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An Apology

First off, I apologize for the wall of text that will undoubtedly fill this post. I have been deep in thought and just wanted to air my current opinions. Please know that, as my tone cannot be conveyed via text, I am not ranting, raving, or trying to berate anyone. Rather I would like to present some ideas I have, given my experience with Warhammer 40k and Magic the Gathering (the latter of which is showing an unprecedented growth in numbers), and how Wizards of the Cost's business model may be a smarter direction for GW do head in. Though no GW employee will likely ever see this post, I still feel compelled to write it.

MTG and 40k
Currently Magic the Gathering is in a great period of growth, and has been growing since shortly after the recession began. Similarly Warhammer 40k seems to be stagnant in its numbers, which seems to show a decrease in growth. I believe the reason for this is due to a basic difference in the philosophy of each company's business model.

In response to the recession (and a drop in the number of people capable of affording the hobby), GW seems to be moving toward increasing prices so as to target a very small group. Essentially, you target the small group with high demand and income, while losing profits in terms of the supply of material sold, as you are recruiting less players. This is an understandable response to the economic changes, but I believe it is flawed in the long run. To highlight this, I'd like to look at MTG.

MTG has been growing because it's cheap to start, cheap to expand your collection, fun (and fairly inexpensive at a casual level) and provides entertainment. The main downside for the casual player of MTG is that every few years decks cycle out, as the "Standard-Legal" cards are replaced by new ones (requiring you to buy new cards if you want to play in most tournaments). The old cards can still easily be played, but the large-scale tournaments focus more on the standard environment. Still, the relative cheapness for start-up allows players to restart a new standard legal collection with this in mind. This cost of magic is negated by 40k, because though various rules change, units are still "legal" to use (as a non-standard legal card can't be used in standard regardless).

This benefit of 40k justifies an increase in price over MTG, as does the nature of the models (which are far more substantial than Magic Cards). However 40k is falling flat when it comes to its numbers of players because they are abandoning two tenants which have helped magic be so successful: Ease of start-up and expansion.

As I mentioned earlier, in MTG it costs 15$ to get a starterdeck (+ two boosters). it's not an amazing deck, but it's a start. 50$ more or so can easily make it a powerful casual deck (30-80$ for most casual decks, 200-1000$ for highly competitive tournament decks). Because the cards will cycle out of standard eventually (or be rendered weaker due to new sets) the cheap cost offsets these costs.

Starting 40k is something else altogether. The cheapest intro to the hobby is Dark Vengeance. For 100$ you get 1000 pts (though only 500pts may be of the army you want), and an abbrev. BRB. If you buy a codex and paints, that rises to roughly 150$. And that's the bare minimum games workshop offers. Despite it's apparent "cheapness," I'm fairly convinced GW is making a profit off of DV due to the volume sold, let alone the profit margin on the models themselves (which I believe is still high.)

Sadly DV only works for two armies, really. For other armies the cheapest you can start (from GW) is a battalion, a rule book, a codex, an HQ (maybe) and some paint. Assuming market price, you're in for roughly 230-250$.
The start-up price is simply too high to attract a wide variety of people. Lowering a start-up cost will allow more people to get into the hobby. This is the most important issue I see currently, the one that must be fixed posthaste.

Secondly GW should lower expansion cost. Though the individual profit from each sale decreases, I'm quite sure that with proper pricing demand would increase enough to still make a sizable profit (if not more than usual). Given the current economic state, people are willing to take up hobbies, especially those that offer a lot of fun whilst not being TOO expensive. W40K is currently too close to this too expensive line to justify people coming to the community (and thus increasing the potential buyers).

Thirdly by making start up and expansion lower, it allows players with collections already to easily start up new ones (and thus preventing buyers from becoming saturated and stopping when they have "enough" of the one army they started with)

I'm not very convinced that either one of these options will ever be explored by GW, but I still believe that they are more profitable in the long run than the current model. They bring in additional players (selling more product, despite lower profit margins per sale.) Unfortunately doing this would probably cause short-term loss in profit (it may not, but there is a chance it could). Thus it seems initially unattractive, though in the long run it would probably increase the game's population enough to increase profits well beyond their current value (I'd hope).

