Bachmann Farish 2017 Price Increases

Started by Bob G, January 11, 2017, 04:55:53 PM

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Jerry Howlett

Quote from: newportnobby on January 12, 2017, 02:01:57 PM
Quote from: acko22 on January 12, 2017, 12:18:16 PM

2) The Chinese Government implementing its wage increase 4% each year


If I recall correctly the actual annual percentage wage increase was 20%, Gareth, and I believe we still have 2 years of this to come. I hate to say this (again) but I reckon come 2019/2020 the cost of a large loco will hit the £200 mark full RRP.
We're doomed, Mr. Mainwaring, we're doomed!

Don't Panic Don't Panic....

Sorry
Some days its just not worth gnawing through the straps.

acko22

20% a year ok then bloody hell! I thought it was 20% over 5 years!!
Mechanical issues can be solved with a hammer and electrical problems can be solved with a screw driver. Beyond that it's verbal abuse which makes trains work!!

Newportnobby

When I pre ordered the Castle back in 2013 the price was £110.46. Last I heard it has risen 7.7% to £118.96 but there's no way it will come in at that price :)
Worse is the new Auto trailer which, when I pre ordered it was £18.66 and the latest is £29.71 - an increase of 59.2%!!!!!!! :veryangry: :veryangry: :veryangry: :veryangry:

Buzzard

#18
What I don't understand is how two companies whose models are manufactured in China can end up charging wildly differing retail prices.

Revolution produced the TEA for £26 or £27 per wagon depending on livery.

Farish produced the Polybulk and charge almost £43 for the unweathered versions.

Both wagons were produced from scratch and have a number of additional parts that need to be added.  In the case of the TEA a lot more parts and more passes through the tampo printing machine.

Before anyone else says it I know that the both companies sell their products in different ways but surely that cannot effect the price?

So is there something a bit rotten in paradise?  Is there an element of profiteering with the excuse of Chinese wages or is it just good old fashioned greed?

Having heard that Farish are updating their TEA I thought great.  I suspect that they too will have an almost eye watering price tag so I won't bother.  I've got a pretty decent rake already which I might stick on top of some ATM bogies and call them job done.

So what do I want off the 2017 list?  Nowt.  All I want off the 2016 list is a few 57/3s in Virgin colours and then I'll spend the rest of my budget elsewhere.

Karhedron

#19
Quote from: Buzzard on January 12, 2017, 02:37:35 PM
What I don't understand is how two companies whose models are manufactured in China can end up charging wildly differing retail prices.

Revolution produced the TEA for £26 or £27 per wagon depending on livery.

Farish produced the Polybulk and charge almost £43 for the unweathered versions.

I am sure Mike or Ben will correct me if I am wrong but my understanding is the RevolutioN models are not being sold at "retail" price at all. I think they are being sold at cost which means no profit margin (or very at least not much) for the manufacturer and definitely none for the retailer (since they sell directly to the modelers).

Yes RevolutioN have the same development costs as Farish. They may or may not have the same production costs depending on how many parts the finished model requires. They certainly don't have the same overheads as Ben and Mike are doing a lot of that themselves. And as mentioned above, they don't have the same margins.

What you regard as a fair profit margin on a product is a very subjective question, especially when you come to discretionary spending on hobbies.
Quote from: ScottyStitch on September 29, 2015, 11:28:46 AM
Well, that's just not good enough. Some fount of all knowledge you are!  :no:  ;)

Bob G

Quote from: Buzzard on January 12, 2017, 02:37:35 PM

Revolution produced the TEA for £26 or £27 per wagon depending on livery.

Farish produced the Polybulk and charge almost £43 for the unweathered versions.


There is at least one handler - the retailer - to add to the Bachfar Wholesale price to get to the shop price. Revolution have cut out the retailer.

Revolution has to make something on the deal - they don't give their time for free.

So if it costs Bachfar and Revolution £22 to produce a Polybulk/TEA wagon, Revolution make £4/wagon and a shop would make £20/wagon (non-discounted). The shops that discount by 15% or more still make £13.70 per wagon. And they need to, to stay in business.

