Andre, a few more thoughts your comments have brought to mind:
As to the resources of LifeLike, MTH and others as moved into new markets I agree. In fact, not only did LIfeLike have a well established presence in scenery materials and train sets, they were part of the largest manufacturer of styrofoam coolers in the world - so they had deep pockets.
Back in the day, Athearn and MDC were known to "work together" in lots of ways, doing tooling for each other based on the resources each had and so on. It is clear just by looking at a Walthers catalog from the 60's, 70's or even early 80's that they avoided making the same items and worked to capture different segments of the market, and thereby "grow" the market, rather than cutting each others throats - not like today.
Agreed - Mantua and Bowser, for what ever reasons just fell too far behind the times. Bowser is catching up, Mantua is gone and I don't see Model Power have too much long term success unless they upgade Mantua more than they have.
There have been some 'moderate price" upstarts - Accurail seems to be doing OK, Bowser moved into the "shake the box" kit world and has also shifted into the RTR world pretty well. I just ordered a whole stack of Bowser freight car kits.
But I still think that traditional, life time, full interest modelers (trying to avoid that term "serious modeler") are, or will become frustrated with the "limited production", "buy it now", RTR, high end craze. It will drive them back to kits or slow their spending or both.
So who will buy what when all the collectors get bored, fill up their display cases or loose their high paying jobs and stock portfolios that prompt them to buy lots $500 locos and $80 passenger cars?
History has shown most "collector fads" go through cycles with the typical collector only being active for about 7 years and over all interest rising and falling in waves - But I've spent between $1000 and $3000 a year on this hobby for most of the last 40 years! Ask Mike Wolf at MTH if 3 rail is doing as well as 10 years ago? A number of shop owners I know say it's about half.
Assuming a similar markup, who is the better potential customer? But I'm just a hick with a pickup, some guns, and some trains without brains.
Sheldon
Does it not finally boil down to the question whether some of the key players are pricing themselves out of the market?
When comparing price levels for model railroads, there are some countries where the hobby still seems to be an affordable one. In UK Peco track is about 40 % off the price you pay in Germany for it, despite a higher VAT in UK. Locos are in the range of $ 100- $ 150, not the $ 300 - $ 800 you see in Germany. Granted, you have to "chip" them for DCC, but a decoder is in the range of $ 20 - $ 30, unless you want sound.
Japan seem to be a heaven for N scalers. beauty like this one sells for a little over $ 100 + shipping.
Look at the detail - hard to believe that this is N scale! The same loco sells for $ 240 in Germany...
If the market is to grow again, than we need reasonable prices, good quality and attractive starter sets to get more people into the hobby. The interest for trains is still there!
ATLANTIC CENTRAL But I still think that traditional, life time, full interest modelers (trying to avoid that term "serious modeler") are, or will become frustrated with the "limited production", "buy it now", RTR, high end craze. It will drive them back to kits or slow their spending or both. So who will buy what when all the collectors get bored, fill up their display cases or loose their high paying jobs and stock portfolios that prompt them to buy lots $500 locos and $80 passenger cars? History has shown most "collector fads" go through cycles with the typical collector only being active for about 7 years and over all interest rising and falling in waves - But I've spent between $1000 and $3000 a year on this hobby for most of the last 40 years! Ask Mike Wolf at MTH if 3 rail is doing as well as 10 years ago? A number of shop owners I know say it's about half. Assuming a similar markup, who is the better potential customer? But I'm just a hick with a pickup, some guns, and some trains without brains. Sheldon
$500 locos and $80 passenger cars? I think we need to recalibrate ourselves. The February MR News and Products section shows an 8-car brass set of B&O passenger cars for a mere $4,750. And I don't think that includes the loco.
Obviously the company in question has, or thinks they have, a viable business plan and has identified who they think are the better potential customers. It apparently isn't many of us here.
Sheldon, I don't know if this thought has occurred to you, but you represent what was the target market of the vast majority of MR mfgr's in the 1950's. Freelancing the steam/diesel transition era WAS model railroading in the 50's and prototype modeling was virtually unheard of. That ain't the case any more. There really is no single "big" (I use that term very loosely) MR market the way there was years ago. The market's highly fragmented and there are niches within niches. Just knowing someone's a Santa Fe modeler doesn't tell you squat. The Santa Fe guy who models the Santa Fe at the tail end of the caboose era isn't in the same market as the guy (e.g. Keith Jordan, Jared Harper, Ted York) who models the Santa Fe in the steam/diesel transition era.
