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Manchu wrote:@Grot 6: Could you quote (with page citation) that annual report as indicating GW employs the premium pricing strategy?

Basicly, the language is all through the report.

Here is a beginning, and a couple of snippits from a couple of the first pages.

" “'May you live in interesting times' is also meant to be a curse, and you can see why, if you want to live a quiet and untroubled life. Personally, I don't, so for me the fact we have all been living in 'interesting times' for the last couple of years has been just that: really interesting. It depends on what you read, or course, but there is no shortage of people prepared to write that 'capitalism is dead' or some other similar tosh. I've always been mildly baffled by the notion that there is, somewhere, an alternative to capitalism. The field has been muddied by Marx capitalizing the word as Capitalism, and demonising it with mid-nineteenth century fears of mass revolution, international hunger and poverty. It has since somehow become the cause of all the world's wrongs and I'm sure if you search diligently enough amongst the barmier reaches of the internet you'll find it is responsible for hurricanes in the Caribbean, flooding in Tewkesbury,measles, Mexican flu and the failure of Leeds United to get promoted again. Capitalism is another way of saying we make things and sell them at a profit and it will never end.

Those who say(hope?) capitalism is dead would serve us all better by working to ensure venality, cupidity and certifiable stupidity were dead instead. Sadly they are not. It isn't capitalism that's the problem it's people's bad behaviour. That is what we should rail against, not the honest human need to better ourselves.

A fascinating side effect of our recent woes has been the resurrection of the periodic 'Warren Buffet has lost the plot' stories. Buffet has no more lost the plot than those who criticise him have found it. There is no 'plot'. There is only an accumulation over a long time of good decision taking outnumbering bad. If your chairman has a guiding star it is that one. I cannot make good decisions all the time, but if I am to remain useful to you I'd better make a lot more good ones than bad ones. Just like Warren Buffet.
Recently our record on good decisions has been better. Our profits, year on year, have improved a lot; the underlying growth in our core business is more modest. Nevertheless it is there. Just as importantly, this result, together with effective asset management, has enabled us to reduce borrowings significantly, therefore further strengthening GamesWorkshop’s balance sheet.”
- GW chairmans Preamble ( Sets the tone for the rest of the report.)



“'May you find what you are looking for' is intended as a cautionary admonition not to look for too much, nor to look forthat which you do not fully understand. To make what we wish for here at GW sensible and achievable we have focused on doing what we always have done well better, and stopped doing all the other things. By 'better' we mean growing thesales in the business but making sure the cost base works even at last year's low sales numbers. So you could say we have found a bit of what we are looking for and it isn't cursed.
Other things we have found are: better trade terms - designed to help those who make the serious commitment of having a real store where they can talk to customers and explain how our games work and teach modelling and painting; a more sustainable store opening model - smaller, cheaper stores that open when we want them to be (not mall operators) and can be run by just one member of staff if need be; higher prices - enabling us to respond when costs increase dramatically as the price of tin did last summer; and, very importantly, a better balance between the price of our plastic miniatures and our metal ones - for similar models prices ought to be similar and not less 'because they are plastic'.”(Chairmen’s Preamble direct quote about sales.)

“There are no silver bullets for growing sales at Games Workshop. It requires a consistent focus on the basics of recruiting new hobbyists through our Hobby centres and using our games to teach them how to buy, build, paint and collect ever larger armies of miniatures. We retain these hobbyists as customers by releasing fantastic new products and running exciting activities to keep everyone engaged in the Hobby. By growing our active customer base in this way, our sales to independent retailers (trade) and direct businesses benefit as well. It is simple to say, but hard to do, which is why it all comes down to the strength of our management teams in each sales business and in particular the quality of our managers in each Hobby centre.”
- (Business review quote, Pdg. 5)

The last few years have reminded us how important it is to be cost conscious and we have made good progress in restoring this cost saving culture across the business. We have reduced staffing levels in our Hobby centres by adjusting opening hours to better reflect when our hobbyists are available to play. We have limited our property cost increases by better planned rent negotiations and relocations to lower cost premises when possible. Our new web store has improved efficiency in processing orders and allowed us to slim down our direct sales teams. We also closed our Canadian office and relocated our Italian office to more modest premises outside Rome.Investment has been focused on two key drivers of performance, opening more Hobby centres, which increased from 334to 355, and developing more plastic injection tools. These two areas will remain the focus of future investment. Other non-essential capital expenditure has been cut back. In addition, we have implemented automatic stock replenishment and streamlined product ranges into our UK and North American Hobby centres to improve our control of working capital. This is being rolled out into Europe next year.
(-Buisness Review, Pdg. 5)

I could go on and on, but You can take from it what you want to. I take from it that they have a thorough knowledge of what they are doing, have not only the intention to increase the prices, but to continue to do so through next quarter, and that they will continue to do so.
The product is overhyped. The numbers are overhyped. The justification is overhyped.