Now everyone go tell the transition modellers out there to buy the Type B tank in bulk because it is such good value.

Bob

railsquid

Quote from: Bob G on January 12, 2017, 02:58:44 PM
Now everyone go tell the transition modellers out there to buy the Type B tank in bulk because it is such good value.
Mmmh, curses. I might end up needing some of those.

Quote from: acko22 on January 12, 2017, 12:18:16 PM
Hi all,

Well I am no economist but there are a few factors that I think have seen the price rises:

1) Value of the Pound (after the last 6 months we have all seen it drop)
No economist either, but my understanding is that while currencies fluctuate (tell me about it, I live in one country and get paid in the currency of another), companies can factor this into their calculations and to some extent can hedge against it. However if it looks like there will be a fundamental negative shift in a currency's long-term outlook (e.g. due to uncertainty about whatever *it* is means beyond leaving a major trading bloc), this will feed through into consumer prices. Personally my British N gauge purchases have peaked over the last few months, but I doubt that will last.

red_death

#22
Quote from: Buzzard on January 12, 2017, 02:37:35 PM
What I don't understand is how two companies whose models are manufactured in China can end up charging wildly differing retail prices.

Revolution produced the TEA for £26 or £27 per wagon depending on livery.

Farish produced the Polybulk and charge almost £43 for the unweathered versions.

Both wagons were produced from scratch and have a number of additional parts that need to be added.  In the case of the TEA a lot more parts and more passes through the tampo printing machine.

Before anyone else says it I know that the both companies sell their products in different ways but surely that cannot effect the price?

So is there something a bit rotten in paradise?  Is there an element of profiteering with the excuse of Chinese wages or is it just good old fashioned greed?

You only have to look at the accounts of Bachmann Europe to see that it isn't greed! No one is getting rich from model railways.  As Matt has pointed out comparing Farish and Revolution is like apples and pears - we sell direct (no retail margin) and have low overheads (as we don't get paid and don't have to employ people). Having said which Bachmann can amortise their tooling costs over much larger run than we can, so there are some benefits for Bachmann!

Even if you could fairly compare Bachmann and Revolution, it would still be difficult to do for two different products and without knowing tooling/production costs.  It is perfectly feasible that the Polybulk has more seperate parts than our TEA - I don't know.

For a small company currency hedging is difficult, even for Bachmann it probably doesn't help too much (as they own their own factory).

Quote from: Bob G on January 12, 2017, 02:58:44 PM
Revolution has to make something on the deal - they don't give their time for free.

So if it costs Bachfar and Revolution £22 to produce a Polybulk/TEA wagon, Revolution make £4/wagon and a shop would make £20/wagon (non-discounted). The shops that discount by 15% or more still make £13.70 per wagon. And they need to, to stay in business.

Actually we do give our time for free! We try to include a small markup to hedge against currency fluctuations or changes to production prices (both of which we absorbed for the TEA and which wiped out most of our margin).  The margin we make goes to overheads eg advertising, going to shows and ultimately allows us to take a bit of a punt on the next project eg the TEA surplus allowed us to invest in CAD for the Class B tanks.

Cheers, Mike



EtchedPixels

Well once the locos hit £400, we'll all just have to start buying from CJM 8)

Union Mills also looks better value every year
"Knowledge has no value or use for the solitary owner: to be enjoyed it must be communicated" -- Charles Pratt, 1st Earl Camden

davidinyork

In OO gauge, have a look at the only HST Hornby are producing next year (GWR livery) - makes N gauge look cheap!

PennineWagons

Could we be approaching the point where, for whatever reason, it is no longer profitable for a manufacturer to produce N Gauge models at a price which the average modeller (whoever he or she may be) is willing and able to pay? This doesn't sound like good news for the hobby.
Alternatively, could we be getting ever-closer to the stage where the Chinese have finally priced themselves out of the market, and production returns to the UK?
PW

CaleyDave

Quote from: davidinyork on January 12, 2017, 05:26:35 PM
In OO gauge, have a look at the only HST Hornby are producing next year (GWR livery) - makes N gauge look cheap!