With respect to $80 passenger cars, who's buying Bethlehem Car Works kits, some of which are priced in the $65-70 range as kits with trucks and couplers not included? If Bethlehem would come out with a kit for Southern Pacific buffet-parlor car #2946 "Oliver Millett", I'd gladly pay $100 for it and count myself lucky. I know a couple of other guys who would do the same thing. What I don't know is how many potential customers there are out there for the car. It's certainly not the set of all Southern Pacific modelers. The car was assigned to the "Del Monte" taken out of service in 1960. The leaves out quite a number of DSPF's (drooling SP fans) who concentrate on different eras and/or different locations. How many people who don't follow the SP would buy one? Not many, I'd wager.
You and I are not in the same market. I'd be willing to pay $500 for an SP P-6 and I might even consider paying $1800-2000 for a brass one as I doubt that Harriman Heavies of any kind will ever be done by any of the "mass" producers. As with the "Oliver Millett", I know a couple of other guys who might be willing to save their pennies and do the same, but for all I know, the 3 of us might represent the entire market for SP P-6's unless there are some Texans out there dying for a T&NO version.
Andre
[quote user="andrechapelon"]
To a large extent that's been true a long time that there are different price point markets, ie brass vs plastic,etc.
To all, there is a reason that Horizon bought Athearn and Walthers bought LifeLike. It provided vertical integration and brought the mfg closer to the end user as a way to cut costs and get efficiencies as well as trusted market intelligence. This also provided more control in the distribution channel. IMHO these moves will help the hobby survive in the US.
Richard
I know why Horizon bought Athearn and MDC, because they were good, profitable businesses, and because they had the money.
But I thought Walthers bought Life-Like because they panicked and figured if they didn't do something quick they would have a big hole in their catalog as well as their profit sheet. It just never appeared to me as though the Walthers/Life-Like deal was very well thought out.
Not to say I can't be 100% wrong, it's just the way it appeared to me from what I saw and heard from a couple of "insiders".
Mark
I really hope Hornby makes it. I like RR. I'm hoping they do another Alegheny 2-6-6-6.
Don - Specializing in layout DC->DCC conversions
Modeling C&O transition era and steel industries There's Nothing Like Big Steam!
blownout cylinder Well, as I sit here I'm looking at the market for steam kits getting a little smaller, but we'll see what happens when we start trotting the kits out in the fall of 2011... ...we figure on a 'so-called' MSRP of $229. ...first one is the CN version of the 2-6-0...
Well, as I sit here I'm looking at the market for steam kits getting a little smaller, but we'll see what happens when we start trotting the kits out in the fall of 2011...
...we figure on a 'so-called' MSRP of $229.
...first one is the CN version of the 2-6-0...
That low, eh? I've been wondering what your price point was going to be. As a matter of fact, I was just wondering if I'd be willing to buy one at when I was figuring the "MSRP" might be right around $325-350. The other thought I had was simply to stick a $20 bill in the mail and encourage others to do the same regardless just to show support for someone doing something that hasn't been tried since Arbour and The Locomotive Company, neither of which is still in business. I won't include DJH in that group because they had a base of British models to generate revenue before they tried and failed to bring the joys of building a highly detailed kit to the North American market. In any case, DJH is still around.
I hope the kit's a smashing success. Those of us who lament the loss of steam locomotive kits really need to put our money where our mouths are and actually buy a kit even if it's for a prototype we don't follow, just to show our support. You're definitely WELL below the any of the prices DJH asks for its line of Conitnental prototype engines. The only DJH engine remotely useable on a North American based layout is the USATC S160 2-8-0 and DJH wants the equivalent of US $485 for it at current exchange rates: http://www.djhmodelloco.co.uk/prodloco.asp?ProdID=3073
Forty Niner I know why Horizon bought Athearn and MDC, because they were good, profitable businesses, and because they had the money. But I thought Walthers bought Life-Like because they panicked and figured if they didn't do something quick they would have a big hole in their catalog as well as their profit sheet. It just never appeared to me as though the Walthers/Life-Like deal was very well thought out. Not to say I can't be 100% wrong, it's just the way it appeared to me from what I saw and heard from a couple of "insiders". Mark
Mark, you might be party right about that, but Walthers did that to themselves - they treated Athearn and MDC as second rate citizens from the minute they bought TrainMinature and came out with their own "shake the box" kits. You can't blame Athearn for then taking their distribution somewhere else.
Especially when then that somewhere did just as another poster discribed - lowered costs, increased profits and improved market control of pricing.
Andre,
I fully agree about the more diverse nature of the market as well. As for $80 passenger cars, I might buy them if:
I had some feeling I could actually buy the whole train without "missing" any do to limited production.
And, they had working diaphragms that actually touched, stayed touching and worked.