With this in mind, I have the following suggestions:

1. Lower start up cost by turning Battalions into "Starter Kits."
Every army needs the opportunity to have easier start up (for prices similar to the DV armies). In this case I'd recommend 500-600 points of models with an abbreviated BRB (like the one in DV) and an abbreviated codex (containing point values, the most essential wargear, and no other fluff, descriptions, etc. Just the absolute minimum required to play). I'd price it at roughly the same as the battalion box (100$ or so).

This way a player can start an army and get to playing for fairly cheap. They don't get the whole BRB and codex, with their flavor and fluff, so they can buy them if they'd like to see that, the art, etc. However this way players can pay a fairly low start-up cost to begin playing, allowing new players to start an army without having to invest 120$ on rule books and codices alone

This change, alone, would have a major impact on number of players imo, as suddenly a consumer can get into Warhammer40k without putting up some 250$ in start up (unless they play DV/chaos)

2. Lower expansion costs with a set price drop.
This is the real kicker. Personally I think that a drop of 65-75%, so that a 100 or so points of an army = 10$ would really explode the warhammer player base's numbers, but it's such a high drop that GW would likely never dream of it. Even if successful, the delay on the investment coupled with the initial profit hit would probably be too much.

I still say, however, that a 1000 point army, with multiple unit types, etc., should try to float at 200$. This number is reasonable enough for many people to accept the investment. To achieve this, it would likely require a 40-50% drop in price. E.g.: 10 Space Marines would cost 24$, 5 termies 32$, etc. This is still a lot of money, but it is perhaps more acceptable to GW. It would have to be a slow decent, but an overall decent in prices would increase the player base and increase the amount of product sold. The profit margins should still be enough (given DV as a reference) that GW can still see profits, and if the number of players increases (as I believe it will) then they could even see more profit. Either way, welcoming more players is a far healthier business model instead of charging much more to a smaller player base (with very few new players, thus killing continual growth after a period).

I'd hope that books would also drop in price (BRB to 45, codices to 20), as requiring a player 120$ for two books is dangerously high.
It'd also be prudent, imo, to lower paint prices. I am not familiar with the cost to produce such paint, I just believe that the quality of GW paints is high enough that if prices dropped, much of the competition they have would take a major hit. Then again, I'm not that familiar with paint (though it seems likely that the price on paints could be dropped).

In conclusion
I'm sorry it took so long to get here (and for w/e typos dot this text). To those who managed to read this whole thing, I'm sorry for taking so much of your time, but I believe I've made some valid points. If I'm super wrong on anything, please feel free to point out my mistakes. I may be 100% off. I'm no economist, and if anyone with more experience wants to point out what assumptions I've made incorrectly, please do so! I'd love to learn more about the situation (and the process).

To put it in a TLDR: Due to high start-up cost and high cost of expansion, 40k is unable to recruit players in the same numbers of games like magic. However it is not necessary for GW to keep prices at such a level that they keep people from the game. Making changes could easily breathe more life into the franchise. In particular, I believe that "Starter Kits", alone, would have a very positive effect on sales. To whatever end, I just hope GW is looking at MTG (and Wizards of the Coast) and can learn from their successes.

I love Warhammer 40k and I think changing GW's business model will help the franchise in the long run.

GW can't lower prices that much. Their profit margins aren't all that impressive as it is, and cutting prices by 75% would mean every single product would be selling at a loss. That might be a viable strategy for starters sets (sell at a loss to get people into the game, make it up on future purchases) but there's no way they can sell an entire 1000 point army for $200.

What GW really needs to learn from WOTC:

1) Stop excluding potential customers. 40k is not exclusively a "beer and pretzels" game, accept that tournaments exist and do everything you can to get competitive players into the game (along with casual players, people who just like to paint, etc). There's a reason that WOTC has done extensive research into what each player archetype enjoys and makes an effort to ensure that all of them have a steady supply of reasons to buy MTG.

