW. People come into their shops and talk to them about the products and even play and use them right there in the store. If GW make use of this it is an incredible resource for getting feedback from actual users.

3. Because people are in the stores playing, GW have two more advantages. They create a community atmosphere and player matching system. That is a major bonus for wargames where the big problem is always to find a bunch of guys to play with. A lot of people play 40K not because they like the fluff or the rules or the models, but simply because it is widely played and you can find players wherever GW has a shop. The second advantage is that the experienced painters and players in the shops are a free (to GW) resource for recruiting and training new players. It is vets in stores that help teach the rules and how to paint to newcomers. Without this, everyone would be on their own and a lot fewer people would ever start.

Please note that out of my three points, only point 1 is verifiable in accounting -- that is, the beancounters can actually find a pile of beans to count and reckon if they are making a profit. However anyone who has studied marketing and organisational behaviour will recognise that points 2 and 3 are major benefits that would be lost if the retail chain were closed.

(OT, I think a lot of the overall renaissance of TTG in the past 20 years is thanks to GW's success in two ways : (1) by recruiting players who move on from 40K to historicals, (2) by stimulating the formation of competing companies such as Privateer, Rackham and Flames of War.)

Just FYI, in microeconomics there is a supply and demand curve...

I know, but the way people talk about GW, it's like the think they're talking about commodities being traded on a macroeconomic scale. Even if you reduce it to a more micro scale, there's still really not a supply and demand curve at work, because GW's goods aren't a commodity. You can't just go down the block and get your Space Marines from somebody else.

But what if buying tampons meant Jessica Alba was your girlfriend/wife?

Then I'd be a mormon, and it'd be SO WORTH IT.

All that the costing shows is that GW should exit the retail business as quickly as possible. As a manufacturer, GW definitely makes money. As a retailer, it's a disaster.

Much more refinement to this analysis than the oversimplified supply/demand stuff, but even this might not be true.

This is a hobby that both has to entice people to start playing, and to keep old players interested. That means that they system has to be both deep and sophisticated, but also easy to pick up and learn. I think we all need to be honest and admit that's a tough balance to strike.

One way to work around those two conflicting aims, is to have people stationed at the FLGS to run clinics, to get people interested, to paint up armies to inspire the veterans, etc. etc.

If the retail side is losing huge amounts of money, ok, maybe it needs to go. If it goes, and sales don't drop off, then yeah, it definitely needed to go.

But if the retail side is losing a small amount, while still being necessary to keep sales up, then you can't cut it loose.

As for GW profits, GW is pumping that into massive tooling.

This is a good point. It'd be nice to know where they stand right now. If they've spent a huge chunk of money that they won't need to spend again, money which sets them up to do better, faster, cheaper production in the future, then that indeed sets them up for success.

On the other hand, if they're simply paying the new cost of doing business in a high tech environment, and it's going to recur, and is necessary to even stay competitive...

JohnHwangDD wrote:All that the costing shows is that GW should exit the retail business as quickly as possible. As a manufacturer, GW definitely makes money. As a retailer, it's a disaster.

GW sells those $5 Terminators for $30 wholesale. So they make over 80% Gross Profit on them. That's a very good rate.

As for GW profits, GW is pumping that into massive tooling. GW turned a profit while buying 3-D scanners, Rapid-Prototyping machines, CNC digital milling machines, and large production systems for injection plastic. They are using this technology to cut their own metal molds that *never* wear out and running production 24x7 "lights out". GW profit was high enough that they paid for this out of cash, and *still* were able to pay a dividend to stockholders.

With the vast amount of plastic GW now sells, their long-term profitability is guaranteed.

First off, your math sucks.

As to the retailing being a disaster, it is not. The retail side of things is where they bring new players in, every time I go in to the local GW store to pick up a book or a bitz order (about all I need them for) I see a kid trying out a game of 40k or WHFB for the first time and loving it. <following is speculation, mostly based on my own experiences> Said Kid, then goes and spends $400-$500 in a month to put something together and another $500 over the year, plays with some friends who he brings in to the game and that one kid means something like $1500 of sales to GW in the first year. Kid spends a bit more money over the next 1-2 years and then finds his dick and decides that playing with girls is much more fun than playing with minis and shelves the $1000-$1500 of stuff he bought until he goes to college/university and finds some other kids that play 40k when he picks it up again, spends some dough and then shelves it for a few years again and then comes back.

IHMO the BEST thing that GW could do for its marketing would be to turn GW into an MLM, (multi level marketing)

For those that don't know it would work like this.

I bring Sam, Dave, John, Joe, kevin and mike in to the hobby and they get unique ID's, I get 5% of everything they buy, and 2% of everything that the people they bring in buys (lets say they bring in 6 each so 36) and 1% of that next level of people as well (again 6 each =216).

Math works something like this: If each person coming in spends $1000 in the first year (you all know that is stupid easy to do and using that as an average is pretty fair) I get $300 for my first level $720 for my second level and $2160 for my third level. All for sharing a game with friends that you enjoy.

I know MLM has a bad rap because there have been a lot of scams but it is the best way to market anything that word of mouth has the strongest affect on marketing and GW games are probably the best example.

