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I've just started playing Warmachine and am having a hard time even thinking about 40k..

Element206 wrote:
Thats pretty insightful and spot on for those of you out there majoring in economics. The only thing I dont like is that 98% of his figures are speculation based off of internet searches. I dont recall once hearing him quote or use a legitimate statistic or price directly from GW other than the retail cost of the LR. I suppose it can give you a very rigid idea of the marginal profits for GW.

He is using approximations, but even using approximations, the various ratios should hold roughly true...unless GW has some kind of secret access to black market sculptors and molding machines, I can't see the approximations being ridiculouslly far away from the reality.

Goddard wrote:

There is a lovely essay floating around somewhere on the internet where someone dissected Games Workshops profit margins on an individual kit...I'll see if I can find it.

I actually know what you're talking about: the kit in question was a Land Raider. GW collects less than $10.00 profit from a 62 dollar sale.

No way can that be accurate, if it was then the competitors that charge $1.50 per model instead of 3-10$ per model would be bankrupt. That's before considering that GW has a huge economy of scale advantage (IE, they don't have to outsource the molding process).

Well, the figures are looking at Land Raiders in particular, as opposed to Marines.

Requia wrote:

Goddard wrote:

There is a lovely essay floating around somewhere on the internet where someone dissected Games Workshops profit margins on an individual kit...I'll see if I can find it.

I actually know what you're talking about: the kit in question was a Land Raider. GW collects less than $10.00 profit from a 62 dollar sale.

No way can that be accurate, if it was then the competitors that charge $1.50 per model instead of 3-10$ per model would be bankrupt. That's before considering that GW has a huge economy of scale advantage (IE, they don't have to outsource the molding process).

It could be accurate, for that one particular kit. A companies level of profit varies by product, some are just better than others profit wise. It wouldnt surprise me if some GW apologist fan boy went through the entire catalog until the found the model with the highest retail/lowest profit ratio then made a big deal of it, showing how poor GW only made $10 off a $62 sale. The same could be done on the opposite end of the spectrum as well.

Like its been said...either pay the price or find something else to play. I vote find something else. Let GW continue to price themselves out of existence. They will go bankrupt, and either restructure and start over, or someone will buy the IP and run with it.

Yeah, I'm a bit confused too I have to admit- why can Mantic produce it's Orcs for less than half the price of GW?
The only defense I can think of is that the core troops are the profit makers for less profitable items that take equal amounts of design time.
Does that make sense to the sculptors out there?

Da Boss wrote:Yeah, I'm a bit confused too I have to admit- why can Mantic produce it's Orcs for less than half the price of GW?
The only defense I can think of is that the core troops are the profit makers for less profitable items that take equal amounts of design time.
Does that make sense to the sculptors out there?

No retail overhead.

If it's really down to that, then...wow.

The stores must be running at quite a loss.

malfred wrote:

Da Boss wrote:Yeah, I'm a bit confused too I have to admit- why can Mantic produce it's Orcs for less than half the price of GW?
The only defense I can think of is that the core troops are the profit makers for less profitable items that take equal amounts of design time.
Does that make sense to the sculptors out there?

No retail overhead.

I'll see you're retail overhead and raise you multinational corporation with an almost monopoly over the fantasy/scifi wargaming hobby with an established customer base and mass production resources and materials buying power...

The land raiders were estimated to cost GW about 12$, its the operating costs (marketing and so forth, thing not directly related to the land raider but that cost the company money regardless) that kill it.

Looking at the stockholder report, I think it is right. The profit margins for the company aren't exactly stellar. (16 million pounds last year, for a company with over a hundred million in revenue). The operating costs consumed ~80 million. (comparatively, actual cost of sales was ~30 million).

I find it mind boggling that it costs the company that much more to run day to day business without ever making a single package than smaller competitors. Are they paying the executives that much, or are they just that focused on maintaining the leading spot that they'll borderline bankrupt themselves spending on marketing?

Warlord & Perry Bros each make similar quality plastic minis as GW at a lower price.

Mantic makes slightly lower quality plastic minis at an even greater lower price.

Wargames Factory minis are significantly lower quality, but are damn cheap compared to GW.

Gw being a larger company should be able to make a cheaper product. The fact that they don't shows that either: (1) they are doing something wrong, or (2) they are incredibly savvy at taking your money hand over fist.

Or we can factor in the fact that GW has a huge network of brick and mortar stores that they have to support as well, something none of those other producers have to worry about.

If the stores are costing them that much, surely they are a failure? They could market their miniatures through other media than the stores, cut down on all the stores that aren't profitable. People would still buy.

If that is the case then why not just do this and salvage the whole enterprise.

1. Close their chain of stores. If this is seriously draining as much of their income as people are claiming they ultimately aren't worth it. Independent LFG will have a place to flourish when prices change.

2. Become a company based completely online. They can reprice their product so that it is more accessible/affordable and so that other online companies can no longer undercut retail and offer their hefty discounts. This will promote the LFG again as the brick and mortar stores will no longer have to compete with websites offering massive percentages off.

3. Use the majesty that is the Interwebs to promote and advertise their game! With the game more affordable and LFG's finding it easier to open up in small towns not only will their player base vastly increase, but there will be more places to actually play their product which in itself promotes sells growth.

These are all major decisions, I understand, and GW's business plan is metaphorically a bleeding house of cards. Any major changes (even positive ones) might bring the whole thing tumbling down. As it stands it is easier for them to simply raise prices and close the occasional store so that their numbers don't chase the stockholders off in droves.

But you can only whip a horse so much before he dies. And you can't squeeze water from a stone.

There will come a day when GW prices themselves into oblivion or a contender rises to end their ridiculous company.

It is such a shame that something we love as much as we do is in the hands of such poor businessmen.

