[Archive] Why does Games Workshop keep raising their prices?

cornixt:

Anyone noticed the completely new units in each army update? Even the veterans have to buy new models if they want to keep up.

Hashut’s Blessing:

Metal molds are surely no cheaper to make than a plastic one? In fact, due to higher temperatures etc, I’d have thought they’d cost more actually. What I mean is, if the prices of plastics are rising so quickly, why haven’t the metals? They are creating larger profit from the plastics than metals is what I’m “getting at”.

As for needing to reclaim at least double the cost, it is still a once-off cost is the point I was making. Whereas the plastics of the models are constant (as is rent, but that would need to be paid whether they made the models or not).

Saying they are a monopolistic market (which I would think they are. Certainly a completely monopolistic one for Warhammer) does mean that they have to generate their own demand, but they have been reducing it recently (although there have been a few bonuses to be fair). Their supply hasn’t decreased to my knowledge. If anything, I’d guess (again, it IS a guess) it would have increased, which technically (but no necessarily) devalues the product, meaning it should be priced lower.

Still, it’s not the way they run it, but such is life. cornixt is right: they are doing good business by making a new unit each time, so the vet.s are still interested somewhat.

wallacer:

I remember reading an interview with (I think) Sid Meier, the computer game designer. He said when you release a new version of something (in his case, computer games) you keep 75% the same and make 25% new.

That seems to make sense. It keeps things interesting and fresh and encourages vets to renew their interest (read: spend money) in an army that they have already collected.

It certainly motivated me to spend money again on my first army, Chaos.

Theory_Man:

explaining plastics is an easy thing to do. to create the molds for injected plastic it costs between £100,000 to £250,000 so, one of the reasons "core" units are done in plastic is that many are needed and the initial investment (considered a full loss until it recoups it cost back twice.. ) so in order to be a complete profit GW would need to see £200,000 to £500,000 respectively on each full plastic sprue set up.

two_heads_talking
200,000/18 (price) ~ 11111 (number of units)

now divide this by the number of stores, this gives you the number of products that are needed for each store to sell to make a profit with respect to initial investment (not taking into account other costs like running the hobby centers)

100 stores 112 items
200 stores 56 items
400 stores 28 items
800 stores 14 items
1600 stores 7 items

does anyone know the number of GW stores?

Lord Zarkov:

Metal molds are surely no cheaper to make than a plastic one? In fact, due to higher temperatures etc, I'd have thought they'd cost more actually. What I mean is, if the prices of plastics are rising so quickly, why haven't the metals? They are creating larger profit from the plastics than metals is what I'm "getting at".

Hashut's Blessing
Apparently the master for plastics is more expensive than for metals, but their then cheaper to produce once you have the moulds. Hence why they usually only make plastics for units they expect to sell well (or else give it a rediculous cost to recoup the difference as is the case for the larger tanks)

slev:

I can verify that that is the case. It’s an economics of scale matter.

Casting plastics is on a curve, the more you cast, the cheaper it becomes.

Metals casting is costed on a liner basis.

The break even point on a metal mould is apparently 10,000 casts, all inclusive.

IIRC, the break-even point on plastics is more like 250,000 casts when only considering the mastering of a single mould.

Hammerhand:

There is something on the GW website about a price rise for metal models at the end of the month due to the price of tin ‘more than doubling’ within the space of the last price rise.

GW is a british based company and as such is embroiled in the current UK credit crunch, and as the chancellor says, the worst economic crisis in 60 years. The price of everything in the world is going up right now.

When I could buy a single lead miniature from GW for £3, I could also buy a mars bar for around 22p, and the price of a very good family car was under £10k, my mum bought her house for £19k.

Now, a white metal single miniature which is none toxic, far more detailed and part of a wider choice costs me £5, A mars bar now costs me over 60p, my reno scenic cost me £18.5k and my mum is selling her house for over £100k.

It’s easy to accuse GW of succering us for more money, but the prices of everything has gone up since the good old days, due to all sorts, not to mention GW employees demanding higher wages to pay for their more expensive food and petrol and homes.

Plus, look at all the stuff you get in BFSP and AoBR for £40? New cold one knight unit for £12!

The good news is for now only the metal models are due for price increases, but it is only a matter of time before the plastics succome to the increasingly difficult economic climate.

Viskar Zhragoth:

Quick note:

the mold for metal are very- very- cheap compared to plastic…but you have to make new ones whenever your mold starts getting worn (or repair it if possible). plastic moulds tend to last forever -unless dropped or cracked (and yes it has happened even though they are made from metal). but the costs (as mentioned before) are at the front end, and huge compared to the relatively minor costs of the metal (rubber) moulds. Which is why they started doing it for the “core units” first.

also note that Privateer Press is also raising the prices on their metal models, and they announced it BEFORE GW did. Tin really has jumped that much.

And if you look at the last financial statement, GW made very little profit last year (around 1%) before “one-time” costs. So while we may not like it, they are going to raise the prices on metal. I’m glad that the plastics are going to stay the same. Especially considering that most of the cost for the plastics are in the moulds and shipping the stuff out (most from England). After all, it is not like gas costs for boats,planes and trucks have gone up at all…

Godbob and his jolly rogers:


Plus, look at all the stuff you get in BFSP and AoBR for £40? New cold one knight unit for £12!

Hammerhand
yes that is a good deal
maybe there is light at the end of the tunnel :)

two_heads_talking:

does anyone know the number of GW stores?

Theory_Man
in 2006 I believe Gw had 338 stores. that could have gone up or down since then I am sure..