And, they were offered undecorated versions in ALL the body variations that they offer lettered (skirts, no skirts, etc).
BUT, I refuse to pay that kind of money for someithing I have to rework to bring to my standards. I rather buy something for $20 and spend $40 more on it after kitbashing it.
But that's just me.
You're preaching to the choir. As I said, I would pay up to $500 for a "mass" produced SP P-6. However, the odds of that loco being done by BLI, MTH, P2K, Bachmann, etc. are about equal to the chance of me winning the California lottery at the next drawing without buying a ticket. The closest non-brass 4-6-2 that's been done is a USRA light. I might pay up to $150 for one of those, DCC ready.
First of all a good topic. The following is my opinion on the subject.
After reading all of postings on this subject I wonder why every one seems to post like they think that all of these companies make their money from engines. I would think that they would be less then 20% of Atlas's, kATO or Athearn's and others ales. The real money as with most businesses like these are from the accessories.
I feel that unlike many of you posting here most model railroaders do not buy more engines every year. We buy our 2 to 10 engines and then maybe a few more over a many year period. But cars, buildings, signage, figures, track, building supplies, are an ongoing purchase. I now own 10 Atlas and KATO DCC N engines and they come nowhere close in cost to the amount I have and will spend on the other items I mentioned.
Well that's all I have to say. Speculation is so much fun.
Ken G Price My N-Scale Layout
Digitrax Super Empire Builder Radio System. South Valley Texas Railroad. SVTRR
N-Scale out west. 1996-1998 or so! UP, SP, Missouri Pacific, C&NW.
Lake First of all a good topic. The following is my opinion on the subject. After reading all of postings on this subject I wonder why every one seems to post like they think that all of these companies make their money from engines. I would think that they would be less then 20% of Atlas's, kATO or Athearn's and others ales. The real money as with most businesses like these are from the accessories. I feel that unlike many of you posting here most model railroaders do not buy more engines every year. We buy our 2 to 10 engines and then maybe a few more over a many year period. But cars, buildings, signage, figures, track, building supplies, are an ongoing purchase. I now own 10 Atlas and KATO DCC N engines and they come nowhere close in cost to the amount I have and will spend on the other items I mentioned. Well that's all I have to say. Speculation is so much fun.
Lake,
That is a good point and if you read all of my postings carefully, I did make a number of references to rolling stock and all purchases in general.
Often locos are the focus of these discussions because several of the newest companies are mainly in the loco business - like Broadway Limited. What else do they make? a few pieces of rolling stock - certainly not a whole line of rolling stock like Athearn, Bachmann, Walthers, Bowser, Intermountain, etc.
So far MTH is not much different, more locos than other HO items.
That said I am buiding a large layout and have over 120 locos, and about 800 pieces of rolling stock. But it took a lot of years to "gather" that much stuff.
selector I recall reading a post by someone here maybe four years ago saying he knew an old-timer LHS owner who said when times were tough, the MR hobby enjoyed an active and lucrative market. Crandell
I recall reading a post by someone here maybe four years ago saying he knew an old-timer LHS owner who said when times were tough, the MR hobby enjoyed an active and lucrative market.
Crandell
I have heard the same since 08 from local LHS owners.
Bob
Photobucket Albums:NPBL - 2008 The BeginningNPBL - 2009 Phase INPBL - 2010 Downtown
Sheldon,
I agree with you 100% about Walthers treating Athearn/MDC like crap, "their" wake up call came when Horizon showed them they weren't the biggest fish in the pond so to speak.
Personally I think Horizon is doing a whale of a job so far, especially considering they were not particularly familiar with trains until the Athearn/MDC purchase.
Again, is it just me or does Walthers now appear to be shooting for selling direct to the customer and bypassing the dealer? They sure don't go out of their way to accomodate the dealer the way they used to years ago. Some of the stuff I see and hear from my LHS guy all points in that direction, in other words, they have changed, but not particularly for the better. I don't know if it's greed or desperation that is driving them and there are so many signals coming from them it's hard to explain here.
Sad part is, I really like Walthers for what they are, they've stayed with the hobby for a lot of years even when it took a severe dip in the early/middle 1960's they stayed with it.
Complicated thing here..........
After reading all of postings on this subject I wonder why every one seems to post like they think that all of these companies make their money from engines.
