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Jaq Draco lives wrote:
Does anyone have any concrete figures to say what their margins and costs are as to whether or not we even know if they have bloated margins?

I think they mentioned in one of their annual reports that the cost to produce and package a plastic kit is about 5% of retail. But that was some years ago (stuff was cheaper) and doesn't include overhead (design, infrastructure, their stores, and everything else)

Overall Cost of Goods used to be about 26% for GW. This was reported in several reports, but in the most recent one it had risen to 29%.

There has never been a breakdown between the different types of goods they produce, books, plastic kits, Finecast models, and various hobby supplies.

Thing to consider about GW's expensive firesale attempt for a one time sale is that it massivly oversauturates the second hand market.

Good for you GW you just sold an army for 1000 bucks to someone wholl loose intrest in six months, and it will be sold of on ebay how many times 4x-5x times. Thats 3 potential army sales lost.

Second hand isnt a problem itself. but its GW's buisness methods thats oversaturating the market, GW is actually outcompeting themself by shuffeling armies on rich parents.

From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Those figures are roughly in line with GW's own reported figures, however the conclusion about the retail chain is not as simple as a straight price cut of 50%.

The shops are basically GW's only marketing effort at the moment. If they went, the product would have to compete with all the other wargames on Indy shop shelving, so GW would have to spend a lot more on advertising and promotions.

This might of course be more cost effective anyway than having a retail chain.

 Kilkrazy wrote:
Those figures are roughly in line with GW's own reported figures, however the conclusion about the retail chain is not as simple as a straight price cut of 50%.

The shops are basically GW's only marketing effort at the moment. If they went, the product would have to compete with all the other wargames on Indy shop shelving, so GW would have to spend a lot more on advertising and promotions.

This might of course be more cost effective anyway than having a retail chain.

It would probably be a good thing if GW actually had to do promotions, community relations, and compete -- it would be healthy for it.

Back when the GW Store was sort of a local hub for the hobby, and they could rely on a pretty large sales staff to be their ambassadors, they could do without. I really don't feel like the retail chain in its vestigial form is "making back its points."

Kirby would agree. The only explanation he gave for their bad results last year was trouble staffing the one-man shops.

 Kilkrazy wrote:
Kirby would agree. The only explanation he gave for their bad results last year was trouble staffing the one-man shops.

And so, in his infinite wisdom, he carried on anyway

Lanrak wrote:
From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Not seeing costs for sculpting and design, writing of codex or other support mechanisms in place and other base level costs which your main product must contribute to.

So as it stands though even without those figures those people saying GW could do a 40% price cut are living in cuckoo land unless of course they decide to change their entire company structure.

Jaq Draco lives wrote:

Lanrak wrote:
From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Not seeing costs for sculpting and design, writing of codex or other support mechanisms in place and other base level costs which your main product must contribute to.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

Jaq Draco lives wrote:

Lanrak wrote:
From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Not seeing costs for sculpting and design, writing of codex or other support mechanisms in place and other base level costs which your main product must contribute to.

So as it stands though even without those figures those people saying GW could do a 40% price cut are living in cuckoo land unless of course they decide to change their entire company structure.

General design studio costs are probably absorbed into overheads.

 Kilkrazy wrote:

Jaq Draco lives wrote:

Lanrak wrote:
From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Not seeing costs for sculpting and design, writing of codex or other support mechanisms in place and other base level costs which your main product must contribute to.

So as it stands though even without those figures those people saying GW could do a 40% price cut are living in cuckoo land unless of course they decide to change their entire company structure.

General design studio costs are probably absorbed into overheads.

Exactly, they are accounted in the 24% parcel along with mold making costs and other things like that. Its basically everything that is needed to produce a model from nothing until its a complete product ready for sale.

Fair enough so in that case though I mean a 13% margin doesn't leave a lot of room for change especially when you consider they have trimmed down to a one man store format.

Jaq Draco lives wrote:
Fair enough so in that case though I mean a 13% margin doesn't leave a lot of room for change especially when you consider they have trimmed down to a one man store format.

Close the stores, voilá, they now have an extra 55% of margin to work with!

But with no marketing, and they become reliant on independents they have spent the past few years deliberating grinding down as hard as possible.

 Kilkrazy wrote:
But with no marketing, and they become reliant on independents they have spent the past few years deliberating grinding down as hard as possible.

They are already heavily reliant on independents (and on their online channel), everywhere that isn't the UK. And how effective are their new 1 man stores, tucked away outside major traffic areas, from a marketing standpoint really?

They've completely cut down on promotional events in these past few years, there are no more official tournaments, no more official conventions, no more global campaigns. Heck, there aren't even any more GW store tournaments or campaigns to help drum up interest for the game. How big of a loss would it really be, from a purely marketing stand point, if all those stores just went away?

