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This is nonsense. Almost no engineering at all goes into any GW product. You have one designer and a couple of modelmakers involved in the creation that's it.

Actually, it's probably more like 1-2 designers, model makers, machinists, production control schedulers, supply chain supervisor, various managers and team leads, inventory control specialists, marketing and a few other odds and ends job descriptions I can't think of... If they can make a product in a company with a global retail presence at the volumes they need to meet demands with just three people then they've figured out something no one has... perhaps they should go into consulting and forget miniatures completely.

Saldiven wrote:
The bolded part of the quote is the reason you don't get it.

The bolded part is misleading. I've bought several motorcycles. I've also sold several and have never owned more than one at a time.

I play golf. My set of clubs cost $169. I can't even begin to afford a country club membership; I play at $20-30 public courses.

Do you complain that country clubs are overpriced?

If I won the lottery, I wouldn't spend $20K on any motorcycle that didn't have Ducati on its side.

Well, that's just a matter of taste. Ducatis and Harleys appeal to difference crowds, but the price is about the same.

All the hobbies involving airplanes...just come on.

What, is that unrealistic? My dad, a college professor (not exactly a super-high-paid profession, btw), has a pilot's licence, and skydives regularly. That's his chosen hobby.

I do ballroom dance.

Probably why you prefer Ducatis...

I do ballroom dance. For what it probably cost for any one of your 4000 point lists, I could get high quality private coaching sessions from competition winning professional dancers once per week for an entire year.

Isn't that more of a "skill" based hobby? I mean, once you learn the "costs" drop dramatically I'd imagine... unless of course they come out with a new Codex: Hardwood Floors and your shoes were balanced around Codex:Carpet... you'd have to compeletely retool then I'd imagine...

Thunderjaw wrote:

This is nonsense. Almost no engineering at all goes into any GW product. You have one designer and a couple of modelmakers involved in the creation that's it.

Actually, it's probably more like 1-2 designers, model makers, machinists, production control schedulers, supply chain supervisor, various managers and team leads, inventory control specialists, marketing and a few other odds and ends job descriptions I can't think of... If they can make a product in a company with a global retail presence at the volumes they need to meet demands with just three people then they've figured out something no one has... perhaps they should go into consulting and forget miniatures completely.

So now you are including people not involved in the creation process? I see those goalpost moving...

Guess what all these types of people are involved in all the other products for the other hobbies as well. And somehow they manage to do without so much markup.

It is also convenient the OP is using more expensive metal figures in his comparison. How do they stack up with a 10 man box of space marines?

As for expenses, remember they also have a retail chain to support, and most of those stores aren't making money. What happens is, the stores are used to recruit kids and adults, they find the FLGS is a better place to play at and shop at, and they also find the internet ( which helps kill the FLGS).

The local FLG store here started selling at discount, and they are killing the GW store here.

I'm pretty sure you hit the nail on the head there General Hobbs. Most of their money is going to prop up expensive stores that add nothing (other than higher prices) for me as a customer. I think it's their retail arm that's killing them. BTW for those struggling with margins: a 70% margin is a 233% markup

asmith wrote:
Guess what all these types of people are involved in all the other products for the other hobbies as well. And somehow they manage to do without so much markup.

Again, if you're going to keep saying that their markup is unfair, please provide the hidden financial data that you have and we don't. Otherwise, I can only assume that the people making decisions at this multimillion pound internationally traded company aren't complete idiots and have set the prices such that they're making the fairly small profit that their annual reports say they are.

Assume away... keep paying the markup and be happy about it. It's more than I am willing to pay for pieces of cheaply made injection molded plastic. Comparing it to other hobbies and saying "well at least it's not as much as that" is only making yourself feel better.

Annual report profit margins cover the entire company and not just miniature sales. That includes royalties made on licensing your IP out to card games and MMO's and other "zero cost" type of activities...

It would be nice to see just the manufacturing P&L's... they don't seem to be listed seperately anywhere on their Investor page...

@redbeard - Just because the hobby is not too expensive for you doesn't mean that GW might have raised the starting cost too high and alienated many potential customers.

Considering what one can buy for $20 instead of a single unpainted and unassembled pewter figure... new customers might question the "value" in investing in this "hobby".

Disclaimer: I -can- afford it, but as I don't have much free time these days, I can't justify buying huge swathes of plastic models at current prices considering I won't have time to assemble, let alone paint or play with them.

Saldiven wrote:

Redbeard wrote:Do you guys really think GW is an expensive hobby?

