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Part of GWs problem is that you have two eras...

The pre-business era where they expanded their worlds and universes in a haphazard fashion based on what the designers felt like doing...

...followed by the post-business era where management come in say "What sells? The guys in power armour? Cool... lets do them." This subsequently alienates all xenos players who essentially stop buying because there's not much for them to buy. I imagine most Necron players reached the limit of their collections some time ago (you only need so many Monoliths right?). Not the largest portion of the market maybe, but still a significant pool of hobbyists not parting with their cash.

With my business hat on, I would have got ruthless and cut down the amount of races to a more manageable number, so that each player got a big release every 2-3 years or so. Failing that I would have concentrated on throwing the xenos players a frigging bone once in a while... plastic Wraithguard, a new Tomb Spyder kit, Flash Gitz, plastic Battle Sisters etc etc, anything to keep the cash rolling in from all sections of the hobby.

AgeOfEgos wrote:However, the question I have is have they exceeded their price point? Before, I said "Whatever, people are still buying". It doesn't appear they are now, even with a given 20% discount from online retailers.

In my opinion, GW needs to wise up and fix a number of things with regards to pricing...

1. Prices across regions need to be harmonized. GW Australia is so infamous for providing EXCEPTIONALLY BAD VALUE that it has become its own sort of meme. GW Canada, which had made great strides as of late has reverted to the usual +25% premium over the US.

2. They need to take a good look at how they price things. Even without the ridiculous discrepancies in costs between regions, some items themselves are ludicrously bad value compared to other items in the same category. It's one thing when the entire range is expensive, but when you have some items that are reasonably priced - the rest of the range looks ludicrously overpriced in comparison. Goldswords, Blood Knights and Ogryn aside, no better place is this illustrated than in their scenery department. In GW Canada...

Good value:
The Ruins of Osgiliath is $30.50. The Dreadstone Blight and Temple of Skulls are $35. The Temple of Skulls deserves special mention, as it is HUGE.

Bad value:
The pitiful Lord of the Rings Scenery Pack is $30... The LOTR set is exceptionally bad value. It contains about the same amount of stuff as their "Battlefield Accessories" set!
The goddamn FENCE pack is $30. The resin FENCES are $35!!!
The Arcane Ruins is $40... Not the worst kit, but grossly overpriced compared to the above good value kits.
Don't even get me started on the Chaos Bastion. It is unexplanably $60.

Granted, this problem is less pronounced in the US, but IMHO it is a problem none-the-less, and an easy one to fix.

Founds it! Was just about to give up and retract my comment (what, I would have!)


http://privateerpress.com/community/privateer-insider?page=5

Mentioned in the first paragraph.

Mr Mystery wrote:Founds it! Was just about to give up and retract my comment (what, I would have!)


http://privateerpress.com/community/privateer-insider?page=5

Mentioned in the first paragraph.

Um, they are talking about the division of the company that they call Privateer Hobby. Like the 'Eavy Metal Studio.

Article what I linked wrote:today Privateer Hobby will collect and display the best parts of the Privateer Press hobby experience

It is there.

P.S. I'm not criticising this. I see there is a PP Hobby as much as a GW Hobby. Neither is denying the wider side, so much as just not promoting it. What sensible company would?

Pricing a product to optimize sales is a very hard thing to do. There's no magic formula to apply to work that price out. And you can't ask people prior to pricing a product because that information is extremely unreliable.

The only way to do it is to put the product on market at a given price and see what happens. Then change that price (up or down) and see what happens. What might surprise some people is that there are the exact same sales problems below a certain price point as well. In other words if you charge too little no one will buy, if you charge too much no one will buy. Finding that sweet spot is insanely difficult. Compounding it, the price point is different depending on region and even down to the individual.

Now, the wargammer market is a fairly static market. There's only so many people that will take the time to collect, paint and play an army. So GW has to figure out who that person is and how much of their money they are willing to part with. Which raises another point most people miss: the amount of money it takes to create and distribute a product is only loosely (and very loosely at that) related to the retail price of that product. This means that things like the price of oil, employees, etc will have a very limited impact on the actual price they charge the customer. Those things might impact profitability, but they aren't a prime driver of the retail price.

So, where does this leave us?