Reconnect with customers through social media. Begin running contests and begin beta programs immediately.

Reach out to the Independents you've crapped all over and begin supporting them properly. (Losing their loyalty directly feeds both funds and more importantly players to your competition.) Begin closing all non UK GW stores.

Once you have established your beta program begin development of 2 new games.

They are both to be gateway skirmish level games for your two flagship systems. Use your existing strong range of miniatures for both games.

If people have a fun engaging game to buy into that doesn't cost hundreds of dollars just to start, they will more willingly begin playing your mass battle game when doing so is only a couple units and a rulebook away. Even if they don't that is still sales you weren't getting before.

I agree with Killkrazy, GW plc are in a very fragile position right now.
The warning signs were there before and after the LoTR boom.(2000, / 2005.)
The B&M stores were functioning as mainly 'loss leading hobby centers' that added value to the product range,but were costly to maintain.

A competent C.E.O or chairman would have had a complete and in depth look at the way GW plc used sales and marketing to promote their product range/hobby.

And looked at the social media/ internet as a more cost effective way to promote and retail GW plc product.
Promoting the hobby with some thing similar to the Outriders program , where 'GW Hobby Managers', help and support local clubs, LFGS, and gaming groups organize fun events like tutorials , campaigns and tournaments.

This would have allowed GW plc to scale back retail chain slowly over time, to allow GW plc to maximize returns on all revenue streams .
Rather than try to change the way the world works to fit how Tom Kirby wants the world to trade with GW plc.(Like it was back in 1992.)

I agree with TAG, I think that Tom Kirby believed all he had to do was cut costs, raise prices to maintain turn over in the short term, and GW would be bought out by a big company like Hasbro, and he would retire with a massive pay out.

When GW plc did not get bought out ,Tom Kirby hoped the Hobbit would allow them easy success like the LoTR license did.
However,his attempt at maximizing profits off the Hobbit licence, over priced the product range effectively culling interest in the Hobbit minatures in many cases.

The actions needed now to repair the damage caused by Kirby and his cronies is quite extensive, and requires the skills and mindset the current corporate managers simply do not have.

I was not proposing just shutting all the GW B&M stores over night.
But find ways to communicate with and build up the players base , to be able to minimize dependence on GWs costly retail chain.

Jaq Draco lives wrote:

Lanrak wrote:
From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Not seeing costs for sculpting and design, writing of codex or other support mechanisms in place and other base level costs which your main product must contribute to.

So as it stands though even without those figures those people saying GW could do a 40% price cut are living in cuckoo land unless of course they decide to change their entire company structure.

Cost of sales is ~37k

Revenue is ~ 124k

Cost of sales includes all development costs, production costs, basically everything to get a concept from the creator's brain to the shop shelf.

So an average cost per item is approx 29% of RRP before tax. This is quite a jump from last year (which was around 23% IIRC)

The issue that occurs and eats into the margin is the non product related costs, ie the stores, if it weren't for the massive overhead of running the stores and employing staff, GW would be making bucketloads of cash even with the declining income and sales.

As it stands, they could still significantly alter the contents of the boxes to include more without a great impact to the margin per box, as cost per sprue will be tiny once designed and the mould created, the trick would be balancing the increase in unit sales against the drop in revenue (people would only buy 1x10 man box, as opposed to 2x5 man boxes for a 10 man unit, but would enough extra people buy the better value box to offset that?)

On a personal note, I'd happily hand over £30 for a ten man Sternguard box, but have not purchased any of the 5 man boxes at that price, and don't really intend to.

Lanrak wrote:
From my friend who works at GW Nottingham.

The cost of manufacturing plastic kit boxes is appx 6% of RRP.

The cost including all overheads except retail and logistics is appx 24% of RRP

Logistic is appx 8% of RRP.

So that is appx 32% of RRP includes every thing apart from the cost of the retail chain.

The retail chain costs appx 55% of the retail price.(leaving about 13% clear profit.)

So if GW plc just used independent retailers and their own web store to sell product , they could cut prices by 50% and still make 5% more clear profit.

Imagine how much more profitable they might be if they ditched the retail chain, engage independent retailers as an ally (instead of competitor), and actually conduct a little bit of advertising.

What GW should do -- I have made this point often in the past -- is make better use of their retail chain by selling more than two products.

 Kilkrazy wrote:
What GW should do -- I have made this point often in the past -- is make better use of their retail chain by selling more than two products.

Well, three products (40k, WHFB, and Citadel paints/hobby stuff.)

Do you think they'd be better off launching (or re-launching) other lines, or bringing in other producers/partners to try to make the retail space more profitable?

ComTrav wrote:

 Kilkrazy wrote:
What GW should do -- I have made this point often in the past -- is make better use of their retail chain by selling more than two products.