I've got at least eight armies, all at least 4000 points, and I still haven't spent anywhere close to as much as I have on my motorcycles.

The bolded part of the quote is the reason you don't get it.

I play golf. My set of clubs cost $169. I can't even begin to afford a country club membership; I play at $20-30 public courses.

Yes, I think GW is an expensive hobby.

No, he gets it. What you don't get is that he just has a *lot* more disposable income than you do. GW isn't for "poor" people.

My clubs cost me about $500. But nothing golf is free. Range balls, tee times, etc. add up very quickly.

I think GW is expensive, but I think it costs what it costs. GW isn't going to lower their pricing because you or I whine on Dakka. They don't even care. GW only cares if stuff like Greatswords & Steam Tanks and such stop selling.
____

Thunderjaw wrote:

I do ballroom dance. For what it probably cost for any one of your 4000 point lists, I could get high quality private coaching sessions from competition winning professional dancers once per week for an entire year.

I mean, once you learn the "costs" drop dramatically I'd imagine...

It's a performance-based hobby with costume costs.

Those patent leather shoes and sequined shirts don't pay for themselves.

Cane wrote:For those who feel that GW's prices are justified or represent good business decision making I question your business education.

GW in the past few years have generated fewer total sales indicating a shrinking customer base all the while they increased their prices at a pace that far outreaches the rate of inflation and their currency exchange rates are basically made up as they don't coincide with legitimate currency exchange rates.

There is a big problem with GW's business mindset and their price making decisions when your customer base shrinks itself more and more each year while you decide to continue to jack up the pricetags.

If I remember my economics, there's the old supply and demand chart. While raising prices might reduce demand, it can increase profitability for the company. There's some balance point where they're not selling enough X to recover the cost of manufacturing and development.

GW isn't a cheap hobby. It's why I've bought very little the last few years (at least, compared to 10 years ago) and want to catch up on my painting.

Now, if the whole consumer base leaves the hobby in the next 5 years, it'll show to be a bad business decision. OTOH, if profits go up over the next five years, it'll show to be a smart one.

I remember a cartoon once where Superman is talking to a shrink and says that he's really struggling because everyone needs his help and he can't decide how to prioritize his aid. So the shrink tells him that when he (the shrink) feels that way, he raises his rates, and that does it for him.

Unless you are really quite poor, or a super-quick painter, it's pretty easy to buy wargame figures of any make faster than you can paint and base them.

Redbeard wrote:Set of Golf Clubs: $500-$5000 (I have no idea, but a quick web search was turning up individual clubs for $500)

I've yet to see a Golf Course that decided to make Nine Irons illegal between editions.

Country Club Membership: $10,000+ /year

Yes because everyone who plays Golf has a 10kp/a country club membership.

New Harley: $10,000-$20,000

I hear the next version of Harley is going to make rear tires illegal, but you're now allowed to bring two front tires. Damn Harley Davidson for changing their bikes and making old bikes unusable between editions.

Oh wait...

Pool Table: $2500-$5000

Why would you bother with a pool table? They're only good for what, 6 months before Pool Workshop changes the rules? Last edition cues became illegal... man it was hard to play. You had to will the balls to move. The new one brought them back, but the 8-ball was twice the price! WTF!

Oh wait... no it didn't.

Your post is full of fail Redbeard and proves sweet feth all.

H.B.M.C. wrote:
I've yet to see a Golf Course that decided to make Nine Irons illegal between editions.

Had you noticed, however, that new clubs use new technology and perform better? That if you want to stay 'competitive', you need to keep buying the new gear?

Yeah, your post is full of fail too, and you clearly don't understand the point of this thread. Some hobbies are cheaper than wargaming. Some hobbies are more expensive than wargaming.

asmith wrote:
Assume away... keep paying the markup and be happy about it. It's more than I am willing to pay for pieces of cheaply made injection molded plastic. Comparing it to other hobbies and saying "well at least it's not as much as that" is only making yourself feel better.

I don't need to feel better about myself, thanks. If it's more than you're willing to pay, why are you still here? Go troll some board for something you're not too cheap to participate in. As I previously said, I don't go onto yachting forums and whine about how yachts cost too much.

keezus wrote:
@redbeard - Just because the hobby is not too expensive for you doesn't mean that GW might have raised the starting cost too high and alienated many potential customers.

You know, I am quite aware that this might be the case. It wouldn't surprise me at all. But, they're not making a ton of money, they're cutting costs left and right, and they can't sell something for less than the total costs of producing it. If that pushes the supply and demand curve and cuts into demand, that's a consequence. But if they go bankrupt because they stop making money, then they go under, and demand goes to 0.