I don't know what it's like at stores by you, but these guys can sell.

The local GW shop employees roll their eyes at kids behaving badly in
the store, but they really do know how to make a sale and commit a
customer. It's all about GW learning where they can find that magic
location that has good foot traffic, decent floor space, and a local base
of indulgent parents. I don't think they always find the right place to
do that.

Location, location, location...

happypants wrote:

JohnHwangDD wrote:All that the costing shows is that GW should exit the retail business as quickly as possible. As a manufacturer, GW definitely makes money. As a retailer, it's a disaster.

GW sells those $5 Terminators for $30 wholesale. So they make over 80% Gross Profit on them. That's a very good rate.

As for GW profits, GW is pumping that into massive tooling. GW turned a profit while buying 3-D scanners, Rapid-Prototyping machines, CNC digital milling machines, and large production systems for injection plastic. They are using this technology to cut their own metal molds that *never* wear out and running production 24x7 "lights out". GW profit was high enough that they paid for this out of cash, and *still* were able to pay a dividend to stockholders.

With the vast amount of plastic GW now sells, their long-term profitability is guaranteed.

First off, your math sucks.

As to the retailing being a disaster, it is not. The retail side of things is where they bring new players in, every time I go in to the local GW store to pick up a book or a bitz order (about all I need them for) I see a kid trying out a game of 40k or WHFB for the first time and loving it. <following is speculation, mostly based on my own experiences> Said Kid, then goes and spends $400-$500 in a month to put something together and another $500 over the year, plays with some friends who he brings in to the game and that one kid means something like $1500 of sales to GW in the first year. Kid spends a bit more money over the next 1-2 years and then finds his dick and decides that playing with girls is much more fun than playing with minis and shelves the $1000-$1500 of stuff he bought until he goes to college/university and finds some other kids that play 40k when he picks it up again, spends some dough and then shelves it for a few years again and then comes back.

IHMO the BEST thing that GW could do for its marketing would be to turn GW into an MLM, (multi level marketing)

For those that don't know it would work like this.

I bring Sam, Dave, John, Joe, kevin and mike in to the hobby and they get unique ID's, I get 5% of everything they buy, and 2% of everything that the people they bring in buys (lets say they bring in 6 each so 36) and 1% of that next level of people as well (again 6 each =216).

Math works something like this: If each person coming in spends $1000 in the first year (you all know that is stupid easy to do and using that as an average is pretty fair) I get $300 for my first level $720 for my second level and $2160 for my third level. All for sharing a game with friends that you enjoy.

I know MLM has a bad rap because there have been a lot of scams but it is the best way to market anything that word of mouth has the strongest affect on marketing and GW games are probably the best example.

I absolutely have never thought of that before, but GW seems almost set up from the beginning to work with MLM. Anyone who could talk GW into doing that might become a very wealthy person.

It came to me a while back, maybe I should apply as pres. of marketing.

Haha I can't help but laugh when I try to think of GW trying to follow the Amway or Cutco method of "business."

The way I imagined it, it would be like a Mary Kay or
Tupperware party. Bring the game, show off the minis,
buy lots of stuff.

Malfred has it about right, MLM's don't have to be sleasy, there is a toy company in toronto that does it and all they sell is fair trade toys, no child labour, lead free toys etc. They just decided that instead of spending 10% of their budget on advertising in magazines and on tv that they would put their efforts elsewhere.

When it gets sleazy is when there is a "sign up fee" and you "become part of the company" and have to start stocking inventory etc. basically turning the individual into an independant retailer who gets stuck with a bunch of merchandise.

MLM's tend to favor women. Creative Memories, Pampered Chef, Longaberger, Mary Kay - they don't work so well. I agree an element of MLM might help, but I doubt it's a viable method of promotion beyond a fraction of sales.

Men don't respond as well to MLMs.

Before the shop staff started to abuse their discount they used to get their models at a silly discount. I worked in a GW store for a few months a couple of years and straight away got a 50% discount, the discount after 3 months was even more. In fact the store manager did me a favour and allowed me to buy my Dwarves at the full discount, which if I remember correctly I paid £36 for a load of metal models, which worked out at about £120 retail. This was great, but since then I've never bought a GW model since, it just makes me cringe.

happypants wrote: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.

Which is why I think their inattention to the quality of their rules is inexcusable. Sure I get pissed at wasting my money, but I get even more pissed at wasting my time, coz I can't get that back on eBay!

Until GW fix their crappy rules I'm not going to waste my too-precious time painting models for them.

I'm still waiting for GW to spot that as an issue!

dienekes96 wrote:MLM's tend to favor women. Creative Memories, Pampered Chef, Longaberger, Mary Kay - they don't work so well. I agree an element of MLM might help, but I doubt it's a viable method of promotion beyond a fraction of sales.

Men don't respond as well to MLMs.

Wow, that's painting with a broad brush...

I also agree that it wouldn't/couldn't be their ONLY method of marketing, but if you can see a 10% sales boost, why the heck not?

happypants wrote:

dienekes96 wrote:MLM's tend to favor women. Creative Memories, Pampered Chef, Longaberger, Mary Kay - they don't work so well. I agree an element of MLM might help, but I doubt it's a viable method of promotion beyond a fraction of sales.