Whatever you might think, GW management has been turning the company around. The GW of today has a lot better outlook than the GW of 2006; and no, they aren't going out of business anytime soon. I think they've probably identified the sweet spot of pricing (hint: they have currently shot past it) and will leverage this years releases to start reigning them back in. Pricing of DE models seems to be a step in the right direction. I expect others will follow. Further, they absolutely have to take a global look at pricing: Australian prices should have absolutely nothing to do with UK pricing and instead need to be driven entirely by local market conditions. It shouldn't be possible for an Aussie to buy the product from a different country, have it shipped to them, and pay significantly less than they would at a LHS.

Personally, I think they need to look into a simplified model on how to get new gamers in the door. One way to do this would be to revamp all of the battle forces. Namely, each one should have a HQ, 2 complete troop units, and a codex to complete the basic Force Org Chart. Perhaps with a $70(US) price point. From there everything else is an addon. Sell both versions of the rulebook: the small AoBR one for like $20 and the big one for more. This would put pricing in line with buying a video game which Mom and Dad usually don't think too much about. Next, encourage the retailors to run smaller games. Such as between 500 - 750 points. This is the number of points that should be available in a battleforce. Which means little Johnny can get into the hobby for under $80 (after paint) and should have somewhere to play. Smaller games have a lot of advantages such as taking a lot less time. And if Johnny keeps with the game he'll start buying the other stuff.

This is a completely different model than their current one, but takes advantage of ideas they already have. However, I've seen tons of kids walk into a store with their mom begging for some models. Each time mom's eyes will bug out at the bewildering array of products and has absolutely no idea where to even start. If they ask an employee what to do, that employee will create a pile including a BF, Codex, RuleBook and a few other required models to get a basic force going (~ $200). Inevitably her eyes pop out and drag the kid out of the store. Another lost opportunity.

For the veterans, you still have all of the additional models to buy and, obviously, can run games as large as you want.


My $0.02

PP runs seasonal league events with limited edition prize support (not buyable on the open market) which keeps the action fresh and drives sales. Irrespective of the fixed outcomes of GW's worldwide battle campaigns, (Armageddon and Eye of Terror), they generated a lot of interest in the gamer community and drove a corresponding amount of sales. These days, with the move to one man stores, I don't know how this impacts in-store events. I am certain that some keener managers will continue to run them, but I expect that YMMV. With the downsize of their events staff, it looks like GW is increasingly relying on the independents to run events and drum up interest. The lack of unique prize support outside of product is also disapointing. GW's old 3rd edition prize support was the stuff of legend. I still have one of their old plaques with the resin insert. Saddly, my Rogue Trader Tournament pewter pin is now a bit worse for the wear.

boyd wrote:

I didn't see this in their last set of financial statements, could you reference this for me? I did see that they are still making a profit and their margins have remained relatively consistant (only a 2% increase). What that tells me, is that they raised the price of their product by 5% and only saw a 2% in their gross margin. That is in no way indicative of anything less than adjusting the price for increase in materials charges. Also their price increases are based on historical trends (based on the PY) so they adjust their prices to reflect this so they didn't lose money producing their product.

Mr Mystery wrote:Oddly, new edition of Fantasy shook things up so much, I had customers starting new armies left, right and centre. The Horde mechanic made some older, dustier armies a lot more usable (Ogres!) and thus appealing.

Could a new book have helped? Of course, but to say it didn't work or was a flop (slightly paraphrasing from other threads before anyone gets their knickers in a twist) is disingenuous.

Your example is anecdotal, just as it is when people say it was a flop. What's in fact disingenuous is thinking that either anecdote somehow equals empirical data.

Products are really good, just slow to come out and not alot of variety from month to month. The last release for orks was a year ago and there is nothing on the horizon, thats alot of time in which its easy to get board with no love from WD either...

This is a problem. Can I mention Rackham and Confrontation? Yes, the company folded, but not because of the way they released their products. Every month or so Rackham would release a wave of models containing new units and characters for several different armies. One month you might get Kelt Centaurs, Orc Trackers, Dirz Abominations and Griffin character. The next month you'd see new units or characters for Devourers, Goblins, Drunes and Archon. With a few exceptions you could count on your army getting 2-8 new releases every year.

This was totally awesome! Because Confrontation miniatures were packaged with profile/stat cards it created a constantly evolving and changing meta game. Plus, a constant stream of awesome new models! As an Orc player I was thrilled to be able to buy new models every few month, and to know that something new would be available for my army in the next few weeks or months. It kept me interested in the game as both a player and a collector. The constant stream of new models for ALL of the armies eventually enticed me into picking up a Goblin and an Archon force as well.