This was part of my reasoning for moving to N gauge. Despite the price increases it was still possible to get a better deal, for what I wanted to model at the time, in N than OO.

davidinyork

Quote from: PennineWagons on January 12, 2017, 05:37:23 PM
Could we be approaching the point where, for whatever reason, it is no longer profitable for a manufacturer to produce N Gauge models at a price which the average modeller (whoever he or she may be) is willing and able to pay?

I don't think it's specific to N gauge - the same also applies to OO. It has to be said that at the moment a lot of OO models with high RRPs are being sold at substantial discounts, so assuming there wasn't a large profit margin to start with they may well be selling them at a loss which is obviously not viable long-term.

Ben A

Quote from: Bob G on January 12, 2017, 02:58:44 PM

Revolution has to make something on the deal - they don't give their time for free.

<snipped>

Bob

Hi Bob,

Actually, we do.  I thought everyone realised this! 

What tiny margins we build in (to try to guard against currency fluctuations and pay for show stands, flyers etc) we keep in the business - paying, for example, for the CADs for the Class B in an effort to help the project.

In terms of rising costs, I think there is a disconnect between what people say and what they do.

At their trade day last weekend Bachmann confirmed that Farish sales are up year-on-year despite price rises.  We may not like the increasing prices, but we still buy models and, frankly, long may that continue otherwise the hobby would be in trouble.

Cheers

Ben A.



Nick

#29
Apologies for long post:

I'm very confused by the information on Chinese wages that is circulating in the model railway world. Reading the magazines last year and posts here, I was under the impression, as others obviously are, that the Chinese Government was imposing substantial wage rises across the board.

That doesn't seem to be the case. This is my understanding:

The 12th five-year plan (2011-2015) targeted a 13% per annum increase in minimum wage. This in fact resulted in a 60% increase in minimum wage over that period. I.e. actual increases seem to have averaged out at just under 10% over that period. The target for household income (as opposed to minimum wage) was 7%. I don't know how that out-turned.

China is now in the mid-upper wage range among East Asian economies, and as a result some companies in industries such as garments, toy and shoe manufacturing have begun transferring operations to lower wage countries such as Bangladesh, Indonesia and Vietnam. (There has for years been an expectation that as globalisation matured, and Chinese wages rose, production would start to shift, first to lower wage East Asian economies, then, as their wages rose, to India, and ultimately to Africa. Obviously not in the next year or two. Or five or ten. Whether the election of a protectionist President in the US will change that trend remains to be seen.)

So, the 13th five-year plan (2016-2020) has abandoned setting a minimum wage target completely and is talking about "perfecting mechanisms" and "reasonably setting levels". Last July, the Chinese Vice Premier for Human Resources  called for wage restraint. Smaller and less frequent wage rises.

Actually setting minimum wages is the responsibility of individual regions, not the Central Government. One province (Guangdong/Canton) has actually already pegged the minimum wage for 2016 & 2017 at 2015 levels.

So why model railway manufacturing has two or more years of structured wage increases to come, I know not.

On the currency front, it is certainly true that companies "hedge" currencies. Which in this context would normally mean taking options to buy (or indeed buying) a certain amount of foreign currency for a defined period in the future at preset rates. The maximum length of such contracts is normally about six months to a year.

Since the referendum, the pound is down about 15% or so against the dollar, a little less against the euro, compared with pre-vote levels, and is unlikely to recover in the near future. So as we enter a world in which hedging contracts taken out pre-vote expire, and new contracts reflect the new world, it is no surprise that imported goods such as food, almost all manufactured items, fuel and specifically toy trains model railway stock  ;) are likely to suffer a fairly hefty price hike, the exact size of which depends on how much of an item's cost base is paid in foreign currency. Hopefully, it will be a one-off hit, although some pundits think the pound may go below parity with the dollar depending how events transpire. Hopefully not...

But I'm still puzzled about these "planned wage increases"...

Sorry again for the long post, and I hope the mods don't think it's too political. It wasn't meant to be.
Nick

The perfect is the enemy of the good - Voltaire

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