Bachmann Pricing Policy

[Rabbitaway]

Hi All

Have a look at the situation with Fender, does put into question the legality of the maximum 15% discount on RRP for newer releases demanded by Bachmann on their retailers

https://www.bbc.co.uk/news/business-51214257

[Bob G]

I believe it is part of the contract between manufacturer and retailer about the amount of discount against RRP in the first X months of release of the model, but I have not seen it in print to confirm it.
Dapol also seem to do similar. And when they sell from their factory direct to customer, you get the 15% if you are a member of the Dapol club, so aligning the shop sales with the discounters.
It feels more of a cartel to me.
Bob

[Steven B]

I can't find the official guidlines at the moment, but my understanding is similar to Bob's. Manufacturers can legally restrict discounts for the first few weeks/months after a product is released, after which retailers can sell for what ever price they want to - hence you'll eventually see discounts larger than 15% off RRP.

Like Dapol, Farish's direct sales at exhibitions for new stock (rather than returned/repairs) are always at RRP. If they undercut their retailers then they get a lot of angry model shop owners complaining.

Bachmann also will only sell to retailers that have a physical shop that modellers can go to. Anyone that's trading 100% online or just at Toy Fairs doesn't get supplied direct.

I believe that applying the limited discount for the initial period was done to support the smaller shops that couldn't compete with the likes of Hattons when larger discounting was alowed. The intention being that it keeps the smaller shops in business which is surely good for the hobby. I'd also guess that it's one of the reasons why the larger shops such as Hattons, Kernow and Rails have the finance available to fund their own models.

Steven B.

[Dr Al]

I believe that applying the limited discount for the initial period was done to support the smaller shops that couldn't compete with the likes of Hattons when larger discounting was alowed.

Offering smaller quantities of stock to said retailers at the same trade price as they sell to Hattons et al would help the smaller retailer more I think.

Cheers,
Alan

[longbow]

As far as I can see the rules prohibiting retail price fixing apply to all products, new or otherwise, and the alleged 15% discount restrictions would thus be in breach of UK competition law. I did point this out to the CMA but they did not respond - it seems they are understaffed and look only at major cases.

[njee20]

Like Dapol, Farish's direct sales at exhibitions for new stock (rather than returned/repairs) are always at RRP. If they undercut their retailers then they get a lot of angry model shop owners complaining.

Dapol's stand at exhibitions is always full of bargains, totally undercutting their dealers, and yes, really annoying them. Bachmann do sell at RRP as you say.

[Dr Al]

As far as I can see the rules prohibiting retail price fixing apply to all products, new or otherwise, and the alleged 15% discount restrictions would thus be in breach of UK competition law. I did point this out to the CMA but they did not respond - it seems they are understaffed and look only at major cases.

I know nothing of the legality, but it does seem a little like fixing prices to a complete legal novice.

Legally, it may well be sound, but my general impression with Bachmann is that they are more and more behind the times - equally with their attack on Hattons in more recent times and their demand that you have to have an actual bricks and mortar store before they'll supply you - surely the modern future of this hobby may will end up with more and more suppliers (either manufacturer or retailer) who do not have this. Revolution Trains are a good example of such.

In OO Bachmann seem to be getting squeezed more and more, now that Hornby have got back some serious mojo and nouse in the form of Simon Kohler - here in N they are perhaps more lucky in having less competitors to the Farish range.

Very much my personal opinion though.

Cheers,
Alan

[PLD]

We've done this one to death so many times.

It IS LEGAL to set retail price limits (both a ceiling and/or a floor) for an introductory period for a new product provided specified conditions are met. The pertinent criteria to Bachmann's policy being:

• It applies equally to all retailers and does not advantage one retailer over another
• It is time limited (Bachmann's is IIRC 90 days)
• The Manufacturer does not supply direct at a price outside the limits set for other retailers

It has been tested in the courts numerous times in other industries (particularly with reference to Motor Vehicles and Mobile Phones) and each time found to be compliant when the above are met. Google will find you numerous case studies...