That's because the F5 hurricanes in a teapot develop when somebody starts ranting about some engine they pre-ordered that either has been totally dropped or whose shipment date has been pushed out or whose price, in the estimation of the complainant, amounts to highway robbery. In any case, while people may buy more cars and other stuff than engines, the big ticket items are engines and they're the ones that generate the greatest wailing and gnashing of teeth. The engines are also the items most commonly subject to pre-order. Steam engines, actually, now that I think of it. A Santa Fe F7 differed from a Pennsy F7 a heck of a lot less than a Santa Fe 3400 class Pacific differed from a Pennsy K4.
andrechapelon blownout cylinder: Well, as I sit here I'm looking at the market for steam kits getting a little smaller, but we'll see what happens when we start trotting the kits out in the fall of 2011... ...we figure on a 'so-called' MSRP of $229. ...first one is the CN version of the 2-6-0... That low, eh? I've been wondering what your price point was going to be. As a matter of fact, I was just wondering if I'd be willing to buy one at when I was figuring the "MSRP" might be right around $325-350. The other thought I had was simply to stick a $20 bill in the mail and encourage others to do the same regardless just to show support for someone doing something that hasn't been tried since Arbour and The Locomotive Company, neither of which is still in business. I won't include DJH in that group because they had a base of British models to generate revenue before they tried and failed to bring the joys of building a highly detailed kit to the North American market. In any case, DJH is still around. I hope the kit's a smashing success. Those of us who lament the loss of steam locomotive kits really need to put our money where our mouths are and actually buy a kit even if it's for a prototype we don't follow, just to show our support. You're definitely WELL below the any of the prices DJH asks for its line of Conitnental prototype engines. The only DJH engine remotely useable on a North American based layout is the USATC S160 2-8-0 and DJH wants the equivalent of US $485 for it at current exchange rates: http://www.djhmodelloco.co.uk/prodloco.asp?ProdID=3073 Andre
blownout cylinder: Well, as I sit here I'm looking at the market for steam kits getting a little smaller, but we'll see what happens when we start trotting the kits out in the fall of 2011... ...we figure on a 'so-called' MSRP of $229. ...first one is the CN version of the 2-6-0...
Well, it appears that that is our price point, we'll see as it gets closer to that time...I'm still thinking it is a bit low-ish but we'll see what transpires in the meantime. Most of our suppliers are sort of in other fields as well which kind of helps.
We've done the homework, in regards the tool/die part...CNC all the way...baby...
Any argument carried far enough will end up in Semantics--Hartz's law of rhetoric Emerald. Leemer and Southern The route of the Sceptre Express Barry
I just started my blog site...more stuff to come...
http://modeltrainswithmusic.blogspot.ca/
As a potential customer, I'm probably shooting myself in the foot, but I think you're right that the price point is a bit low. However, if you insist on giving away the store, it's a sacrifice I'm willing to make.
BTW, will customers be able to get pieces/parts as separate items? Like, oh I don't know, maybe some 63" drivers? Incidentally, will be the axle diameters be 1/8" or 3mm?
Mark,
I think the big thing at Walthers now is selling their own "branded" products. Being a distributor of other brands is declining just like so many other distributors in the hobby business have gone by the wayside.
Walthers is still selling other brands mostly at the "traditional" wholesale discounts even as those same manufacturers sell more and more of their product direct to larger dealers at much bigger discounts. That is what has a lot of the small dealers upset with Walthers. Imagine, you know how cheap Bachmann sells direct, but Walthers wants the small dealers to pay about what the big dealers are retailing it for.
Athearn ended that problem when they went with Horizon. Single point, single price distribution - at a wholesale discount larger than the old industry "standard". Cut out the other middle men, be your own middle man, and split the middle man markup with your customers - than let the market decide how much of that goes to the consumer. It seems to be working rather well. I know I'm still buying lots of Athearn. My WHOLE Christmas gift list this year was list of Athearn and Roundhouse rolling stock - and I received EVERYTHING on the list (because they actually make the trains before they try to sell them all).
It is an idea who's time has come and Athearn is not the only one. Branchline, Intermountain, Bowser and many of the much smaller lines are all moving in that direction as well.
Market pressures have increased some wholesale discounts at Walthers, but they are still the highest price on the block - wholesale or retail.
Not that profit is a dirty word, in may ways the hobby was likely better off when most people paid retail and small local shops were supplied by regional wholesalers - but those days are long gone.
And Walthers, like others is in the process of re-inventing themselves and their place in the hobby. People said Athearn could not do such a re-invention, but I agree with you - they have done quite well.
Unless something changes, the day is coming when Walthers gets out of the wholesale business, or, only keeps it by virtue of being able to sell those other lines retail - the latter may actually already be here.
ALL the LHS owners I know (more than 1-2) only buy from Walthers products not available from some other source - what does that tell you?
But surely I don't know anything about this business, I've only been in the hobby, and in and out of the business now and again, for 40 years - not nearly long enough to be an expert.