I don't like high prices - don't get me wrong here. I would rather see more people able to afford to play. But, I'd also prefer to see an end to world hunger, and that's not happening either. There are economic realities at work here, and I do not believe that the GW upper-management are completely ignorant to retail pricing or supply and demand. Global costs are going up, and there's a recession on as well. Demand is going down regardless of what they choose to do, as when you're out of work, any luxury item is too expensive.

In short, if someone says, "this costs too much for me", well, I feel bad for you, I'm sorry that this is the case.

If someone says, "GW is exploiting their loyal customers", well, that I can't agree with, not without more data. I don't believe they're exploiting anyone - they're setting a price point that makes business sense. If that happens to price you out of the hobby, that's too bad for you, but I don't think they're deliberately trying to lose customers, I just think they're at a point on the supply/demand curve where they cannot lower costs to the point where demand would go up, without losing money in the equation.

And if someone says "GW is an expensive hobby" - I'm sorry, I don't really buy that. If you want to play, you can, for under $500, quite competitively. Their figures are not priced out-of-line with other figure makers in the market, and there are a great many hobbies that will cost you a lot more money. I don't think GW is a cheap hobby, but it doesn't have to be expensive either.

Everyone has to make these choices for themselves. We all decide what to spend our money on, and what to cut. I haven't ever paid for cable. At $50/month, for the 15 years I've had to make that decision, that's saved me $9000. Cable TV isn't worth the money to me. Having minis to paint is.

Redbeard wrote:And if someone says "GW is an expensive hobby"

GW *is* an expensive hobby.

But I don't think it's obviously more expensive than many others that I've enjoyed. Costs seem to be essentially similar to RC cars and amateur golf, along with console games.

I think I've gotten my fair share of enjoyment out of my minis, to the point that I've been willing to buy more.

Isn't that enough?

Redbeard wrote:
I don't like high prices - don't get me wrong here. I would rather see more people able to afford to play. But, I'd also prefer to see an end to world hunger, and that's not happening either. There are economic realities at work here, and I do not believe that the GW upper-management are completely ignorant to retail pricing or supply and demand. Global costs are going up, and there's a recession on as well. Demand is going down regardless of what they choose to do, as when you're out of work, any luxury item is too expensive.

I'm sorry, but I have to disagree with you here. GW upper management are terrible. Having helped to run a multi-national corporation I can definitely say GW upper management do not know how to effectively leverage their business strengths, nor are they able to run an efficient operation. They've made so many huge strategic blunders over the years it's almost funny, if it weren't so sad. Expanding retail stores that continue to lose money for years, an incomprehensibly ignorant channel strategy (as mentioned before), Sabertooth games (a 1.2M pound loss for this year alone), terrible hiring/retention strategy, and an inability to run a lean and efficient operation to name just a few.

For a company to make 70% margins and still barely be able to turn a profit is inexcusable. This speaks to incredibly inefficient operation. They're bleeding money internally and one of the big culprits is their retail chain. Their selling expenses make up 44M out of 75M pounds of their total expenses, with revenue around 110M (76M gross profit). Good Lord! That means for every dollar they make, 40% of that is going toward the actually selling process. Just selling it!

Also, as a side note, their development costs only amount to a little under 3M. So yes, not counting salaries (which we can't see from the statement) all those designers, sculptors, etc. get paid relatively little of the total profit. I would surmise that most of their staffing costs come from the sales staff in the hundreds of stores they are operating globally.

As for pricing, well they will charge what they feel the market can bear. There's really no such thing as gouging. If it's too much, people won't buy it. No one is forcing you to buy the product. The question should instead be: Is their pricing strategy a good long term strategy?

Problem with the monopolist supply/demand pricing is that they don't really have a monopoly. As can be seen in the last 10 years, more and more mini game companies have entered the market due to the high prices and are chipping away at GW's market share. A company that can run more efficiently than GW can make more money at it. Furthermore, with more and more competition for their target segment (young teens) in the form of substitute goods (video games such as WoW, Xbox, social networking even) they're looking at a shrinking market size.

Eventually, GW will not be able to cannibalize their market share to make up for their poor management decisions, as their market share is continually shrinking, and at a certain point it will not be able to sustain their lumbering bulk. Eventually they will need to lean up their organization and also come up with a better strategy than their current one (high churning customers, high retail presence). Honestly, they need some seriously better management because whoever is/was running it has totally flubbed it.