It's been disheartening to return to 40k and the philosophy of only updating armies every few years.

Destrado wrote:
If I didn't get it wrong, however, their business strategy so far as been one of constant price increases not to combat base material prices, distribution, manufacture, et al, but to increase gross profit. While the increase in base materials would eventually be carried to the final costumer, it would be a rather negligeable increase because it is distributed all across the range - they're not selling a single product here, they're selling a lot of different products. If based on the quantity of material, then surely the Space Marine Tactical Squad would cost the same as the Dark Eldar Hellions. If I am incorrect in my assumption, do correct me, as it's been a long time since I had Marketing classes.

I say GW's administration is bad, because the discrepancy in price rises - they are not covering for the increased cost of transports and base materials, or even stores and administration, they are charging a lot more on their products so as to compensate for lower sales.

I'm sorry if I do mix up some terms. I also don't have an insight as to how the Board determines this. As I said, I'm merely speculating about their business models.

The actual material cost is nearly insignificant. Pewter, having doubled in price over the last few years, is still only a buck an ounce. Resin and plastics are even cheaper. The real costs that get passed on to the consumer are shipping, packaging, and most of all creation. GW probably pays good money for its sculpts and molds, and has to recoup that somehow.

The 2% increase in profits, if due mainly to raises in efficiency, is kind of bad news. Because they aren't going to be able to make the same changes again next year. Declining sales plus a drive to open more retail outlets seems like it could backfire in a big way as they're increasing their overhead in hopes of getting more business rather than as a response to demand.

The underlying issue is that GW has a bad case of Big Company Syndrome. They're so used to being on top and operating in a market without competitive pressure that they assume that the market will adapt to their decisions rather than adapting their decisions to the market. For the first time in its history GW has actual, honest to god, competition in the form of Battle Front and Privateer Press and they don't seem to have figured out how to build value in their product when compared to the other choices on the market. If Wyrd and Corvus Belli survive the next few years then the market is going to be even more crowded. Good news for war gamers, bad news for war game companies who aren't ready to evolve.

Howard A Treesong wrote:

KOS wrote:what if they are going to close everything ? Could they really go bankrupt ?

Not yet. They could end up in trouble but there's a long way they could decline yet. They won't disappear all together though, what could happen is that they end up in a really bad way and get bought out by another company like Hasbro.

Oddly enough I looked up the wikipedia entry on TSR as they went this way and were the biggest RPG company in the world. Here's a few choice bits from that entry...

[CUT]

There's something awfully familiar about some of this...

yes it's ... familiar.

They just don't care about customers or what people requests from the game and models. We are just cows to squeeze and then throw away. Sad.. but true.

clively wrote:Pricing a product to optimize sales is a very hard thing to do. There's no magic formula to apply to work that price out. And you can't ask people prior to pricing a product because that information is extremely unreliable.

So recently I was reading up on why companies have coupons as opposed to sales (to my mind a coupon was nothing but a sale with extra paper that has to be thrown away), and it turns out that coupons are a way to do market research on a variety of things, one of them being pricing. They help you see what lengths people are willing to go to get a discount on your product.

That, plus your post, made me realize I have never seen a coupon for a GW product, let alone a sale. It seems if you don't have the good fortune to live near a store that is having it's grand opening, you don't get sales with GW. Or coupons, or discounts of any sort.

Seems like that would be a good way to optimize their price points. Issue coupons (in WD perhaps? Give that magazine a reason to exist) and set up sales in different regions and test exactly what happens when prices are lower, without having to lower prices all at once. Makes more sense than shrugging and saying, "Well, I guess our followers will pay whatever we ask them to."


Automatically Appended Next Post:

Mr Mystery wrote:Founds it! Was just about to give up and retract my comment (what, I would have!)


http://privateerpress.com/community/privateer-insider?page=5

Mentioned in the first paragraph.

Alright. If I agree that Privateer Press has just as terrible a view of their customers as GW, will you be happy?

JOHIRA wrote:

clively wrote:Pricing a product to optimize sales is a very hard thing to do. There's no magic formula to apply to work that price out. And you can't ask people prior to pricing a product because that information is extremely unreliable.

So recently I was reading up on why companies have coupons as opposed to sales (to my mind a coupon was nothing but a sale with extra paper that has to be thrown away), and it turns out that coupons are a way to do market research on a variety of things, one of them being pricing. They help you see what lengths people are willing to go to get a discount on your product.