Barry,
That price sounds OK, I will take a look. Not sure what I will do with a CN 2-6-0 but who knows?
I have said before, kit or RTR, large or small, I'll pay $200 +/- for good steam loco. It's this $500 plus and you MUST take DCC and sound that shut down my interest in new steam locos.
Best of luck,
andrechapelon BUT, I refuse to pay that kind of money for someithing I have to rework to bring to my standards. I rather buy something for $20 and spend $40 more on it after kitbashing it. But that's just me. You're preaching to the choir. As I said, I would pay up to $500 for a "mass" produced SP P-6. However, the odds of that loco being done by BLI, MTH, P2K, Bachmann, etc. are about equal to the chance of me winning the California lottery at the next drawing without buying a ticket. The closest non-brass 4-6-2 that's been done is a USRA light. I might pay up to $150 for one of those, DCC ready. Andre
(tongue in cheek) But I don't understand? You want some, and I said the other day I would buy 6, surely BLI is making plans as we speak?
I have only two brass locos - both USRA Pacifics, do to the severe lacking of Pacifics in the HO market.
Interestingly I have exactly $300 invested in them - $200 for one, $100 for the other. But then I did put some nice Bachmann tenders behind them, another $50 total.
andrechapelon Well, it appears that that is our price point, we'll see as it gets closer to that time...I'm still thinking it is a bit low-ish but we'll see what transpires in the meantime. Most of our suppliers are sort of in other fields as well which kind of helps. We've done the homework, in regards the tool/die part...CNC all the way...baby... As a potential customer, I'm probably shooting myself in the foot, but I think you're right that the price point is a bit low. However, if you insist on giving away the store, it's a sacrifice I'm willing to make. BTW, will customers be able to get pieces/parts as separate items? Like, oh I don't know, maybe some 63" drivers? Incidentally, will be the axle diameters be 1/8" or 3mm? Andre
The pieces/parts may actually be sold separately as well...it depends on just what falls out of the woodwork ...as it stands there will be spares flapping abouts so we may..... Axles are in both 3mm size and 1/8ths...I'm looking at what size wheels we'll have out...
Graffen So I guess you can´t see the same happening in the US? I think otherwise, as the small run, pre-order strategy isn´t so unlike what the big US Mfg´s has as a standard practice nowadays. It isn´t that they manufacture too many of the items that forces them to sell out the stocks, it is that they don´t like to keep stock or making smaller runs in a long span of time! It costs money to make money and somehow the Mfg´s seems to have forgotten all about it by now. It is especially a real shame that well established companys with lot´s of goodwill that has taken more than 70-80 years to build are being erradicated by shortminded business strategies. I know i´m not made in the "American dream mold", being Swedish and all. But what I have learned is that the company that has the greatest profit margins isn´t even on the stock market: IKEA! Maybe Ingvar Kamprad knows something about businesses that the market should learn.......
So I guess you can´t see the same happening in the US?
I think otherwise, as the small run, pre-order strategy isn´t so unlike what the big US Mfg´s has as a standard practice nowadays.
It isn´t that they manufacture too many of the items that forces them to sell out the stocks, it is that they don´t like to keep stock or making smaller runs in a long span of time!
It costs money to make money and somehow the Mfg´s seems to have forgotten all about it by now.
It is especially a real shame that well established companys with lot´s of goodwill that has taken more than 70-80 years to build are being erradicated by shortminded business strategies.
I know i´m not made in the "American dream mold", being Swedish and all. But what I have learned is that the company that has the greatest profit margins isn´t even on the stock market: IKEA!
Maybe Ingvar Kamprad knows something about businesses that the market should learn.......
I wish hobby manufacturers would follow the Ikea model - put all the pieces in a box and let me put it together myself!
But that's another favorite argument
They can keep the hard-to-pronounce names though
Eric
I wish I was a headlight
On a northbound train
I agree with Ulrich on the German model train business. Piko is starting to get a strong foothold in the States with their very reasonably priced and still proudly made in Germany G scale trains, they are severely under cutting LGB in this market. They are even comparable to Bachmann G in pricing. Hopefully they will expand into other scales in the U.S.A. Do they still make TT gauge?
James Sanchez
James - Piko started out to make TT gauge locos and rolling stock some years ago and they have only a very limited selection. TT gauge is mainly done by Tillig - the successor of the former state-owned "Berliner TT-Bahnen". TT gauge is very popular in Eastern Germany and still moderately priced - at least when compared to the "premium" brands Marklin and Roco. It has turned into an attractive alternative for those short of space and cash.
Piko shows us how to grow a market. There is a lesson to be learned from them for all manufacturers.