I provided the report. Go ahead and read through and you can either read it, or not. Throughout the report, it basicly over hypes the product, convinces the reader that it is a resonable price, and then goes to show how they have increased and overpriced the product to justify thier sales numbers.

Id say yes because they are (in this case a GW tank) expensive in comparison to a model tank of similar size by another company.

fellblade wrote:All I have to do is look at the 118 ml squeeze-bottle of Games Workshop PVA glue, and know that I can buy a quart of the exact same PVA glue from a hardware store for a lower price, to realize that Games Workshop is employing the premium pricing strategy.

I don't think GW's hobby supplies are targeting the premium market so much as the convenience market.

People (by and large) don't buy GW glue because they think it's any better than other glues on the market. They buy GW glue because they're buying GW models, and buy the glue while they're there rather than going somewhere else.


Whilst it's true that there are some people who think that GW's hobby stuff is superior, or 'better' for use with GW models (particularly amongst younger customers, who are more likely to swallow it when a staff member tells them that GW glue is 'specially formulated' to be better with their models) I would put that down more to the perception that GW, as a hobby company that makes great miniatures, would know what they are doing when it comes to tools, glues and paints... but that perception would still be there is GW hobby supplies were reasonably priced. It's not a result of them being expensive, which is what the premium pricing mould is about.

FOR SIMILAR MODELS OUGHT TO BE PRICED SIMILAR AND NOT LESS "BECAUSE THEY ARE PLASTIC"...


Buy those mini's, my little darlings... and your little grots, too!!!! Muh ha ha ha ha.....

Grot 6 wrote:FOR SIMILAR MODELS OUGHT TO BE PRICED SIMILAR AND NOT LESS "BECAUSE THEY ARE PLASTIC"...


Buy those mini's, my little darlings... and your little grots, too!!!! Muh ha ha ha ha.....

Am i the only one that still remember GW saying "metal are always more expensive because plastic is cheaper to produce"?

@Grot 6: Thanks for responding. I asked because I had also read that document when it was posted on dakka sometime back and could not recall seeing anything that led me to believe GW was using a premium cost strategy as Luna seems to believe. It seems that you and I ended up coming to different conclusions from our readings.

@fellblade: Insaniak has made pretty much the same point as I was going to: you pay more for less PVA for the convenience of getting it from the same supplier as your models and basing materials (in the case of people who one-stop shop at GW) in a manageable quantity. I would just add, as you probably already know from shopping at WalMart or Costco as opposed to a mom'n'pop drugstore or hardware store, selling a smaller amount of goods or a smaller amount of a certain good generally makes your cost per unit go up.

Once again (although for the first time in this thread) I'd like to point out that GW may have an overarching sales strategy but that does not mean they make the same kind of profits off of every type of product. I would be very, very surprised to learn that there is a larger mark-up on Citadel hobby supplies than GW models. I would be very surprised if GW did not make most of its money from the sale of models. And I think it is clear that GW does not employ the premium pricing strategy as it has been defined in this thread.

LunaHound wrote:Am i the only one that still remember GW saying "metal are always more expensive because plastic is cheaper to produce"?

I don't recall them ever saying that metals are 'always' more expensive.

They cited cost of production as a reason that plastics could be cheaper, when they first started producing single-part plastic models in regiment or squad boxes. And when you're talking about single-part metal models vs single-part plastic models, that's certainly true, provided that the volume of sales is there to warrant to initial tooling cost of the plastics.

When you start going from single-part metal models to 9- or 10-part plastics, it's not so clear cut.


(And no, that's not 'justifying' the cost of GW's kits. Just pointing out that comparing metals to plastics isn't as simple as saying 'this one's metal, and that one's plastic, so should be cheaper...')

LunaHound wrote:Am i the only one that still remember GW saying "metal are always more expensive because plastic is cheaper to produce"?