2) Stop pretending that it's still 1990 and marketing doesn't exist. The internet exists, and the "hobby" does not consist of just GW products anymore. Learn from how WOTC does previews for upcoming MTG releases: lots of information to build up excitement in the 1-2 months before release, previews to major independent magazines/blogs, presence at gaming conventions, etc. And then learn from how WOTC has a website that makes you actually want to read it daily and stop posting "articles" that are little more than a link to something to buy.

3) Start playtesting properly. Learn from how WOTC manages to have a much more complicated game that is still well balanced and completely lacking in rule ambiguity. There's just no excuse for the laughably bad quality of GW's rules.

I think you're being a bit unreasonable in asking GW to esentailly give away codexes with battle boxes, *and* lowering the price. They can stick a rulebook (I don't know why people say it's cut-down when it's not...it's a rulebook. It contains all the rules you need to play, and omits none), because it gets people into the game. There'd be no point to giving away codexes with the battle boxes.

Though I do think they should be available to *buy*. Normal codexes cost £30 in the UK, I think mini-dexes would be reasonably costed at £15.

Also the starter sets need to be a lot friendlier. GW need to stop kidding newcomers and say exactly what you need to get your gak up and running - clippers, a file, a paintbrush and paint. If you were to buy all these from GW you'd be paying a fortune.

A quick question (not hostile or anything, I just really have very little knowledge of the plastic model making process). After creation of a model, how much does the overall production cost them? Is plastic more expensive than I imagine? I'm used to Space Marines, and it always seemed a little strange that 10 space marines would justify a 37$ cost. I mean it's quite possible it does, I just don't know the cost of making plastics is (and thus if it justifies so high a price).

On the advertising side:

I think you're right that 40k has trouble with advertising, but I will say that a lot of MTG advertising comes from groups dedicated to selling MTG (like starcity, for example). These secondary marketers really seem to advertise the hobby.

On the rules:
I agree that Magic has much tighter rules, (esp. because there is a core ruleset that is fairly easy to pick up) and that I'd like to see 40k much more streamlined, however I will admit 40k has a lot more variables to deal with than on a magic table.

Finally:
Really the core of this long post is pushing the idea of better start up potential. Even if prices remain the same, you need a fairly easy way to enter the hobby, imo. 250$ to start a tau army, for instance (At basic point levels) is just so high to me. But again, I don't really know much about the process ^ ^

The problem is that the only cost to wizards to make magic cards is to print pretty pictures onto pieces of paper. Games workshop, on the other hand, works with plastic, metal, and resin. It's also a LOT easier to come up with a new a pretty 2-D image than a 3-D model. Because their materials and manufacturing expenses are much higher, they automatically require higher entrance costs. That is, without losing a bunch of money on starter sets, which they don't seem to be in a position to do.

I mean, MTG is in such a way where you can easily do the online version. Definitely not so for a game like 40k. You instead wind up getting a rather different game.

The same is basically true for expansion costs. Expansion costs for MTG are extremely low because all you need to expand might be a few pieces of paper. Adding a new unit to your army made of plastic minis is necessarily going to cost more.

This means that the strategy you're calling for would require GW to take a loss to get people into the game, and then to keep taking a loss while people get deeper into it. Where exactly was GW supposed to be making their profit from?

Which really is the problem. A strategy of "cheaper prices now" is always better for the customer, but it really isn't always best for the business. Just having more people buying your product isn't necessarily better by itself.

@ Alairos

I completely understand that comparing MTG to 40k, on a pure cost value is unproductive. 40k models should cost more than Magic cards (on the whole; i'm looking at you, Black Lotus), I would say that the 250$ start-up cost for a new Tau player (for instance) is steep enough to be a substantial barrier to many people who might want to try out the game. Hence the recommendation for "starter kits"

You are quite right, however, that it is unrealistic of me to just prescribe an "across the board" price drop when I myself have very little knowledge of the processes that go into making those models, and the costs associated therein. For this I apologize.

Well what you're really looking for, then, is some sort of 40k-esque game. Something that uses the same models, and many of the same rules, but is set up to be a pure skirmish game.

I don't know why they don't do this other than from the historical data of small-model-count games not actually working out that well for GW (for example, blood bowl, necromunda, mordheim and inquisitor are all out of print). Don't know why they weren't profitable enough, but I guess they weren't or GW would continue to support them, presumably.