Hashut’s Blessing:

two_heads_talking, in that case, at a rough guess (no attempt at maths :wink: ), according to Theory_Man, it’d be something like 32 units per store, which I guess would take something like 3 months on average (dependent upon model).

Lord zarkov, thanks for the correction. In that case, ignore my statement about the molds costing the same to produce :wink:

Hammerhand, you’re damned lucky to have got a house for £19k! Just so I know, what sort of year are you talking about? I do agree that prices have risen everywhere and, yes, it’s beyond inflation rates in a lot of places, but it doesn’t change the fact that GW has risen prices beyond even those rates. A pack of Nurglings cost £3 when i started this hobby (7 years ago) and the last lot that solf for one base, came in at £7. That’s a 233.3 (recurring)% increase in price, whereas that inflation is supposed to be closer to £3.61 (including the almost twice as high inflation rate in the past year). Again, I agree with those box sets, but they’ve always been better value than other boxes, making savings of up to (estimate)£30+ in the past. The Cold One Knights are certainly a turn in the other direction and I hiope that it becomes a trend. Alas, your good news isn’t as good as you think as they said they’re also raising the costs of publications and paints. Basically, it’s only plastic miniatures that won’t rise (which is the only upisde to this).

Viskar Zhragoth, I’d like to see the source that gave you this 1% profit pre-once-off costs, please, as nowhere I’ve seen has implicated that in the slightest.

Godbob, I agree wholeheartedly.

al-hashut:

I agree with HB, GW prices are well above inflation rates and yes this is due to greed not the global market/UK “credit crunch”. Prior rises have been because they got greedy and then based their plan/development on this inflated price. There’s no need for, in HB’s example, a 233.3% rise in 7yrs, but because they’ve adopted it as a business plan now, they are not able (nor want) to either backpeddle nor incorporate the rise in the price of the raw material.

Therefore, prices get pushed on the consumer. Which in light of the recent economic downturn, increases the possibility of them not buying it, harming them further. GW has (and will continue to do) some very silly things, it all depends on how much they can push their core market demographic before they’re more willing to buy a plastic kit and greenstuff to make the metal option themself.

In that case, won’t the company be forced to increase the price of plastic kits in order to compensate from their lack of metal sales?

Kera foehunter:

Why does gw raise there prices? it sorta like asking a dog why does it lick it self !

Becase it can!!!

cornixt:

Well, Nurglings are £8 for two bases now, whereas they used to be sold as a single base.  So that would be a 33% rise.

GW aren’t rolling in profits, however you look at it.

Thair annual report says they make 12% profit

Hashut’s Blessing:

cornixt, I’m aware they now do them 2 for £8, so it’s now £4 a base, which, as you said is 33%. It’s still a 10% rise.

If they’re profit margins are so low, they should consider changing other things than just price. Such as: reducing costs of production where possible.

slev:

If they're profit margins are so low, they should consider changing other things than just price. Such as: reducing costs of production where possible.

Hashut's Blessing
A few years ago, they took to having their books printed in eastern Europe rather than domestically.

AFAIIA, the main costs are the design studio, which is kind of necessary, and their retail arm, which is also responsible for most of their sales.

Viskar Zhragoth:

Hashut’s Blessing, sorry, that is 1% post once offs, not pre…it was 4.9M profit on revenue of 110.3M, or 4.4%, pre-exceptionals, which also included the 1.7M in royalties from the computer companies. Their pre-tax profit of 1.1M gives them a 1% profit, and their financials explain the exceptional costs later in their financial report.

Here is the link to the summary.

http://investor.games-workshop.com/latest_results/Results2008/full_year/financialhighlights.aspx

Hammerhand:

Hammerhand, you're damned lucky to have got a house for £19k! Just so I know, what sort of year are you talking about?

Hashut's Blessing
It was an ex-council house bought in 1994. It was my mum that bought it, I'm bummed that my car + my TV cost more than my mums house!!!!

I know GW prices (in some cases) have risen higher than inflation, that is why I chose 4 distinctly different markets to show how each market rises differently. In 1994 GW was cheaper than it is now, but so were lots of other things!

soundcircus:

Because they can get away with it… It’s been happening for years.

Go into any GW store and it’s full of young teens… kids not quite teenagers yet with there parents. This is what keeps it alive. One day the parents are gonna stop buying… and one day that will be the death of them… GW i mean… Not the parents :exclamation:

GW have been sending themselves to an early grave for years… Bring out a codex etc… Six months later another ‘revised’ version of the same codex etc comes out… more cash for them.

I did work experience at a certain UK South London store many years ago… And heard many worrying insider stories about the main bosses at GW HQ.

Theory_Man:

does anyone know the number of GW stores?

Theory_Man
in 2006 I believe Gw had 338 stores. that could have gone up or down since then I am sure..


two_heads_talking
I looked into this...

UK 114
Americas 76
Continental Europe 109
Asia Pacific 35
Total 334

Theses are hobby centers, the figures does not include independent retail stores.

According to the GW 2008 Annual Report, hobby centers only account for 49 Percent of the sales.
according to Theory_Man, it'd be something like 32 units per store, which I guess would take something like 3 months on average (dependent upon model).

Hashut's Blessing
GW would need to sell roughly 33.27+ units for each of it's 334 hobby centers (if hobby centers accounted for 100 percent of the sales) to break initial cost. I would have to take your word on the 3 months Herr Blessing because I have no idea how long it takes to sell take many units in a hobby center.

I wonder how many regular consumers GW has, on average, at each hobby center.