Men don't respond as well to MLMs.

Wow, that's painting with a broad brush...

I also agree that it wouldn't/couldn't be their ONLY method of marketing, but if you can see a 10% sales boost, why the heck not?

IIRC, the best MLM/pyramid customers are guys who have a real competitive edge. This is especially true if the MLM/pyramid is the kind that lets their customers work for them, like those door-to-door booksellers. It's horrible pay and all, but if the MLM management gets an ultra-competitive guy hooked, they know he'll try to bring his friends over as hard as he can and he'll work as hard as he can, since he has the idea that his newly-found business opportunity will net him a big advantage one day. He believes in that so much that the company can milk him for all his worth. At the end of it all, he'll claim it was a character-building experience that showed him the true worth of a dollar.

dienekes96 wrote:MLM's tend to favor women. Creative Memories, Pampered Chef, Longaberger, Mary Kay - they don't work so well. I agree an element of MLM might help, but I doubt it's a viable method of promotion beyond a fraction of sales.

Men don't respond as well to MLMs.

Hmm... Scrapbooking parties. A good place to meet womens?

Take all my money GW i have no need for it.

I think GW is heading in the right direction.

Percentages and profit margins aside there was a point after 3rd edition where we were getting nickle and dimed to death.

Want a maxed out Ork boyz mob ?
THEN
Buy 2 plastic box sets, end up with 2 extra guys. Don't worry, they'll have company soon enough. $70
Buy a metal Nob $7 Currently, but I could have sworn he was up to $10 at one point
Buy 3 packs of boyz with Heavy Weapons $30
$110 Total, $40 of which was upgrades that could have been included in the plastics, and you have 6 extra boyz

NOW
Buy 3 Plastic Boxes $66
$66 Total, 2 extra boyz/nobz

$44 difference, that's the kinda extra costs people hate

Why the change ? I'd wager it has very little to do with our benefit. Eliminating the Nobz and heavy weapons blisters lowers their production costs, less storage, less inventory to manage, less retail shelf space required.

Look at the success of the D&D miniatures. They went random because it simplified stocking down to a single produt code, instead of 60 with every set. Retailers are much more willing to carry the product becuase there is a mcuh lesser chance of getting stuck with dud items from each release.

Someone mentioned earlier that GW gets stuck with returns of the crap that doesn't sell. Rolling those items into the box sets eliminates that kind of returns.

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

Another annoyance, already mentioned, was pricing the plastics the same as the metals they replaced.
They are simply setting prices at what they can get for them, not what it costs.
Don't agree ?
Explain to me then how 5 terminators costs substancially more than 5 marines with jump packs ?
or 10 ork boyz with a nob and 2 heavy weapons ?
They cost $50 because that's what we were paying for metal Terminators.
The plastics are better models all around than their metal predecessors, but cost as much as entire Battle For Maccrage box set !!!!!!

dienekes96 wrote:

JohnHwangDD wrote:GW sells those $5 Terminators for $30 wholesale. So they make over 80% Gross Profit on them. That's a very good rate.

You need to check your math, John.

Huh?

Termies are $50 retail, and GW has roughly 40% discount ($20) to the retailer. So the wholesale price is $30.

$30 price - $5 cost = $25 GP

$25 GP / $30 price = 83% GP

83% GP > "80% PG".

If you're claiming a math error, please show where it is.

Kilkrazy wrote:(OT, I think a lot of the overall renaissance of TTG in the past 20 years is thanks to GW's success in two ways : (1) by recruiting players who move on from 40K to historicals, (2) by stimulating the formation of competing companies such as Privateer, Rackham and Flames of War.)

IMO, this "rennaissance" in non-GW TTG is thanks almost entirely to GW's price "adjustments" (increases), and the timeframe is only about 10 years.

GW's continued raising of prices on presumed monopoly allowed competitors (Privateer, Rackam, etc.) to charge enough to cover their development costs, while pricing low enough relative to GW to establish a foothold in the industry.

If you go back to then VOID / VOR were released, GW's competition was much weaker because they didn't have the pricing margin to develop quality models. Their reduced economies of scale reduced the value that they could provide to their customers. If you compare the VOR experience with FOW, it's night and day, despite both companies aping the GW business model of rulebook - Codex - minis.

happypants wrote:

JohnHwangDD wrote:GW sells those $5 Terminators for $30 wholesale. So they make over 80% Gross Profit on them.

First off, your math sucks.

First off, your criticism sucks.

If you can prove I've made an error, so please do so.

adamsouza wrote:Another annoyance, already mentioned, was pricing the plastics the same as the metals they replaced.
They are simply setting prices at what they can get for them, not what it costs.
Don't agree ?

No, I don't.

Check out the pricing for WFB cavalry as it moved from mixed-metal (with ancient, fully-amortized plastic steeds). Most WFB cavalry models were $10 each prior to the changeover. With the Empire Knights, we got 8 models for $35. More than 50% price reduction. With Empire Pistoliers, GW may have wised up and reduced the discount, but that boxed set is still substantially less than $10/model.