Thanks to rises in the price of tin, a major component of GW's metal models, plastic is a cheaper material for them as a manufacturer. To which you will protest, "But plastic Terminators still cost $50." To which I will respond, "Yes, but they'd be at least $75 if they were still made of metal."

Manchu wrote:

LunaHound wrote:Am i the only one that still remember GW saying "metal are always more expensive because plastic is cheaper to produce"?

Thanks to rises in the price of tin, a major component of GW's metal models, plastic is a cheaper material for them as a manufacturer. To which you will protest, "But plastic Terminators still cost $50." To which I will respond, "Yes, but they'd be at least $75 if they were still made of metal."

Which you'll also agree with me that they at most $3 of materials to produce right? ( of course we have to still factor in the machinery used )
but just so we are on the same page that you dont think they are using platinum to cast the termies

Manchu wrote:Thanks to rises in the price of tin, a major component of GW's metal models, plastic is a cheaper material for them as a manufacturer. To which you will protest, "But plastic Terminators still cost $50." To which I will respond, "Yes, but they'd be at least $75 if they were still made of metal."

Cost of materials is a negligible percentage of the total cost of the figure (I think it was mentioned as being about 3% in GW's financials a couple of years ago)... so the actual material cost really has very little bearing on the price difference between metals and plastics.

@insaniak: Cost of materials against total cost of business operation is a poor way to measure material price fluctation effect on the business. Also, finished goods are worth more in inventory than materials. I'm not sure what kind of figure you're drawing from so I can't comment much further except to say that cost of materials does actually effect GW's costs in a way that consumers eventually feel. Do costs revert back after material costs decrease or stabilize? Of course not.

From the 2009 report Grot 6 was quoting from:

Our gross margin strengthened in the second half as we benefited from the metal price increase that we implemented in the autumn and further cost reductions in our manufacturing and supply chain. Raw material prices have returned to more normal levels in the second half but we continue to invest in converting more of our range to plastic, both to improve the quality of the models and make us less sensitive to metal cost fluctuations.

But I see your main point. Are plastics going to reduce prices? NO because the plastic products are now superior to metal ones. GW will charge what the product is worth: namely, what the consumer will pay.

Manchu wrote:@Grot 6: Thanks for responding. I asked because I had also read that document when it was posted on dakka sometime back and could not recall seeing anything that led me to believe GW was using a premium cost strategy as Luna seems to believe. It seems that you and I ended up coming to different conclusions from our readings.

@fellblade: Insaniak has made pretty much the same point as I was going to: you pay more for less PVA for the convenience of getting it from the same supplier as your models and basing materials (in the case of people who one-stop shop at GW) in a manageable quantity. I would just add, as you probably already know from shopping at WalMart or Costco as opposed to a mom'n'pop drugstore or hardware store, selling a smaller amount of goods or a smaller amount of a certain good generally makes your cost per unit go up.

Once again (although for the first time in this thread) I'd like to point out that GW may have an overarching sales strategy but that does not mean they make the same kind of profits off of every type of product. I would be very, very surprised to learn that there is a larger mark-up on Citadel hobby supplies than GW models. I would be very surprised if GW did not make most of its money from the sale of models. And I think it is clear that GW does not employ the premium pricing strategy as it has been defined in this thread.

No sir, it is not clear.

They do in fact have a premium pricing policy.
Hobby materials, miniatures, hobby sessions that you pay to learn how to play, the Games Day tickets, Glue, Paint, Brushes, Lord of the Rings, Warhammer fantasy, books, Forgeworld products, the list goes on and on.

There have been threads here with posts from people claiming that the GW's employees have an indoctrination program that rewards sales, pushes and enforces a ruthless sales strategy similer to a used car sales mentality, there have been claims by some that they heard GW employees say that other products wouldn't work on the miniatures, and ther have been still others who have claimed that the sales staff and managers have in fact a premieum priceing strategy.
Along with that, everyone knows how the employees of these stores act. It is no secret about thier sales policy.


The name of the game is sales.

If not, then why arn't GW products being sold in Walmart, alongside Elmars, Gorrilla glue, or Testors?

If not, why are Redshirts claiming that other products shouldn't be used on the miniatures?

If not, then why is the chairman of the company claiming that Similar models ought to be priced similar and not less because they are plastic?


Seriously?

The claim was made years ago, before the GW miniatures were of the caliber that they are today that the plastics were going to be cheaper, period.

BEFORE, I say, because there was not a global recession, an increase in operating costs, and it was back in the days when GW went public and took on its excessive corperate restructuring.

