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No, another price hike IS on the way. When and how much, I dunno. But the prices will go up.

Price Cuts, typically are used when you have stiff competition and can afford loss leaders. Supermarkets are a prime example of this. In the UK, Tesco (our biggest) lose money on every own brand super value product they sell. How does this make sense? Because whilst I might not be fussy about my Noodles and Nuts, I do prefer Heinz Ketchup, Kelloggs Cereals and so on. Thus, I go to them for the cheap stuff, but still buy the more expensive brands I don't feel I can go without. Rinse and repeat times Millions of Customers a year, and as long as you have more tempting prices than your opponents, and the biggest market share, you will be in rude health.

The other time price cuts come in is desperation (bit strong a word perhaps?). Things really aren't going well, so to get people in through the door you slash prices. Total gamble. It only works if the new/regained customers then show the Holy Grail of Retail, Loyalty when things have stabilised. Otherwise you are cutting prices to spite your face.

GW are in neither situation. Any price cut needs a higher sales volume than you might expect to make financial sense. GW, being niche aren't likely to achieve this volume increase in a short enough time period. I shall try to explain as best I understand it, and without confusing myself, let alone anyone else.

Now, say the average customer buys £50 worth of gubbins a month, and I run a 50% profit margin (numbers out the air which are easier to work with. Don't read owt into these!) Now, statisically that might average out to each gamer buying 5 £10 boxed sets a month. Going on the aforementioned 50% profit margin, this nets me £25 per month per customer in profit each month.

Now, I cut the price by 20%. Now my customers can afford 6 boxed sets a month with their £50. This is of course, good for them. But I actually make less profit. How? My overheads remain the same, meaning my profit level drops. Every penny of that price drop comes straight out of my pocket. So 6x8 means they are spending £48 a month with me (we'll assume to round things off and stop my brain leaking out my various facial orifices that the £2 is gifted in tips in gratitude!). So, each box has cost me £5 still. So overall, I have cut prices by 20%, seen a 20% increase in volume scale, but my profit money has dropped from £25 per customer, to £20. A 20% drop. I think. I might have cocked that up.

But hopefully it's right and bears out and my point is suitably illustrated!

I thought people on the whole don't have a lot of extra money laying around to buy games. I'd imagine this could be called a bit of a crisis.

But really, that does make sense to me. I'm just glad to see you aren't popping a tent over GW being the biggest and the baddest.

Typeline wrote:

Polonius wrote:Why? Because GW's success is good for me. A healthy GW means healthy support for a game I enjoy. Do I wish the stuff were cheaper? Of course. Am I happy they're posting a larger profit? You bet.

Why are you happy they are posting a bigger profit given their history. It means another price hike might be on the way.

Did you read my post? Because it means the company is healthy.

I don't buy much stuff new, what I do buy is generally used or deeply discounted stuff. For me, the fact that GW is making money is a good thing.

Now, there is a valid argument about the actual price point for GW product, and how price increases present too great a barrier of entry for new gamers, and thus hurt the long term viability of the hobby as a whole. That's a really valid argument, alas we have mostly anecdotal evidence to support either side. GW's strategy seems to be based on the idea that they're core audience will buy pretty much regardless of cost. I think there is also some evidence to support the idea that GW has a ceiling to how widely they can expand... at some point, you've reached every person who wants to paint and play with toy soldiers.

So, while the idea of another price hike is draining (some of the GW product is simply too expensive to seriously contemplate buying), my self interest in wanting cheaper product is balanced by my self interest in having three massive armies that I can play in five years (unlike the people that bought the cheap Warzone, Celtos, Starship Troopers, etc. miniatures).

Polonius wrote:

Typeline wrote:

Polonius wrote:Why? Because GW's success is good for me. A healthy GW means healthy support for a game I enjoy. Do I wish the stuff were cheaper? Of course. Am I happy they're posting a larger profit? You bet.

Why are you happy they are posting a bigger profit given their history. It means another price hike might be on the way.

Did you read my post? Because it means the company is healthy.

I don't buy much stuff new, what I do buy is generally used or deeply discounted stuff. For me, the fact that GW is making money is a good thing.

Now, there is a valid argument about the actual price point for GW product, and how price increases present too great a barrier of entry for new gamers, and thus hurt the long term viability of the hobby as a whole. That's a really valid argument, alas we have mostly anecdotal evidence to support either side. GW's strategy seems to be based on the idea that they're core audience will buy pretty much regardless of cost. I think there is also some evidence to support the idea that GW has a ceiling to how widely they can expand... at some point, you've reached every person who wants to paint and play with toy soldiers.

So, while the idea of another price hike is draining (some of the GW product is simply too expensive to seriously contemplate buying), my self interest in wanting cheaper product is balanced by my self interest in having three massive armies that I can play in five years (unlike the people that bought the cheap Warzone, Celtos, Starship Troopers, etc. miniatures).

Maybe if the company wasn't so healthy we'd be seeing better quality from all aspects of the game. Maybe a little more desperation from the company to reach newer audiences, but then again that could definitely back fire on the rest of us.