[Rabbitaway]

By Pinsent Masons

https://www.pinsentmasons.com/out-law/guides/recommending-and-agreeing-retail-prices-competition-law-puts-limits-on-how-far-you-can-go

[Dr Al]

Musing this, it's interesting to consider how it works in practice though - and I can only base that on myself.

With this 15% cap, I now pre-order nothing, and buy nothing as it's immediately released, knowing it'll be potentially cheaper in a few months time. The interesting further factor is though, that almost universally in that time I've found the same models in new or nearly new condition then on the secondhand market, for >15% less. I've no idea why people buy and then immediately sell, loosing money, but it happens a lot - even high demand items!

Thus, Bachmann instead of making two potential sales (the one being sold secondhand, and a possible one to me), now make only one sale of the secondhand model to the first owner when it was new a month or so earlier. Sure, I know this is a niche example (willing to risk buying warranty-less), but I'm sure others hold off buying for the same reason, so it seems that there's at least some detrimental effect to Bachmann of this strategy.

It's a psychology thing - I know that the price is effectively artificial* in some way, so I'm much less likely to buy during that period.

*which is why it *feels* like price fixing....even though it's legal.

I'd be interested to explore what other folk do - do others hold off buying as a result of this strategy? I'd be amazed if I was the only one.

Cheers,
Alan

[Bob G]

... my general impression with Bachmann is that they are more and more behind the times - equally with their attack on Hattons in more recent times and their demand that you have to have an actual bricks and mortar store before they'll supply you - surely the modern future of this hobby may will end up with more and more suppliers (either manufacturer or retailer) who do not have this. Revolution Trains are a good example of such.

I totally agree. There seems to be a resistance to change from the Bachmann corner, and as you say, the market adeptly evolves and adapts, with Accurascale, Cavalex, Revolution, Sonic, etc
This is positive for the modeller, but a negative that also comes out of this is eg the Bachmann response to Hattons, and I do feel the Hornby tactic of apparently going for the jugular with the Terrier, 71, and now 91 seems aggressive (even if it was truly by chance that these models were developed without knowledge of the other)

IIRC we have been told that if someone announced a 25/3 variant in N then Farish would quickly develop one in competition, and they have said as long as someone is buying their 25/1 and 25/2 variant they wont bother to do a 25/3. They have not responded to the Heljan 25/3 that was announced in OO, though...

Oh and if anybody is wondering, I don't think Dapol has a strategy 

Bob

[Bob G]

With this 15% cap, I now pre-order nothing, and buy nothing as it's immediately released, knowing it'll be potentially cheaper in a few months time. The interesting further factor is though, that almost universally in that time I've found the same models in new or nearly new condition then on the secondhand market, for >15% less. I've no idea why people buy and then immediately sell, loosing money, but it happens a lot - even high demand items!

I'd be interested to explore what other folk do - do others hold off buying as a result of this strategy? I'd be amazed if I was the only one.

My strategy has changed depending on my financial situation. So that will be a primary driver for most folk.
As I currently have a salary (self-employed) and no mortgage (wonderful) my strategy is split into five stages:

1. Research whether there is a chance (however slight) that the model appeared in my modelled region and era.
2. For crowd funded models and limited editions (eg Brighton Belle) just go for it and pre-pay.
3. For things I REALLY want (I was going to say need but none of us NEEDS any of these models, actually), I do buy at 15% discount.
4. For things that get offered to me at ridiculous discounts, I do (1) above (just to calm myself down and be really sure) and then go for it. Everyone likes a bargain!
5. If I discover that something was produced that fits my era and I had missed it, I trawl the net and auction sites, and pay the market rate, which could be lower or in some cases could be higher than RRP.

I also do some modelling but this has reduced as the quality of the RTR finish has improved. I'm good enough at single colour models, like black, green or blue, but I don't try anything complicated

Part of me just wants to *own* a special model, and I admit to buying just to be able to say I once owned one of those.
Examples are the Bachmann Anniversary Jubilee and 47. Oh and the original Blue Pullman. I sold both on quite soon after. No profit.