@ Alairos

Don't get me wrong, I love 40k and playing it. Just from speaking to some of my friends (who, though they love the fluff, have trouble swallowing the 250$ entry cost), it seems like a "Starter kit" idea would really help get more people into the hobby.

Yeah, as for necromunda et al, I as well am unsure why they were unprofitable in the long run. I assume internal competition at the company? (competing with more popular formats, like 40k or Fantasy), as well as other factors (that people more qualified than me can answer).

Don't get me wrong though, I really like 40k and love GW models. I just lament my friends and others who are put off by the entry price point to the hobby.

Lol, I see people bitching about Space Marines costing $48 USD but down here in NZ if I wanted to buy that gak new it'd be like $80 NZD - something like $70 USD

Hashbeth wrote:
@ Alairos

I completely understand that comparing MTG to 40k, on a pure cost value is unproductive. 40k models should cost more than Magic cards (on the whole; i'm looking at you, Black Lotus), I would say that the 250$ start-up cost for a new Tau player (for instance) is steep enough to be a substantial barrier to many people who might want to try out the game. Hence the recommendation for "starter kits"

You are quite right, however, that it is unrealistic of me to just prescribe an "across the board" price drop when I myself have very little knowledge of the processes that go into making those models, and the costs associated therein. For this I apologize.

You shouldn't compare any TT wargame to any other game system because its not just a game, its a hobby.

Compare it to other hobbies, like fishing, hunting, biking, paintballing, etc...


But yes, plastic is fairly expensive. Then you have the cost of molds, labor, packaging, and other normal costs of running a business.

 Peregrine wrote:
GW can't lower prices that much. Their profit margins aren't all that impressive as it is, and cutting prices by 75% would mean every single product would be selling at a loss. That might be a viable strategy for starters sets (sell at a loss to get people into the game, make it up on future purchases) but there's no way they can sell an entire 1000 point army for $200.

False. The production cost for a unit of space marines is about $0.75 USD + the cost of molds/number of space marine kits produced , as GW has in-house manufacturing, the cost of the molds are trivial relative the 6 figure prices throw around on these forums (which are themselves higher than reality), since most of the costs associated with producing molds comes from the time it takes to tool them (I.E. youre paying a moldmaker for the amount of time his machines are occupied cutting your molds as opposed to another customers). The production costs of the kits are in fact so cheap that even the largest kits GW produce dont cost significantly more to produce outside of the mold tooling costs (larger molds generally cost disproportionately more to produce).
.
In reality GW is making a large profit on every box sold (and the more boxes it sells the larger its profit margin becomes as a result of dividing up the mold costs among a greater number of boxes), the real cost is the cost of GWs retail outlets which generally dont operate in the black (iirc, there was a leaked report a few years ago about how only a handful of GW hobby centers are actually operating at a profit).

Again, to reiterate, plastic is RIDICULOUSLY cheap. The $.75 USD figure is actually high (though admittedly packaging probably costs another $1.00) relative the volume of plastic in a space marine kit. When I was looking into plastic proudction some time back for one of my own projects (coming soon to a kickstarterbnear you one day maybe), I could actually get about 4 marine kits worth of plastic for slightly less than that.

Hashbeth wrote:
A quick question (not hostile or anything, I just really have very little knowledge of the plastic model making process). After creation of a model, how much does the overall production cost them? Is plastic more expensive than I imagine? I'm used to Space Marines, and it always seemed a little strange that 10 space marines would justify a 37$ cost. I mean it's quite possible it does, I just don't know the cost of making plastics is (and thus if it justifies so high a price).

Raw material costs are almost nothing, but in addition to paying for all the design work (and the metal molds for plastic kits cost tens of thousands of dollars) for the kit the sale price has to cover the labor, packaging materials (and art design for them), the GW website, shipping, etc. It's hard to say exactly what the costs are and how much GW wastes on poor efficiency, but right now their profit margin overall is nowhere near enough to make the kind of cuts you're talking about.

I think you're right that 40k has trouble with advertising, but I will say that a lot of MTG advertising comes from groups dedicated to selling MTG (like starcity, for example). These secondary marketers really seem to advertise the hobby.

