Farish 2015/6 range announcement..

[Roy L S]

Continuing this discussion, checking the Bachmann website today, it looks like many steam locos have had a price hike sneaked through "under the radar" during the last few days.

4F 0-6-0s up from £99.95 to £109.95 that's 10% while still on the blinkin boat! Worse still the already in stock J39s prices up the same amount to £109.95, am I alone in thinking it is taking the  a bit?

Seems many diesels ditto now I look..

I really do hope that Bachmann know what they are doing as I think they are in real danger of pricing themselves out of the mainstream market if this carries on.

If labour/assembly costs are truly the issue, (and let's face it the 20% annual wage increase bandied about is labour cost as a component of the factory gate price not RRP) 10% on the RRP looks very steep, especially at a time when raw material commodities such a crude oil have reduced to such low prices now.

Is this in reality the parent company dictating new and tougher terms I wonder..

Roy

[Karhedron]

No, I think it is just the end of the low inflation era. We got used to cheap imports but ultimately it was unsustainable. In outsourcing our manufacturing, we outsourced our inflation too.

When I was running the (failed) Railcar project on kickstarter, I got to see some of the costs of manufacturing. A 10% increase is not unreasonable based on a wage increase of 20%. Crude may have gone down but for physically small items like N Gauge trains, the cost of the raw materials is not a percentage of the overall cost.

Sadly I think that rising prices is something we will have to get used to for the foreseeable future. We will each have to decide how to cope whether by increasing our expenditure, cutting back on the number of acquisitions or spending our money elsewhere.

[DELETED]

I wouldn't drag Brent Crude price into it.  The price of the products (to us anyway) is pretty far disconnected from the $/BBL.

Fact of life is prices seem to go up every year with everything.  If Farish held their prices, it's bound to be a bigger instant jump if they do put their prices up.  I'm not advocating it -I feel I'm priced out of allot of purchases in this hobby now already compared to 4/5 years ago.

I'm half surprised they're still sticking with China, would have thought India may become more attractive -but such an enormous undertaking to change contractors.

[Roy L S]

No, I think it is just the end of the low inflation era. We got used to cheap imports but ultimately it was unsustainable. In outsourcing our manufacturing, we outsourced our inflation too.

When I was running the (failed) Railcar project on kickstarter, I got to see some of the costs of manufacturing. A 10% increase is not unreasonable based on a wage increase of 20%. Crude may have gone down but for physically small items like N Gauge trains, the cost of the raw materials is not a percentage of the overall cost.

Sadly I think that rising prices is something we will have to get used to for the foreseeable future. We will each have to decide how to cope whether by increasing our expenditure, cutting back on the number of acquisitions or spending our money elsewhere.

Hi Matt

I appreciate that your GW railcar project will have given you a valuable insight so where am I out in the following scenario?

If we take a 4F as an example.

- Work backwards from a RRP of £110, VAT is 20% so deduct £22 takes the pre-VAT price to £88. 
- Dealer margin 30% so say £25...
-  Takes us down to a wholesale price of about £63.
- Manufacturer's margin, shipping costs, duties etc £20-£25?
- So on this basis I am estimating this gets us to a factory gate price of about £40 per unit.
- Of that if we assume labour is as much as half the cost that means £20.
- 20% of £20 is £4. 

As I say, happy to be corrected if my maths are wrong anywhere in that..

Regards

Roy

[Karhedron]

One thing not taken into account is R&D costs. For a small run (1000 units), the CAD and tooling work can be as much as 40% of the total cost. Farish typically deal in larger runs so this will be spread over more units but is still a significant expense.

Crucially, this work is also normally done in China by the same factory so will be subject to the 20% wage increase. In fact this will be disproportionately affected because the R&D is mostly a labour cost with relatively little material costs.

[Agrippa]

Don't forget that as Bachmann and the factories are the same outfit  the
manufacturer's cost is plastic + labour + shipping and import duties
so the factory gate price is irrelevant and unless you have access to
all the figures involved it's all conjecture.

[Newportnobby]

I guess it's a bit like buying a packet of ciggies - just how far do you allow the price increases before saying enough is enough and overriding the desire for the new model you really wanted.
Yeah - I know one is bad for your health but they're both becoming bad for your wealth, too.

[Roy L S]

Don't forget that as Bachmann and the factories are the same outfit  the
manufacturer's cost is plastic + labour + shipping and import duties
so the factory gate price is irrelevant and unless you have access to
all the figures involved it's all conjecture.