NOW? No. Plastic is the new medium. They are getting out of the metals buisness, precisly BECAUSE it is expensive. They are cutting costs and doing what they HAVE to.

I honestly can't fault them for it, but I can fault them for the excessive corperate salery increases, perks, and BS that goes and cuts into the heart of this company's dog turd image and overt mentality of SELL MORE MINIS!!!!

I also fault them for running thier stores like crap, and thier crappy red shirts attitudes and mentality of... you guessed it, "Buy more minis!!!"

@Grot 6: I see that you have a lot of negative things to say about GW but I do not see an argument that they are using premium pricing.

Manchu wrote:@insaniak: Cost of materials against total cost of business operation is a poor way to measure material price fluctation effect on the business.

I wasn't comparing it to total cost of business operation. I was pointing out that it's a reasonably insignificant component of the cost of the miniature... something Kirby pointed out when the cost of tin started to climb in the first place (I believe the original statement was something to the effect of: The cost of tin has risen by x amount, but as raw materials account for less than 3% of production costs, this has minimal effect.)

But I see your main point. Are plastics going to reduce prices? NO because the plastic products are now superior to metal ones.

More specifically, plastic did reduce prices, back when the plastic models were basic, single-part or at best 2- or 3-part minis designed with the express purpose of providing a cheaper alternative to metals.

Once the plastic kits started to increase in complexity, and started improving on the metals, the price rose accordingly.

I'd have to look at it for myself as it seems to contradict this report.

Yes, plastic models are now worth more than metal ones. It's counter intuitive until you remember how many people who have metal pieces in their armies are always clamoring for plastic ones.

Here it is, page 6 of the 2008 report:

Amongst the cost of production risks are those relating to input prices. The cost of raw materials, such as metal and plastic, represents no more than 5% of our sales and therefore we do not believe that the price volatility of these inputs represents a significant threat to our long-term profitability. In the short term our buying team continues to work to minimise these risks and the people in our manufacturing and supply functions continue to seek process efficiencies to offset any cost impact. However, the recent increases in the price of both metal and plastic have been significant, and we will take action to protect our gross margins.

That clears it up, I should think.

Manchu wrote:@Grot 6: I see that you have a lot of negative things to say about GW but I do not see an argument that they are using premium pricing.

When was the last time that you were in a GW store?

When GW talks about "The Hobby", what are they talking specificly about?

When you go over to the GW wbsite, what is the overall emphisis on? What do you see all over the site?

Premium pricing at its best.

Or are you just going to tell me that it is slick advertising and everyone is a rube? That the language, content, discussions and subjects are not priced to the highest denominator? "All of your needs in one box!!!, " " You may not believe how good they are until you try them!" "... the list goes on and on.

They are marketing this product like a farrari.

As for an argument, I put it out there and it wasn't hard- I see it. Maybe its because I know how these guys think, maybe its because I've been around the block once or twice, and maybe it's because I read through thier information, and did some homework on them.

If you don't, then you don't.

If not, then go down to your local GW store and see how you get treated, almost when you walk in the door.
Comment a little on the prices, and see the reaction from the staff, or just hang out and watch Little Timmy come in with Mommy Mil... Dearest or Daddy Warbucks and see how they react.
They are marketing THE HOBBY and they are saying that there is nothing wrong with the pricing.

At this point *all* decent-looking minis are "premium priced": GW, PP, Rackham, Infinity, etc.

Just to make sure we're all on the same page:

Premium Pricing =/= simply Charging the Highest Possible Price

Premium Pricing is charging a high price because you want that high price to be an advertisement for the superiority of your products.

Reading over GW's report, that doesn't seem to be what they're doing. They charge what they think the model is worth, which has some relationship to materials and production but which is mainly related to consumer behavior. That may end up being a high price but this, by itself, is not premium pricing.

I don't think any of us buy GW models because GW is such a fashionable namebrand and we want to be seen around the FLGS with GW models.

LunaHound wrote:

Kanluwen wrote:

insaniak wrote:

Cryonicleech wrote:I'm no expert, but I feel that GW could bring down prices a tad.

They certainly could. But that's not the issue.

The question that Luna is asking, as outlined by the linked definition, is whether GW's prices are as high as they are to encourage their perception as a quality product.

Premium Pricing relies on people choosing an expensive product over a cheaper one on the assumption that the expensive one should be better.