That, plus your post, made me realize I have never seen a coupon for a GW product, let alone a sale. It seems if you don't have the good fortune to live near a store that is having it's grand opening, you don't get sales with GW. Or coupons, or discounts of any sort.

Seems like that would be a good way to optimize their price points. Issue coupons (in WD perhaps? Give that magazine a reason to exist) and set up sales in different regions and test exactly what happens when prices are lower, without having to lower prices all at once. Makes more sense than shrugging and saying, "Well, I guess our followers will pay whatever we ask them to."

They used to give away coupons in WD but they disappeared around the same time as they stopped doing their annual sales (buy 2 red dot items, get a yellow one free).

Were these coupons good or just a waste of time ?

KOS wrote:Were these coupons good or just a waste of time ?

Pretty good as I remember but let's not kid ourselves; GW has always been expensive. I remember saving up to buy an Ork Great Gargant and thinking (£15 I seem to recall) was a lot of money for 1 model. At least with the coupons and sales you could actually make some discernible saving as opposed to now, where the only real way to save is to shop around or buy second hand.

What I mean to say is back then, at least you got the impression that GW actually gave a toss about its consumer base unlike now, where as a long-term player, I feel like the proverbial red-headed stepchild.

Some things hidden in the report:

Netherlands is shifted from Northern Europe (which includes UK) to Continental Europe, spoiling the statistics.
The only Chinese factory will be closed and paint and resin operations go back to Nottingham. This still allows for external production in China like printing or large moulds (ROB).

Fun fact by PsyberWolf over at Warseer:

Also, I should commend Kirby on a "bang up job" here in the states. Let's look at what he's accomplished on his US vacation... uh, I mean his US assignment:

-He fled the Maryland HQ and sought refuge in Memphis
-He pulled out of many areas in the US including the entire southeast
-He moved a "yes man" (woman I mean) from the same failed chain of command to the lead
-Under his leadership this year they sustained losses in sales

Yes, MISSION ACCOMPLISHED... time to head home

I know we've heard it MANY times before, but as previously mentioned in this thread, it appears as if GW may have actually priced themselves too high, and in to some serious trouble.

Time will tell, but I wonder if this year we'll hear about how they are "Holding the line!" on pricing, and perhaps even some (many?) price adjustments this year will be downward?

At the very least, they should at least 'round down' those VAT increases. They make the prices look daft and it would be a something of a respectful gesture...

...although I recognise that this only effects UK buyers.

Alpharius wrote:I know we've heard it MANY times before, but as previously mentioned in this thread, it appears as if GW may have actually priced themselves too high, and in to some serious trouble. Time will tell, but I wonder if this year we'll hear about how they are "Holding the line!" on pricing, and perhaps even some (many?) price adjustments this year will be downward?

I love this optimism. I'm going to let some of it rub off on me! They really do have a growing list of items that simply don't move at their current prices. The problem with adjusting them down and the reason they don't do so quickly probably has to do with the fact that if they were to do so it would send a message that if consumers don't like the price of an item they can just wait a few weeks or months and GW will lower it, which would be an admittedly bad strategy for GW. But some kits like the Greatswords, Bestigor, and Nazgul On Flying Beast have been languishing now for a long time due to their high price points. I hope you are correct and that GW gets more realistic on pricing certain items, if not on existing ones then going forward on some of the upcoming releases.

I kinda doubt a flat price decrease as the 'story' through late 2010 and into 1H2011 is largely inflationary and telling your shareholders that your stuff is simply too expensive would be far too much crow to eat.

What we might see is 'blowout features' like 25% off X items for X timeframe or product bundles priced to move.

Quite clearly they're going to have to do something to entice new people into the hobby as well as a better job at retaining existing customers.

Alpharius wrote:I know we've heard it MANY times before, but as previously mentioned in this thread, it appears as if GW may have actually priced themselves too high, and in to some serious trouble.

Time will tell, but I wonder if this year we'll hear about how they are "Holding the line!" on pricing, and perhaps even some (many?) price adjustments this year will be downward?

If the UK enters a second dip depression, with deflation, falling real salaries and 10 years of economic gloom, as some economists are predicting, it is going to be very hard for GW to get away with an exuberant annual price rise.

I wasn't planning to buy any GW stuff anyway, but my overall wargaming plan for the year is to build and paint the stuff I have on hand, and play the various games I haven't had a proper go at, rather than spending money on buying new things.

That way I can devote all my spare cash to drink.