It seems to be doing something wrong, been going over executive pay and while they're in the 6 figure range, they don't hit 7 figures, which means that 80,000,000 L must be actual expenses. Marketing I guess.

I think that idea would work great nobleseven. It's just impossible because Gw is Gw....

because they can.

edit - delete msg

NobleSeven wrote:
2. Become a company based completely online. (snip)

3. Use the majesty that is the Interwebs to promote and advertise their game! (snip)

Your heresy has been reported to the administratum, brother. While the Emperor protects, Games Workshop will never tap into the foul energies of the Warp Wide Web.

Mad4Minis wrote:Ive given up on GW for anything but the occasional purchase. Its not just the prices, I really dont care for the current 40k rules either, and Im not into WHFB.

Ditto.

I've discovered the world of alternate miniature miniature manufacturers. God Bless Heresy Miniatures and Antenociti's Workshop and Micro-Art Studios!

If you really want to complain about the price of Warhammer, come to Australia or New Zealand then compare our prices to yours and see who is worse off.

Capt. Rex wrote:If you really want to complain about the price of Warhammer, come to Australia or New Zealand then compare our prices to yours and see who is worse off.

This could possibly be attributed to the fact that your continent is the furthest away from the UK. Or maybe you just have really high sales tax? Either way we all continue to buy the products because we love the game, so I guess it really doesnt matter what type of profit margins GW is turning. I dont beleive that GW would take advantage of their already extremely small buyers market to earn additional profit. That would just be bad short run economics.

Either way we all continue to buy the products because we love the game, so I guess it really doesnt matter what type of profit margins GW is turning.

Raised prices don't drive away existing customers nearly as fast as they drive away new customers. It's the lack of new customers that will hurt them in the long run.

Requia wrote:

ph34r wrote:The thing is, there is no proof that lowering prices would get enough people into the game.

Think about it, if GW has a profit margin of 50% on a $40 box, and they lower it, they are losing $5 from their $20 profit, or 25%. Now it will take them 33% more people buying the product to stay even.

Do you think a price drop of 12.5% will make 33% more people get into the game?

I didn't think so.


Keep in mind these numbers are not official, but they show a point. Even if you disregard profit margin, I don't think that lowering prices would gain enough new players to make up for it.

The profit margin is closer to 500%. At least off the website, they probably get 3 or 400% on retail.

The problem comes is that GW is a publicly traded company, and the market reacts poorly to companies that don't show more profit (note, making a profit isn't enough, you have to make more profit than last year).

... .

The margin of retail price compared to cost of goods is 76% according to GW's latest financial report. That means that 24% of the retail price (before sales tax) is the cost of designing the goods, making them and putting them in the shop.

Companies are compelled by international law to state those figures as accurately as they reasonably can.

GW charge so much because they feed off our forum rage.

GW: "Problem, Dakkites?"

theHandofGork wrote:Warlord & Perry Bros each make similar quality plastic minis as GW at a lower price.

Mantic makes slightly lower quality plastic minis at an even greater lower price.

Wargames Factory minis are significantly lower quality, but are damn cheap compared to GW.

Gw being a larger company should be able to make a cheaper product. The fact that they don't shows that either: (1) they are doing something wrong, or (2) they are incredibly savvy at taking your money hand over fist.

Do any of these companies write the rules for their products? Not really. Do they pay for large marketing campaigns to push their products? Probably not.

Let me get this straight: everyone complains about the game, its minis, and its prices, then shops elsewhere and wonders why the company that started the game is so expensive and exclusive about its intellectual and physical properties? Whew...

Writing rules to games is a profit center, not a cost center.

As for marketing, marketing is supposed to *create* money for the company, not cause them to lose it.

GW wants to make money. They will do what they must to have a profit. Simple business practice. Im no GW apologist but to have better minis come out plus the ever growing collection of plastics, and the writers for rules, they have to make it up somewhere.

Warmachine is just as expensive to buy out an entire faction and that is just including buying units only once.

SoloFalcon1138 wrote:

theHandofGork wrote:Warlord & Perry Bros each make similar quality plastic minis as GW at a lower price.

Mantic makes slightly lower quality plastic minis at an even greater lower price.

Wargames Factory minis are significantly lower quality, but are damn cheap compared to GW.

Gw being a larger company should be able to make a cheaper product. The fact that they don't shows that either: (1) they are doing something wrong, or (2) they are incredibly savvy at taking your money hand over fist.

Do any of these companies write the rules for their products? Not really. Do they pay for large marketing campaigns to push their products? Probably not.

Let me get this straight: everyone complains about the game, its minis, and its prices, then shops elsewhere and wonders why the company that started the game is so expensive and exclusive about its intellectual and physical properties? Whew...

Yes, Mantic just came out with a fantasy ruleset (which is free) and Warlord has Blackpowder.
Does GW pay for large marketing campaigns? I've never seen a GW ad before, except in White Dwarf, which now costs $8. Marketing for DOW is done by Relic, who pays GW for using their IP.
Sorry, time for a new argument.

If GW closed down their stores a lot of gamers would lose their place to play and paint, and would hence leave the hobby. The walk-in trade would also stop, thus losing them a lot of new players (I know a dozen people at my local store who began playing because they wandered in by chance, and would not have ever considered wargaming if they had not.)

It's all well and good to say that they should become a website only business, but I think that it would destroy the company. Perhaps some people might think that would be for the best, but I think it would be a real shame (you know, given that GW is my company of choice...), and it would also dent other wargaming companies in the process. How many people who use other companies now started out playing GW? I'm prepared to bet it's a fair few. And those other companies would not have an increasing market of gamers if there were not GW stores everywhere, letting people know that the hobby exists in the first place.

Feel free to tell me I'm wrong, as I'm sure you all will. It's just my $0.02.