But so does WOTC. Previews for a new set, ads on facebook/gaming sites/etc, presence (including events and previews!) at gaming conventions, etc. Obviously WOTC, like GW, gains a lot from their customers telling all their friends about the game, but WOTC is investing a lot more effort than GW in their own marketing.

@Grey Templar
Though monetarily it was wrong of me to compare the two, I do think a strong comparison to barriers to start-up is somewhat justified. Essentially I still believe lowering start-up costs for all armies would be helpful overall (assuming all other prices remain the same).

@Chaos0xomega

May I ask where you're getting this information? Not to be hostile, just genuinely curious. I had assumed cost to be fairly low, but haven't been able to find any data on it. If what you're saying is true, then I would say that cost reduction, on the whole, could move more product and still provide profit similar to what they currently see.

chaos0xomega wrote:
False. The production cost for a unit of space marines is about $0.75 USD + the cost of molds/number of space marine kits produced

Do you really not understand that the cost for a business to produce and sell something is more than the cost of the raw materials used?

Hashbeth, Im an Industrial Engineer and also looking to start my own gaming company, what I wouldnt know is the shipping costs associated with getting the stuff from A to B. I cant imagine it being that expensive per shipping container that the volume of kits per container couldnt effectively cover the costs, and at least until recently GW localized production in a couple countries which should have brought that cost down some.

As for the design costs, I had assumed that the design team, etc. were on salary, given that they produce a number of kits, pieces of art, etc. every year the actual cost to design should be very small per kit produced (unless Jervis and Ward are making duperstar salaries). Also, GWs manufacturing capacity should presumably be in excess of demand (although the Tau fiasco kind of makes me wonder), meaning that if they seconded out their facilities to other companies for hire, they could turn a profit on their machines as well.

 Ailaros wrote:
Well what you're really looking for, then, is some sort of 40k-esque game. Something that uses the same models, and many of the same rules, but is set up to be a pure skirmish game.

I don't know why they don't do this other than from the historical data of small-model-count games not actually working out that well for GW (for example, blood bowl, necromunda, mordheim and inquisitor are all out of print). Don't know why they weren't profitable enough, but I guess they weren't or GW would continue to support them, presumably.

Something like space hulk? Or possibly like the DnD Castle Ravenloft, Wrath of Ashardalon or Dungeon! boxed games that have a half-sized version of the main rules with some minis and preset tiles. The box would be around $75-$100 and would contains a Space Marine Vs. X in a mission based version that uses rules similar to but lighter than regular 40k (like you move squares instead of inches, etc). Ideally you could invite 2-5 people over and have them all take a piece and go to town on a board game, which can be wrapped up easily in a single evening. Market the hell out of it, include tons and tons of material about mainstream 40k. There could even be different versions, like one fpr space wolves, one for ultras, one for Dark Angels, IG, etc, and it wouldnt cost too much to make a variety of them either, since it would be current models inside.

And finally....

OFFER A DAMNED BUNDLE DISCOUNT. Bundles should by nature be cheaper, since you want me to buy more of your product, naturally im going to buy the fat wad of items, even if it has something i do not want if i am getting a 10-15% discount than if i bought it separately. Sometimes I think they dont want sales volume at all.....

 Peregrine wrote:

chaos0xomega wrote:
False. The production cost for a unit of space marines is about $0.75 USD + the cost of molds/number of space marine kits produced

Do you really not understand that the cost for a business to produce and sell something is more than the cost of the raw materials used?

Do you really not understand that GW uses a largely automated production process meaning that the actual costs are, in fact ,basically the costs of materials (to include electric, etc.) used to produce? The cost of the design team and staff are sunk costs which have nothing to do with the profit margins of the products they sell (unless they are paying out royalties/commissions).