Not sure it is irrelevant. The point I was making is that the labour cost is a much smaller % of the RRP than the cost at the Factory Gate and yet in one hit we see on the examples I quote a 10% hike in RRP.

I suspect Newportnobby is right it just depends how far people are prepared to go before going elsewhere with their wallets. The newly announced O Gauge Minerva Models RTR 0-4-0 Peckett at £235 preorder price including postage begins to look very attractive...

Regards

Roy

[Agrippa]

A point to bear in mind is that the company Kader is like Starbucks and suchlike and can make
profits or losses in whichever countries in which it trades  by use of transfer pricing and charging
management costs so the cost of goods on the UK model shop shelf is at their whim.
Though obviously if they go too high they may lose business. However due to the small market in
which they deal in the UK the consumer has a restricted choice when it comes to rtr UK type
models and either pays up or changes area modelled eg US or Europe etc..

[Dr Al]

One thing not taken into account is R&D costs. For a small run (1000 units), the CAD and tooling work can be as much as 40% of the total cost. Farish typically deal in larger runs so this will be spread over more units but is still a significant expense.

I would assume that Farish still pay this off over the first production batches though? - otherwise they'd risk accruing debts from models that are then not subsequently re-run, like the V2.

Cheers,
Alan

[Karhedron]

That is a good question. I know Dapol certainly do cover the tooling costs with the first run. Given that Farish and Dapol prices are similar, it seems reasonable to assume Farish do also.

[red_death]

Don't forget a relatively small cost in the factory is compounded up to a larger amount with retailer margin and VAT (which are both %).

Cheers, Mike

[FeelixTC]

No, I think it is just the end of the low inflation era. We got used to cheap imports but ultimately it was unsustainable. In outsourcing our manufacturing, we outsourced our inflation too.

When I was running the (failed) Railcar project on kickstarter, I got to see some of the costs of manufacturing. A 10% increase is not unreasonable based on a wage increase of 20%. Crude may have gone down but for physically small items like N Gauge trains, the cost of the raw materials is not a percentage of the overall cost.

Sadly I think that rising prices is something we will have to get used to for the foreseeable future. We will each have to decide how to cope whether by increasing our expenditure, cutting back on the number of acquisitions or spending our money elsewhere.

Hi Matt

I appreciate that your GW railcar project will have given you a valuable insight so where am I out in the following scenario?

If we take a 4F as an example.

- Work backwards from a RRP of £110, VAT is 20% so deduct £22 takes the pre-VAT price to £88. 
- Dealer margin 30% so say £25...
-  Takes us down to a wholesale price of about £63.
- Manufacturer's margin, shipping costs, duties etc £20-£25?
- So on this basis I am estimating this gets us to a factory gate price of about £40 per unit.
- Of that if we assume labour is as much as half the cost that means £20.
- 20% of £20 is £4. 

As I say, happy to be corrected if my maths are wrong anywhere in that..

Regards

Roy

Your maths is indeed wrong:
for a start, £110 less VAT is £91.66.
As for your other assumptions, I think they're just that; assumptions. The manufacturer would last long with a margin (less shipping, duties, promotional costs, packaging etc) like that.
........And do you really think labour rates are that high in China??

Sorry if I'm being a pedant, but you can take the Accountant out of the man...............

[CarriageShed]

...last year three "newly tooled" items turned out to be a nice but somewhat limited in appeal "Birdcage" set.

Not holding my breath really...

The Birdcage set certainly has appeal for me. Even though it's the wrong region, it's still the right era, and I'll be making a point of having this as a 'borrowed' set of coaches doing occasional duty too far west.

Can't wait for the N Class SR loco either. Yum.

[Roy L S]

[for a start, £110 less VAT is £91.66.
As for your other assumptions, I think they're just that; assumptions. The manufacturer would last long with a margin (less shipping, duties, promotional costs, packaging etc) like that.
........And do you really think labour rates are that high in China??

Sorry if I'm being a pedant, but you can take the Accountant out of the man...............

No, thank you for correcting my mathematical error, that will teach me not to check what I post.

As to the rest of my numbers of course they are assumptions, which doubtless become less accurate the further back towards the factory gate price they go. They were intended to be illustrative, I suspect in reality the factory gate price is much lower and the labour component ditto which makes the 10% hike on RRP even more difficult to reconcile to a 20% increase in labour costs.

Regards

Roy