The only thing I'm trying to say is that the company that is GW can be a healthy corporation at 100 Million.

Also GW is eventually, in the long term of course, find their 'ceiling' and when they do they are going to feel it.

Typeline wrote:Maybe if the company wasn't so healthy we'd be seeing better quality from all aspects of the game. Maybe a little more desperation from the company to reach newer audiences, but then again that could definitely back fire on the rest of us.

Company health and the quality of their products have no correlation. Pepsi is healthy, yet their diet soda still tastes revolting.

GW are fitting in what can arguably be labelled price cuts, just in very odd ways.

Ork Boyz are a fair example. Before the latest batch of models, 10 boyz and a Nob would have set you back £16 (half an £18 bozed set, £7 for a Metal Nob (fnarr!). I'll leave off the 'Eavy Shoota as that easily converted from the plastics. Now, it's £12. Burna Mobz are also cheaper, signficantly.

Flagellants too have come down, as has Fantasy Cavalry released in recent plastics. Greatswords I guess are the exception to the rule?

So yeah, price cuts after a fashion I guess.

Typeline wrote:Holy crap you guys. Why are you all jacking off so hard to GW hiking their prices because "They are a business they get to!"?

I didn't say that, I said that "Prices will probably come down soon, or they will put out a new codex" both things the community has been shouting for.

Typeline wrote:

The only thing I'm trying to say is that the company that is GW can be a healthy corporation at 100 Million.

Also GW is eventually, in the long term of course, find their 'ceiling' and when they do they are going to feel it.

and my response to that is that unless you've actually done some serious market analysis to back that claim up, it flies in the face of nearly all business wisdom. Bigger is almost always better, more profits better than less. My investment in GW product is safest the more profitable the franchise is.

Polonius wrote:

Typeline wrote:

The only thing I'm trying to say is that the company that is GW can be a healthy corporation at 100 Million.

Also GW is eventually, in the long term of course, find their 'ceiling' and when they do they are going to feel it.

and my response to that is that unless you've actually done some serious market analysis to back that claim up, it flies in the face of nearly all business wisdom. Bigger is almost always better, more profits better than less. My investment in GW product is safest the more profitable the franchise is.

That's one of the things I'm wondering, is the company actually healthy? Or is it just profitable?

It's profitable to quit smoke and also healthy.

But it's profitable to sell your organs and that isn't healthy.

Like what was stated before, they only thing any of us can really use is anecdotal evidence since none of us are financial analysts that work inside the company. Is the company really doing well or have their actual sales been dropping for years but the price hikes have been masking it. How many people are actually getting into the hobby at this price point? How about a price point with a 10% hike in prices? If they keep doing this as a company the game may no longer be viable. With no new players, and older players shelving their models to do other things (like raise children, dedicate more time to their careers or retire) you have a smaller buyer base that isn't really spending much money because they already have armies. Probably huge armies too. With the lack of newer players the company will start to bleed money. Cut backs will have to be made, the production costs of everything made cheaper, product will need to see a price increase to try and meet profit margins, rolling layoffs will decimate the operation bases of the company (GW stores).

Thankfully, we can find the sales volume info (I think) on the Investor Relations page. One of the advantages of a PLC!

I know sales increased everywhere apart from mainland Europe last year (and the gains outweighed those losses I believe?) so the info is there. Will see if I can rustle it up.

I think this is the current one

Page 6 has what I think is the pertinent info to the question currently in hand. And if so, they increased sales in the UK by £4,500,000. Which is pretty good, especially in a Recession.

This could be last years. I don't really understand these things all that well!

@ Typeline. I've never argued that there aren't potential problems for GW. I just think that that absent any evidence for anything other than reasonable health and growth, a business that is profitable and has cash on hand has far more options, and is generally healthier, than one that isn't.

Your argument, which seems elusive, now seems to be that GW "might" be unhealthy. Sure, it might be. If I'm presented with more facts and evidence, I'll be changing my mind in a hurry.

It's hard to argue that a company posting a profit is in long term danger, absent such facts, however. Yes, healthy and profitable corporations go into tail spins all the time. That doesn't mean in any given year it's not better to make money.

I guess my point is that reports of profits is evidence of GW's health. Not proof, but evidence. And that, to me, is a good thing.

I'm going to go out on a limb and say I think GW is in fairly good shape, given the state of the global economy.

They posted a profit in what has been a pretty hard year, and quite sensibly paid off a fair amount of their outstanding debt.

Are they out of the woods given the past few years rather poor performance? Not quite yet. Might be another couple of years before they are where they used to be. But hey, using the link above to the Annual Report, it seems takings are getting up to where they were during the height of LotR bubble, which is surely a good thing?

Polonius wrote:It's hard to argue that a company posting a profit is in long term danger, absent such facts, however. Yes, healthy and profitable corporations go into tail spins all the time. That doesn't mean in any given year it's not better to make money.