If GW, as a company, is operating at a slim profit margin, it is NOT because margins on what it produces and sells are themselves slim, it is because it suffers from organizational bloat and is incurring costs at other points in the supply chain (Hobby Centers) and at other locations in its business model.

chaos0xomega wrote:
Do you really not understand that GW uses a largely automated production process meaning that the actual costs are, in fact ,basically the costs of materials (to include electric, etc.) used to produce? The cost of the design team and staff are sunk costs which have nothing to do with the profit margins of the products they sell (unless they are paying out royalties/commissions)

And all of that only matters if you look at just the cost and sale price of a single product in isolation. But businesses don't work that way, if you want to do things like have a website then that money is coming directly from the revenue from the products you're selling and you'd better sell them for a high enough price to cover it. And the simple fact is that the overall expenses and revenue for GW do NOT allow them to cut prices by 75% and still exist as a profitable business.


Automatically Appended Next Post:

chaos0xomega wrote:
If GW, as a company, is operating at a slim profit margin, it is NOT because margins on what it produces and sells are themselves slim, it is because it suffers from organizational bloat and is incurring costs at other points in the supply chain (Hobby Centers) and at other locations in its business model.

And that's exactly what I said: some other hypothetical company might be able to beat GW's prices and make a decent profit, but GW can not. Blame it on whatever you like, but GW is not capable of making the kind of price reductions the OP proposed.

@Chaos0xomega: I worked for a company that did output a lot of product via shipping for a summer (recycled govt. materials sold out via e-bay and other organizations). The shipping isn't that high, and with a production facility in...Memphis (US at least) I can imagine the shipping not being that bad on light materials.

@ Peregrine
I don't know much about the company, but it's quite possible it has a lot of bloat on it (as well as paying off investments like manufacturing facilities, buildings, etc.) If that's the case, then hopefully we'll see sometime in the future that GW would be able to trim back a little bit (and hopefully use that to help with pricing). That being said, I still think slight changes like starter kits [I know I sound like a broken record] might be helpful ^ ^

I don't think their gross margins are quite as large as you are implying, but they are certainly healthy. From the latest financial report (6 months to Dec. 2012):

Gross Profit (50893) divided by Revenue (67457) = Gross Margin of ~75%. Compared to an industry giant like Hasbro (59%) or yesterday's sector leading stock, LeapFrog (42%) that is a pretty high number.

chaos0xomega wrote:

 Peregrine wrote:
GW can't lower prices that much. Their profit margins aren't all that impressive as it is, and cutting prices by 75% would mean every single product would be selling at a loss. That might be a viable strategy for starters sets (sell at a loss to get people into the game, make it up on future purchases) but there's no way they can sell an entire 1000 point army for $200.

False. The production cost for a unit of space marines is about $0.75 USD + the cost of molds/number of space marine kits produced , as GW has in-house manufacturing, the cost of the molds are trivial relative the 6 figure prices throw around on these forums (which are themselves higher than reality), since most of the costs associated with producing molds comes from the time it takes to tool them (I.E. youre paying a moldmaker for the amount of time his machines are occupied cutting your molds as opposed to another customers). The production costs of the kits are in fact so cheap that even the largest kits GW produce dont cost significantly more to produce outside of the mold tooling costs (larger molds generally cost disproportionately more to produce).
.
In reality GW is making a large profit on every box sold (and the more boxes it sells the larger its profit margin becomes as a result of dividing up the mold costs among a greater number of boxes), the real cost is the cost of GWs retail outlets which generally dont operate in the black (iirc, there was a leaked report a few years ago about how only a handful of GW hobby centers are actually operating at a profit).

Again, to reiterate, plastic is RIDICULOUSLY cheap. The $.75 USD figure is actually high (though admittedly packaging probably costs another $1.00) relative the volume of plastic in a space marine kit. When I was looking into plastic proudction some time back for one of my own projects (coming soon to a kickstarterbnear you one day maybe), I could actually get about 4 marine kits worth of plastic for slightly less than that.

@ Generalchaos34
I really approve of the idea of Bundle discounts. Really good idea. Yes, GW does take off shipping on orders of 50$, but when it comes to large orders a bundle discount would be often. Really good input sir/madam

@Jack_Death
Thanks for the numbers! That's really helpful. I know my numbers are probably a little.... overoptimistic, but it's nice to know some actual numbers. Thanks for the input!

Jack_Death wrote:
Gross Profit (50893) divided by Revenue (67457) = Gross Margin of ~75%. Compared to an industry giant like Hasbro (59%) or yesterday's sector leading stock, LeapFrog (42%) that is a pretty high number.