That's not what GW are about at all. They price as they do because they can, not because they think that being more expensive improves the perception of their product.

And it's not even really that.

This thread came about after a discussion where she brought up the notion that Games Workshop charges the prices on their models due to the fact that you're "paying for both a hobby AND a game."

Kan , just alittle bit more you need to know about me.
My threads are standalone , just because they seem to relate to other issues that doesnt mean they are.
I'll appreciate you not mixing them together , sounds fair to you?

Having been on the forum a while, and having eyes in my head... No, thats not true. At all. You bring threads together like they're sequels all the time.

I provided the report. Go ahead and read through and you can either read it, or not. Throughout the report, it basicly over hypes the product, convinces the reader that it is a resonable price, and then goes to show how they have increased and overpriced the product to justify thier sales numbers.

Having worked in retail all my life I think I can safely say that thats a completely typical report on the health of the business. It's hardly "Overhyped", listen to a sears seminar or the morning speech at a wallmart if you want overhyped. Like everything else in this thread this requires context, and without it it gives a false perception. Find a public business in the world that doesn't have similar language in their quarterlies. Hell, intel recently raved about increasing profit 875% recently and commented on how great its products are when all it did was no longer lose money over a quarter.

I do that, too, sometimes. A discussion will crop up in one thread but seems like it may need its own space. This thread is probably better here than providing life support for the latest paint/no paint debate.

ShumaGorath wrote:Having been on the forum a while, and having eyes in my head... No, thats not true. At all. You bring threads together like they're sequels all the time.

No , do not assume so much , because assumption spawns misunderstanding and general unpleasantness. Its the way of Chaos you heretic.
I know , you have lots of eyes , infinite amount too , again extra heretical ...

Of course they premuim price, what do you expect for official models and the convenience of equipment. GW are a big brand in wargaming and they exploit that dominance to be the cool kid. You can buy models from elsewhere to play warhammer, but if you want to be the cool kid with official stuff and allowed to play in GW stores then you need their models. You pay a premium for buying into the brand. Secondly, GW stores supply everything you need, glue and tools. You can go elsewhere and get it all much cheaper, but if you want to be a bit lazy, you pay for convenience. That's why their glue, drills and other bits and pieces are so much more expensive than the average retailing on the exact same pieces.

FOR SIMILAR MODELS OUGHT TO BE PRICED SIMILAR AND NOT LESS "BECAUSE THEY ARE PLASTIC"...

I don't think you are using the same definition that I am. People DO IN FACT play Warhammer and Warhammer40K BECAUSE OF the name brand.

"Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price.[1] The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction."- Wikki


And by the descussion of miniatures being priced? They are being marketed to Gamers based on a common denominator.

That you are buying top of the line, regardless of how much you have to pay.

Grot 6 wrote:People DO IN FACT play Warhammer and Warhammer40K BECAUSE OF the name brand.

Yes, indeed they do. But that automatically make it premium pricing.

GW games are expensive, but people buy them anyway because they are perceived to be good.
A Premium Priced product (according to the definition you just quoted) is bought because it is expensive, on the assumption that expensive = good.

So what it boils down to is whether or not people are perceiving GW games to be good because they are expensive and buying them as a result, or whether they are perceiving them to be good because of what they are and then buying them despite the price.

The former is premium pricing. The latter isn't.

Grot 6 wrote:
They are marketing THE HOBBY and they are saying that there is nothing wrong with the pricing.

That's not premium pricing. Premium pricing would involve a deliberately high price vis a vis other, similar items manufactured by the same, or alternative corporation.

GW does not use a premium price strategy insofar as most of its miniatures are concerned. It does use premium pricing in its Forge World brand, and all of its 'official' hobby products.

I suppose you could argue that GW's models can be compared to other scale kits, but it seems to me that GW kits are sufficiently distinct as to represent a separate product.

This thread hilariously demonstrates, among other things, the lack of reading before posting. As anti-GW flame bait, however, it is not a good test case.

It also demonstrates what happens when you poorly explain what you're trying to insinuate with a poll.

True but most of those votes came after Luna posted the definition. People must not even be reading to the third post and probably not even the first. Regardless of how leading a thread title might be, you'd think people could be bothered to read the first few posts before firing off their opinion . . . yes, I know, welcome to the internet.

It wasn't even the right definition though, Manchu.

Charging for a name brand is not the same as "overcharging for dual purposes".

I don't understand what you mean. You are disagreeing with the wikipedia entry?