I have another rule too. At my wife's suggestion. To sell something every time I buy something.
This is because I started in N when there was very little available. Now, we can model an era and location much more accurately than before, and the fill in models can be sold.
For me this equates to reducing the window of eras modelled, and selling older models when newer ones appear.

(I tried playing this back regarding shoes and handbags but to limited success)

I am sure each of us has a different purchasing strategy, but it was quite *cleansing* to share my approach to managing my addiction.

Best
Bob

[Train Waiting]

I'd be interested to explore what other folk do - do others hold off buying as a result of this strategy? I'd be amazed if I was the only one.
Cheers,
Alan

I'd normally be reluctant to trouble our Forum with my personal views on something like this, but Alan expressed interest in hearing others' approaches.

This topic probably has particular relevance to locomotives and rolling stock.  Almost all my engines are from Union Mills.  These are only available direct from the manufacturer and I send a cheque to Mr Heard whenever he announces a new model or a re-run of a model that I'm interested in.  By the way, it is only cashed when the locomotive is despatched.

Most of my carriages are by Dapol and these appear to have good availability so there is no rush to purchase.  A bit like me saving up for almost a year to buy a Tri-ang Hornby 'Britannia'! However, a lot of modern production appears to be done in limited runs and there is a chance of not being able to buy a model a while after release.  I understand that some even sell-out by pre-order.

Like many 'N' gauge modellers, I really fancied the Graham Farish 'Birdcage' set.  Southern livery for me!  When the models were released, I went to my 'local' model shop (Harburn Hobbies, Edinburgh) and bought a set.  A good outcome; I got the carriages I wanted (and I'm very glad I did as they are really lovely) and a small independent retailer got my business.  It's wonderful to have a shop like this fairly nearby, as I can pop in when I'm in Edinburgh and buy a tin of paint or a sheet of 'Plastikard' and receive exactly the same courteous service as when I purchased the expensive carriages.

When I did exactly that earlier this week, I noticed that they had discounted 'Birdcage' sets available.  In BR crimson!  I didn't consider buying one, although if a discounted set in SECR 'Wellington Brown' appears on the shelf, I might just be tempted.

In summary, my views are:

Buy on release or by pre-order if I really want something.
Purchase 'as and when' for generally available items.
Buy if and when discounted for a model I like, but would be content to 'miss out' on.
Support a 'local' retailer or small manufacturer as much as possible, provided it is deserving of my support - fortunately 'mine' most certainly are.
I don't buy much second-hand apart from on our Forum.

If Graham Farish announces an 'N' gauge NBR 'Atlantic', I'll get on the first train I can (although it'll take a considerable while to recover from the shock!) to Edinburgh and head down the Leith Walk to pre-order one.

With all best wishes.

John

[njee20]

I'm a bit like Bob.

- If it's crowdfunded (and I want it) I'll pay up front happily as long as I have faith in the company
- If I know I really want it then I'll pay with the 15% discount
- Other stuff I just constantly keep an eye out for second hand items or sales on items that fit (broadly) with what I model. However, this has led me to having seven 350s and six Voyagers

That said I can't remember the last Farish/Dapol loco I bought immediately at launch. It's been a good while. Obviously rolling stock, being cheaper, I'm less fussy about, although again I'm struggling to think of the last things I ordered immediately, probably Dapol mk3 TGSs. I try and buy wagons in whole rakes, as buying piecemeal means having incomplete rakes for ages, and that tends to mean either second hand, or waiting until the major exhibitions where you often get "buy 3 for x" type deals.

[Steven B]

I'd be interested to explore what other folk do - do others hold off buying as a result of this strategy? I'd be amazed if I was the only one.

You sometimes need a crystal ball to predict which models will sell for large discounts (most hover around the 15% mark for the whole time they're in stock) whilst others sell out quite quickly. I'm surpised that the RTC liveried class 24 is still around at 30% discounts for example.

For something like a Mk1 or Mk2 SO you need to buy as soon as they come out. There's usually no problem buying the matching FK or BSO/BCK/BG later on when the prices have dropped.

Steven B.