But gross profit is not the number we care about, it's only one step in figuring out the final profit. It does maybe hint that GW has some problems in other parts of their company (poor retail efficiency, etc), but it doesn't mean that GW can cut prices by 75% before they start losing money. To figure out the maximum price cut GW could survive you need to look at NET profit.

generalchaos34 wrote:Something like space hulk? Or possibly like the DnD Castle Ravenloft, Wrath of Ashardalon or Dungeon! boxed games that have a half-sized version of the main rules with some minis and preset tiles. The box would be around $75-$100 and would contains a Space Marine Vs. X in a mission based version that uses rules similar to but lighter than regular 40k

Sure.

Or perhaps they could charge about $100 for a version of 40k that comes with all the base rules, a bunch of miniatures, and two different armies and all the other necessary swag so that you and a friend could play against each other. Oh.

chaos0xomega wrote:In reality GW is making a large profit on every box sold

In 2012, GW brought in 130 million pounds of revenue. Of which 15 million was profit.

A 12% margin is high compared to things like selling gasoline or postage stamps, but that's hardly gouging. Especially for a specialist durable good.

Put another way, if they knocked off 10% of the price, they'd be basically breaking even (and I'd like them to invest in new content in the future). Anything GW makes at 90% of its retail price is still going to be pretty expensive.

It almost always comes back to price, and of course the same rehashed arguments.

Entry cost for 40k or fantasy as a hobby is quite cheap compared to many adult hobbies. MtG is not any cheaper than 40k if you compare what people who are serious about them spend. The two games are so vastly different I think it would be about as useful to compare 40k to golf as much as to MtG.

JWhex wrote:
Entry cost for 40k or fantasy as a hobby is quite cheap compared to many adult hobbies.

Sure. Getting into flying costs $15k for a cheap airplane, $5-10k or more to get the license, and then $50-100 an hour to use it. Compared to that even the most expensive GW army is dirt cheap (but a lot less fun).

What you need to compare GW games to isn't hobbies in general, it's other games in the genre. I'm not deciding whether to spend money on an airplane or another GW kit, I'm deciding whether to spend the gaming part of my hobby budget on a GW game or some other game. And when you look at it that way GW's games are extremely expensive to start, and extremely expensive to keep up with.

MtG is not any cheaper than 40k if you compare what people who are serious about them spend.

But people who are really serious about the game are just a small percentage of the players. Yes, some people spend hundreds of dollars a month on cards and then even more on travel to major tournaments, but you don't have to spend that much. You can get started in MTG for $50, and you can play a year of local-store MTG or indefinitely in a casual setting for well under $500. You only have to spend huge amounts of money on the game if you really love it and have the desire and budget to play at the highest levels. Compare that to GW games where $500+ is just the bare minimum to start the game.

The two games are so vastly different I think it would be about as useful to compare 40k to golf as much as to MtG.

They may be different in concept, but I bet there's a lot more competition for hobby money between 40k and MTG than between 40k and golf.

 Ailaros wrote:

generalchaos34 wrote:Something like space hulk? Or possibly like the DnD Castle Ravenloft, Wrath of Ashardalon or Dungeon! boxed games that have a half-sized version of the main rules with some minis and preset tiles. The box would be around $75-$100 and would contains a Space Marine Vs. X in a mission based version that uses rules similar to but lighter than regular 40k

Sure.

Or perhaps they could charge about $100 for a version of 40k that comes with all the base rules, a bunch of miniatures, and two different armies and all the other necessary swag so that you and a friend could play against each other. Oh.

chaos0xomega wrote:In reality GW is making a large profit on every box sold

In 2012, GW brought in 130 million pounds of revenue. Of which 15 million was profit.

A 12% margin is high compared to things like selling gasoline or postage stamps, but that's hardly gouging. Especially for a specialist durable good.

Put another way, if they knocked off 10% of the price, they'd be basically breaking even (and I'd like them to invest in new content in the future). Anything GW makes at 90% of its retail price is still going to be pretty expensive.