We don't have to be vague when we're talking about this though. We know what company we're talking about. Do you think my simple minded projection holds any water at all? Feel free to tell me I'm full of it. It's an honest worry I have.

By those reports from the link that MDG posted things seem pretty fine and that the company will soon see an upswing along with the end of the recession.

I'm not worried about GW prices now that we have Obama. He's going to pick up my mortgage and health care for me so I can spend that extra on 40K!

The Green Git wrote:I'm not worried about GW prices now that we have Obama. He's going to pick up my mortgage and health care for me so I can spend that extra on 40K!

You wish, no way the rest of the government is going to let any of that happen. But that's a discussion for another time.

I am just waiting for GW to start offering pre-painted one piece soft plastic “models” for sale at a +20% price increase. It would encourage more impulse buying (hey, you can buy that new unit before your game and field it the same night) and has been successful for other companies (Rackham and AT-43). Of course they would not be able to charge an arm and a leg for their hobby supplies, but cutting them out of the production loop could account for great savings.

GW stopped being a business for and by gamers a long time ago. It is now just another blood sucking corporation (that I give regular infusions to).

Price Rises are an easy and effective way to do this.

Although I agree that businesses are there to make money I do believe that most shareholders are there for the short term goal. Step one is to drive prices up as high as the market will allow while producing less profit. Step two is to remove as much headcount as possible while not removing any work. Step three is remove as much out going money as you can to deplet items such as benefits, raises, and in hobby companies like this...support.
If you look we have all seen these steps taken while not in the specific order and probably intermingeled. It is a short term goal to suck all the money out of a company you can before you bail/sell. The professional term is "Getting Lean", and I have seen it in many US corporations.

I am still not in agreement in their overall buisness plan and have personally limited myself to buying things that normally would have been impulse buys due to product cost.

Their financials look pretty good overall.

The one thing that worries me is this:

1. They mention metal prices have dropped.
2. They mention that they have raised prices.
3. If you look into the detail statements, you'll notice that their selling costs (basically cost of goods sold, from what can figure out) and administrative costs have actually gone UP.

The thing to be wary of is this:

If they are getting the brunt of their revenue increase from the price rise, and not from new customers, then that is not good as their selling costs should have decreased or remained the same at similar or lower volumes with a lower cost of raw materials resulting in lower cost of goods sold. This means there's some inefficiency going on in the company....they're spending more to sell less.

However, if somehow they are actually getting more customers (volume of sales) at a higher price through expanding market/market-share then they're in good shape.

It's hard to tell which scenario is the case right now...my gut feeling is that the first scenario is the case due to the current lay of the facts and what I've seen at local stores (higher prices, lower material costs, but also lower volume of sales at local stores / friends' buying habits). However, even given that, they're still doing much better than before.

Typeline wrote:But that's a discussion for another time.

I think this statement could apply to half of this thread.

This is how capitalism is working for me. Every time they raise their prices, I become that much less likely to want to buy GW products. Their stockholders start crying that their dividend checks are not as fat as they were, so they raise their prices again, causing more people to adjust plasticrack down on their list of priorities. Thus does the hole in the middle of the toilet creep closer and closer.

A company can fudge it's books a few ways to make it appear they're profitable when they're not and vice versa. It's how you avoid taxes and make shareholders feel secure.

It's also how you pull an "Enron", a "World whatever", and any other heist in recent years with companies going under while the top staff make millions.

And I was thinking the same thing about GW and prepainted stuff - that's just waiting to happen, right after Hasbro buys them out and makes "Games Wizards of the Coast Workshop." Seriously, it can happen.

We'll have Optimus Prime, 250 points, elite choice in the new army they're unveiling!

Gen. Lee Losing wrote:

spacemarinejunkie wrote:This thread sums up the principal reason why all business of any type should be banned. Money should be banned also. People should be genetically altered with the purpose being to remove feelings of avarice, greed, and the like from the human genome.

... and remove ambition. Also any desire to improve oneself. Get rid of that nasty habit of freely choosing what is best for you and your family. I think we need a government to force everyone to stop being greedy. A new type of government for the community. Commu...something.

Here, you can have America's government. They've got their fingers in so many pies, there's barely any left that don't have some form of government in them! Who said Socialism died with the USSR?!

Rico.

with an iron fist wrote:A company can fudge it's books a few ways to make it appear they're profitable when they're not and vice versa. It's how you avoid taxes and make shareholders feel secure.

It's also how you pull an "Enron", a "World whatever", and any other heist in recent years with companies going under while the top staff make millions.

And I was thinking the same thing about GW and prepainted stuff - that's just waiting to happen, right after Hasbro buys them out and makes "Games Wizards of the Coast Workshop." Seriously, it can happen.

We'll have Optimus Prime, 250 points, elite choice in the new army they're unveiling!

At least GWCW will play test stuff.

I for one welcome our new overlords.

Mad Doc Grotsnik wrote:Page 6 has what I think is the pertinent info to the question currently in hand. And if so, they increased sales in the UK by £4,500,000.

But look how small the US one is, There's clearly some cannibalisation of sales going on there.