I am missing a paragraph in the report on how much money they saved by firing Alessio and Rick

You're also still missing that it's not been confirmed that Alessio or Rick were actually fired.

But hey, don't let that get in the way of you spreading rumours. You post Stickmonkey's stuff, might as well keep posting that.

Kanluwen wrote:You're also still missing that it's not been confirmed that Alessio or Rick were actually fired.

Alessio wasn't fired. He'd been working on/under a part time contract for about a year before he left.

Mr. Priestley, alas, did not part company with GW under such pleasant circumstances.

But hey, don't let that get in the way of you spreading rumours. You post Stickmonkey's stuff, might as well keep posting that.

... .. hmmm.. okay. I think we'll leave this line of commenting here please. Ta.

skrulnik wrote:

Mr Mystery wrote:Founds it! Was just about to give up and retract my comment (what, I would have!)

http://privateerpress.com/community/privateer-insider?page=5

Mentioned in the first paragraph.

Um, they are talking about the division of the company that they call Privateer Hobby. Like the 'Eavy Metal Studio.

Mr Mystery wrote:

Article what I linked wrote:today Privateer Hobby will collect and display the best parts of the Privateer Press hobby experience

It is there.

P.S. I'm not criticising this. I see there is a PP Hobby as much as a GW Hobby. Neither is denying the wider side, so much as just not promoting it. What sensible company would?

Wow, I've seen some pretty half-hearted defenses of GW, but this one takes the cake...

Just to be clear, the sentence that Mystery here is construing as the equivalent of "The HHHobby thing is my little dig at GW trying to define all of Wargaming as their private intellectual property" (KK's original point) is within;

Starting today Privateer Hobby will collect and display the best parts of the Privateer Press hobby experience! Starting with gallery shots of our terrain and figures, we'll soon be adding galleries of our painting competition winners, player submissions, and tutorials for hobby projects! You can check out the new page here.

Just to be clear, the link is in the original, and it leads to a part of their website called, you guessed it, Privateer Hobby. Or, put another way, the claim "PP describe things as the Warmachine Hobby" is remarkably misleading.

I'm sure he'll "give up and retract [his] comment"...

Because PP asking for pictures of panted PP scenery to post on the part of their website devoted to such things is totally the equivalent of "GW trying to define all of Wargaming as their private intellectual property". Yup.

By the by, the link Mystery originally posted is incorrect now; the way PP's "Insider" works is every new thing posted pushes things back, when I retrieved the quote, it was page 6. That's because, in the day since Mystery posted his link, PP has already updated their Insider Blog.

It's almost as if they use the ease of updating a website to facilitate easy familiarity with their customers and create excitement about their upcoming releases. What mad fools they must be...

Buzzsaw wrote:

It's almost as if they use the ease of updating a website to facilitate easy familiarity with their customers and create excitement about their upcoming releases. What mad fools they must be...

Psssh...

Everyone knows this internet thing is just a fad, anyway. It'll go the way of the MP3 Player and the Cellphone Telephone soon enough.

As many before me have said, GW is concentrating on having new players make one big purchase and then never buy anything again. In that vein, it would make some sense to open as many stores as possible, in order to convince passers-by to make a large purchase. However, GW seems to be missing out on a big chunk of sales in assuming (and maybe even planning for) that new players will only make one large purchase ever. If they can keep people playing their game, they can continue to milk cash from their wallets (or their parent's wallets). In four years, I cannot add up the price of all the gak that I've purchased from GW, and I would assume that the ammount that some of the vets has spent is beyond astronomical. Of course, eventually the older players will have bought enough to be "satisfied," and will either stop buying product, or will begin to buy less. To keep the cash flow going, they need more players, and then the cycle repeats.

Of late, it seems that GW is getting over their reduced sales by jacking up prices, assuming that they can make up the difference, and keep their profit margin. Higher prices then lower sales, forcing yet higher prices. I would spend much more money on more models if they were, say, 5 USD cheaper. The average box of troops is $25. If each were five dollars cheaper, I would probably buy two boxes for every one I buy now, and this seems a common opinion: if models were cheaper, I would buy more. Period. Currently, it seems that GW is quite happy continuing to treat us like pinatas, beating us until we bleed candy.

Give a break to the little guy.... like me. I'm in australia and the prices are scaring my wife '' Honey, look at what i'm going to get!!'' '' oh what!!!, thats more then the phone bill!!!''

Why are you buying products locally?