Acheron wrote:

Redbeard wrote:
I don't like high prices - don't get me wrong here. I would rather see more people able to afford to play. But, I'd also prefer to see an end to world hunger, and that's not happening either. There are economic realities at work here, and I do not believe that the GW upper-management are completely ignorant to retail pricing or supply and demand. Global costs are going up, and there's a recession on as well. Demand is going down regardless of what they choose to do, as when you're out of work, any luxury item is too expensive.

I'm sorry, but I have to disagree with you here. GW upper management are terrible. Having helped to run a multi-national corporation I can definitely say GW upper management do not know how to effectively leverage their business strengths, nor are they able to run an efficient operation. They've made so many huge strategic blunders over the years it's almost funny, if it weren't so sad. Expanding retail stores that continue to lose money for years, an incomprehensibly ignorant channel strategy (as mentioned before), Sabertooth games (a 1.2M pound loss for this year alone), terrible hiring/retention strategy, and an inability to run a lean and efficient operation to name just a few.

For a company to make 70% margins and still barely be able to turn a profit is inexcusable. This speaks to incredibly inefficient operation. They're bleeding money internally and one of the big culprits is their retail chain. Their selling expenses make up 44M out of 75M pounds of their total expenses, with revenue around 110M (76M gross profit). Good Lord! That means for every dollar they make, 40% of that is going toward the actually selling process. Just selling it!

Also, as a side note, their development costs only amount to a little under 3M. So yes, not counting salaries (which we can't see from the statement) all those designers, sculptors, etc. get paid relatively little of the total profit. I would surmise that most of their staffing costs come from the sales staff in the hundreds of stores they are operating globally.

As for pricing, well they will charge what they feel the market can bear. There's really no such thing as gouging. If it's too much, people won't buy it. No one is forcing you to buy the product. The question should instead be: Is their pricing strategy a good long term strategy?

Problem with the monopolist supply/demand pricing is that they don't really have a monopoly. As can be seen in the last 10 years, more and more mini game companies have entered the market due to the high prices and are chipping away at GW's market share. A company that can run more efficiently than GW can make more money at it. Furthermore, with more and more competition for their target segment (young teens) in the form of substitute goods (video games such as WoW, Xbox, social networking even) they're looking at a shrinking market size.

Eventually, GW will not be able to cannibalize their market share to make up for their poor management decisions, as their market share is continually shrinking, and at a certain point it will not be able to sustain their lumbering bulk. Eventually they will need to lean up their organization and also come up with a better strategy than their current one (high churning customers, high retail presence). Honestly, they need some seriously better management because whoever is/was running it has totally flubbed it.

Excellent synopsis.

General Hobbs wrote:

It is also convenient the OP is using more expensive metal figures in his comparison. How do they stack up with a 10 man box of space marines?

As for expenses, remember they also have a retail chain to support, and most of those stores aren't making money. What happens is, the stores are used to recruit kids and adults, they find the FLGS is a better place to play at and shop at, and they also find the internet ( which helps kill the FLGS).

The local FLG store here started selling at discount, and they are killing the GW store here.

I wanted to use metal figures as an example as the set up costs of these is more than likely to be the same across the board. It's impressive that everyone still appears to be going down the same route with their arguments. Whether you want to play an other system or not, or there is nobody to play with in your area, these points don't matter.

The main point still is that Warlord Games can produce a metal figure for £1, GW for £2 and Urban Mammoth for £2.85.

Warlord Games don't have the same overheads as GW, so does that help? Urban Mammoth don't have the same overheads as GW, so how come they are dearer. I would also imagine PP are the same as UM, so again how come their prices are dearer per model (assuming what people are saying is correct)?

Okay you can balance that out in the long run due to the fact that you don't need so many of them to play a standard game in each of those systems.

Redbeard wrote:
I don't need to feel better about myself, thanks. If it's more than you're willing to pay, why are you still here? Go troll some board for something you're not too cheap to participate in. As I previously said, I don't go onto yachting forums and whine about how yachts cost too much.

WTF is with all the personal attacks?

And your yacht analogy is way off base. Seems you have a trend going there.

Redbeard wrote:I just think they're at a point on the supply/demand curve where they cannot lower costs to the point where demand would go up, without losing money in the equation.