I dont think its quite that simple, they sell to retailers at a 25% discount and im sure they are still making a profit on those items.

Im just peeved that they are constantly raising prices well beyond the regular rate of inflation and making it much harder for the casual gamer to jump in, leaving only insane die hards like ourselves.

 generalchaos34 wrote:
I dont think its quite that simple, they sell to retailers at a 25% discount and im sure they are still making a profit on those items.

But only because selling to retailers at that discount removes the cost of selling the item to the customer (retail store rent/employees, website, shipping, etc) and transfers it to the retailer. And then the retailer has to sell it to the customer at a higher price to make a profit. You can't just drop the price to the customer by 25% without destroying profits.

 Peregrine wrote:

 generalchaos34 wrote:
I dont think its quite that simple, they sell to retailers at a 25% discount and im sure they are still making a profit on those items.

But only because selling to retailers at that discount removes the cost of selling the item to the customer (retail store rent/employees, website, shipping, etc) and transfers it to the retailer. And then the retailer has to sell it to the customer at a higher price to make a profit. You can't just drop the price to the customer by 25% without destroying profits.

Then how do alot of stores sell their items for 10-20% lower than GWs list price? Not just online but alot of brick and mortar places sell at that rate.

 generalchaos34 wrote:
Then how do alot of stores sell their items for 10-20% lower than GWs list price? Not just online but alot of brick and mortar places sell at that rate.

Because the discount GW gives to retailers is more than 25%, so retailers selling at 10-20% off are still making a profit.

 Peregrine wrote:

chaos0xomega wrote:
Do you really not understand that GW uses a largely automated production process meaning that the actual costs are, in fact ,basically the costs of materials (to include electric, etc.) used to produce? The cost of the design team and staff are sunk costs which have nothing to do with the profit margins of the products they sell (unless they are paying out royalties/commissions)

And all of that only matters if you look at just the cost and sale price of a single product in isolation. But businesses don't work that way, if you want to do things like have a website then that money is coming directly from the revenue from the products you're selling and you'd better sell them for a high enough price to cover it. And the simple fact is that the overall expenses and revenue for GW do NOT allow them to cut prices by 75% and still exist as a profitable business.


Automatically Appended Next Post:

chaos0xomega wrote:
If GW, as a company, is operating at a slim profit margin, it is NOT because margins on what it produces and sells are themselves slim, it is because it suffers from organizational bloat and is incurring costs at other points in the supply chain (Hobby Centers) and at other locations in its business model.

And that's exactly what I said: some other hypothetical company might be able to beat GW's prices and make a decent profit, but GW can not. Blame it on whatever you like, but GW is not capable of making the kind of price reductions the OP proposed.

And again I say false! Granted I dont know how big of a cut the OP is proposing because I didnt read it, but GW CAN make a sizeable cut if they also cut costs on their end... and they have a lot of room to make those cuts in.

In 2012, GW brought in 130 million pounds of revenue. Of which 15 million was profit.

A 12% margin is high compared to things like selling gasoline or postage stamps, but that's hardly gouging. Especially for a specialist durable good.

Put another way, if they knocked off 10% of the price, they'd be basically breaking even (and I'd like them to invest in new content in the future). Anything GW makes at 90% of its retail price is still going to be pretty expensive.

There is a difference between a profitable business and a profitable product. I am arguing that GW can in fact cut product prices and still make a large profit on every product sold as the cost of the product is much greater than the cost of production (and with reduced prices will come greatly increased volume of sales). GW as a business on the other hand, is just barely profitable, but GW as a business is far more than just a means of production of product, it is also a legal department, a retail chain, etc. etc. etc. All of these costs are being transferred to the consumer by way of product prices, but just like how GW can raise prices on its products, it can also cut costs and make a leaner business. GW would save MILLIONS every year if it cut out all of its retail centers, leaving only a handful of the most profitable ones in large urban centers. GW would also save a ton of money if it cut down its legal department to the bare minimum needed to browse the internet and send out cease and desist letters (basically one guy) and outsourced its legal defense to another company. While im at it, GW would save a lot of money if it gave up on the LotR line, but at this point im beating a dead horse with the withered carcass of another dead horse...