Well, three products (40k, WHFB, and Citadel paints/hobby stuff.)

Do you think they'd be better off launching (or re-launching) other lines, or bringing in other producers/partners to try to make the retail space more profitable?

I was going to comment, but didn't then I saw your post. Well GW also sells Vision, White Dwarf, Paints, brushes, glues, drills (tools) etc. So they do sell more than 2 or 3 product ranges.

Thing is, GW can get away with just 2 lines, problem is, they have no respect for their customer and put themselves in where they are now. Just imagine if GW actually cared what their customers thought, cared what they wanted and gave customers a product they really enjoy and don't complain about.

Problem is, GW seems to be stuck in the 80's or is that 90's mentality that just doesn't work in this day and age. I am surprised that kind of mentality actually worked in the 80's and 90's.

Bring back Necromunda...blood bowl and all the other things we'd love to buy on a related note.

I tend to think they have an oversaturation of stores if my area is anything to go by. We got newcastle and the metrocenter and if people are going to one they are going to the other yet we have a store in both. Could shut down the metrocenter one and have two members of staff in newcastle and actually run some games.

I tend to agree when people say close stores cut prices, not sure what bricks and mortar do these days compared to other things (that GW are TERRIBLE at) I mean if you closed 30-50% of the stores even and then offered a 20% cut it is still something.

Davor wrote:

ComTrav wrote:

 Kilkrazy wrote:
What GW should do -- I have made this point often in the past -- is make better use of their retail chain by selling more than two products.

Well, three products (40k, WHFB, and Citadel paints/hobby stuff.)

Do you think they'd be better off launching (or re-launching) other lines, or bringing in other producers/partners to try to make the retail space more profitable?

I was going to comment, but didn't then I saw your post. Well GW also sells Vision, White Dwarf, Paints, brushes, glues, drills (tools) etc. So they do sell more than 2 or 3 product ranges.

Visions and White Dwarf really don't stand on their own as product ranges; they are catalogues of other products and without 40K/WHF they wouldn't exist. Hobby tools/materials are a stand alone product range though - there's still a reason to buy them even if you're not interested in 40K/WHF, but they are predominantly a support range for their mini's, as most non-GW gamers have already found better alternatives (I've almost entirely switched to Vallejo for paints).

ComTrav wrote:

 Kilkrazy wrote:
What GW should do -- I have made this point often in the past -- is make better use of their retail chain by selling more than two products.

Well, three products (40k, WHFB, and Citadel paints/hobby stuff.)

Do you think they'd be better off launching (or re-launching) other lines, or bringing in other producers/partners to try to make the retail space more profitable?

Yes.

The hobby supplies are an accessory range not a core product line. No-one goes to GW just to buy hobby supplies, they buy hobby supplies for doing Warhammer.

Seasoned wargamers and modellers don't buy a lot of GW hobby supplies even for Warhammer because GW do not sell everything you might need (saws, airbrushes, plastic card, epoxy cement), their stuff is overpriced and sometimes lower quality than you can get elsewhere.

If you could go into a GW and buy Fantasy Flight boxed games like Runebound or X-Wing, RPG books, or the new 5th edition AD&D, Space Hulk, Blood Bowl and that kind of thing, GW would attract a lot more customers who might then also buy Warhammer stuff.

This is basically turning GW back into the general games retailing company they used to be.

Lots of non-GW gamers still buy Citadel paints, so the paint range at least is somewhat independent.

I do see alot of posts regaring a missing community as in a Forum / facebook pages and so on.

The first thing that pops up in my mind, for searching a reason for missing a community would be the flood of criticism on the facebook page/forums.
As seen on many threads on Dakka, alot of people have a lot of criticism on GW. I think they are really afraid on being nuked for everything, and will cost them even more ptoentially costumers as they will read all the criticism of others.

It sounds more like a country which is lead by dictators; do what they want, but no one is allowed/able to say something about it.
It really shows how GW thinks about a community / costumers.

 Rachnaros wrote:
I do see alot of posts regaring a missing community as in a Forum / facebook pages and so on.

The first thing that pops up in my mind, for searching a reason for missing a community would be the flood of criticism on the facebook page/forums.
As seen on many threads on Dakka, alot of people have a lot of criticism on GW. I think they are really afraid on being nuked for everything, and will cost them even more ptoentially costumers as they will read all the criticism of others.

It sounds more like a country which is lead by dictators; do what they want, but no one is allowed/able to say something about it.
It really shows how GW thinks about a community / costumers.

I wonder if they ever thought about...I don't know....maybe addressing those criticisms? That might be something new to try.

Those criticisms are irrelevant because that kind of person doesn't buy GW products. GW sells to people who enthusiastically buy its product offerings.