I'm surprised that as an engineer, you think that their system can not be further optimized. GW management, in my view, is short-sightedly seeking new profit centers, failing in 90% of these new ventures due to a poor understanding of the new venture - either prematurely ending the line(WH40k Roleplay) or continuing to push money into a loosing venture (Sabretooth). They appear to be overly fixated on new ventures to the exclusion of their core games.

IMO, the items that they could cheaply fix that would have the biggest return IMO is the ruleset / publication market. Further revamping of their distribution service and packaging could save a huge amount, both in shipping costs and brick and mortar real estate - a glaring example is how they still sell Hammerhead kits despite the fact that they could rebox the Skyray as a "Hammerhead/Skyray" and save the store space and restock on that redundant item. Reducing their customer base by raising prices instead of implementing further optimizaiton is IMO foolhardy, as it reduces the impact of further optimizations as they can no longer benefit from increased margins from those lost customers.

Kilkrazy wrote:Unless you are really quite poor, or a super-quick painter, it's pretty easy to buy wargame figures of any make faster than you can paint and base them.

I represent that remark!

Grot 6 wrote:

Kilkrazy wrote:Unless you are really quite poor, or a super-quick painter, it's pretty easy to buy wargame figures of any make faster than you can paint and base them.

I represent that remark!

Not as much as I resemble it!

keezus wrote:

Redbeard wrote:I just think they're at a point on the supply/demand curve where they cannot lower costs to the point where demand would go up, without losing money in the equation.

I'm surprised that as an engineer, you think that their system can not be further optimized.

That's not really what I said. I don't think they can lower their prices, under their current system, any further than they have without losing money.

I also don't think that they can optimize their current system any further. I don't think that they cannot either. I think that as an outsider, with no knowledge of their costs or expenses, it's beyond my ability to make such a claim in either direction. I don't have the data. This is the point I'm trying to get through. People sitting on the internet making claims about how a publicly traded company can streamline their business is fairly ridiculous.

GW management, in my view, is short-sightedly seeking new profit centers, failing in 90% of these new ventures due to a poor understanding of the new venture - either prematurely ending the line(WH40k Roleplay) or continuing to push money into a loosing venture (Sabretooth). They appear to be overly fixated on new ventures to the exclusion of their core games.

But, WH40k roleplay didn't end. They sold the enterprise to a third party who now pay them licencing fees. This, actually, allows them to concentrate on their core business, while still drawing some revenue from a new venture. Almost exactly the opposite of what you just said, and exactly why people on the internet aren't good sources of business advice for companies.

IMO, the items that they could cheaply fix that would have the biggest return IMO is the ruleset / publication market. Further revamping of their distribution service and packaging could save a huge amount, both in shipping costs and brick and mortar real estate - a glaring example is how they still sell Hammerhead kits despite the fact that they could rebox the Skyray as a "Hammerhead/Skyray" and save the store space and restock on that redundant item.

Again, I ask, do you have any data to back this up? Perhaps keeping the skyray and hammerhead as different items allows the Tau range to occupy more shelf-space, specifically to make it look as though the range has more options than it does, and draw more players towards the army? I don't know.

Reducing their customer base by raising prices instead of implementing further optimizaiton is IMO foolhardy, as it reduces the impact of further optimizations as they can no longer benefit from increased margins from those lost customers.

But they have been streamlining. You cannot expect a company to reinvent itself overnight. And, each time they do optimize, and concentrate on their profitable lines, the internet pundits attack them for that too. What do you think cutting out the bitz-ordering system was? What do you think standardizing their website was? There's another thread, still on the 'recent threads' page, about how Forgeworld is cutting their Epic line, and countless posts bemoan that fact. Guess what - that's optimizing. That's concentrating on their core lines. And people aren't happy with that either.

I totally agree, if they can find ways to cut costs, they should do it. If they can avoid pricing-people out of the hobby, obviously that's a good thing. But I'm not going to sit here from the comfort of my computer chair and make absurd claims about how they should alter their business without having any data to base those comment on.

Redbeard wrote:But they have been streamlining. You cannot expect a company to reinvent itself overnight. And, each time they do optimize, and concentrate on their profitable lines, the internet pundits attack them for that too. What do you think cutting out the bitz-ordering system was? What do you think standardizing their website was? There's another thread, still on the 'recent threads' page, about how Forgeworld is cutting their Epic line, and countless posts bemoan that fact. Guess what - that's optimizing. That's concentrating on their core lines. And people aren't happy with that either.

Those aren't optimisations though, selling fewer items, having a website with less on it and dropping lines is shrinking. Optimising is doing the same thing with less resourses, this is simply having a smaller inventory and selling less.