Hi, I just read an article about the European consortium of Roco/Fleischmann, and their financial troubles. They also compared the problems with the ones Märklin had a year ago.
Article (put it in Google translate to read in English!)
But what was most interesting was this: The shortsighted strategy of the owners with short production runs and the way that the products is sold out at very low prices short after release, makes the dealers lose money and in a long run unable to sell at the recommended price. The customers quickly learn that it pays to wait a while,to get the low prices....
If the BIG European model RR companys are going bankrupt because of those very reasons, I sincerely hope that the US Mfg´s will learn from it!
Swedish Custom painter and model maker. My Website:
My Railroad
My Youtube:
Graff´s channel
Sadly, they won't learn a thing. The incredibly cheap production costs in China mean that even when manufacturers blow out stock by the case to online and show dealers at 70% off, they're still making a modest profit, and at worst breaking even. Sure, they might take a bath on the occasional item, but if they were consistently losing money, they wouldn't be doing it.
It works for the customers, and they are able to sell enough through retail channels to those who want to make sure they get what they want (blow out tables at shows are often filled with "garbage" road names) that dealers don't stage a full scale revolt.
It's a balancing act to be sure. Looks like Roco/Fleischmann may have lost control of it somehow.
Graffen Hi, I just read an article about the European consortium of Roco/Fleischmann, and their financial troubles. They also compared the problems with the ones Märklin had a year ago. Article (put it in Google translate to read in English!) But what was most interesting was this: The shortsighted strategy of the owners with short production runs and the way that the products is sold out at very low prices short after release, makes the dealers lose money and in a long run unable to sell at the recommended price. The customers quickly learn that it pays to wait a while,to get the low prices.... If the BIG European model RR companys are going bankrupt because of those very reasons, I sincerely hope that the US Mfg´s will learn from it!
Google translate? My God, that's an awful translation, especially when it lets "Fleischmann" go through as a company name in one area and translates it to "meat man" (a literal translation of "Fleisch" and "Mann") in another. Unfortunately, I'm only able to read about every 10th German word, so have to depend on the translation to try and make sense of the article. That's what happens when a computer is used to translate idiomatic language X in a {vain) attempt to translate to idiomatic language Y.
One of the questions I have is when the consolidation of manufacturers was taking place, were the purchasing companies taking on companies that were saddled with too much debt? By the same token, were the purchasing companies overpaying for the companies they bought? Overpaying for a company is bad enough. Overpaying for a company up to its neck in debt is almost guaranteed corporate suicide, especially if the purchaser is using debt to finance the acquisition. None of that is covered in the article.
I'm not really convinced that the problems of Maerklin, Fleischmann, Roco, etc., can solely or even primarily be laid at the foot of corporate marketing practices which seems to be your take on the subject. Companies can and do make poor business decisions that have nothing whatsoever to do with production and/or marketing (e.g. Daimler-Benz's acquisition of Chrysler, Time-Warner's acquisition of AOL, Warren Buffett's investment of > $350 million in US Air). OTOH, the marketing practices of model railroad manufacturers are a favorite whipping boy here so anything that plays into that predilection is bound to find a wide audience and a mighty chorus of "Amens".
Andre
Their market was just as hard-hit, so disposable income is not supporting even as risky a venture and business model as that. Frankly, I'm surprised we haven't heard of such developments across the hobby, and a lot sooner than this.
Then, again, 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. People did without some things, repaired others, but hunkered down at home with some fun times in mind. That often included toy trains.
Crandell
Graffen But what was most interesting was this: The shortsighted strategy of the owners with short production runs and the way that the products is sold out at very low prices short after release, makes the dealers lose money and in a long run unable to sell at the recommended price. The customers quickly learn that it pays to wait a while,to get the low prices....
You have a contradiction in trying to tie short production runs, blowout sales at low prices, and impending bankruptcy of European modle RR manufacturers. Blowout sales of inventory come from 1) too big a production run, and/or 2) cash flow requirements. In either case, there has to be left inventory to blow out. So the "short-sighted" strategy of small production runs doesn't mesh with selling at very low prices. The whole point of limiting production is to keep the price higher through limited supply.
As Andre pointed out, cash flow issues due to excessive debt service requirements, combined with demand falling through the floor due to recession are much more likely to drive a company under than too small a production run.
You are right on one issue. The low prices to blow out excess inventory have conditioned consumers to expect lower prices if they wait. And has caused dealers to lose money. The combination of excess inventory (too large a production run) combined with insufficient capital reserves (to support carrying the inventory until it can be sold at a reasonable price) pull down not only the company with the problem, but all other companies in the industries as well. Setting up deflationary expectations (it will cost less if I wait to buy) is a huge drag on any economic situation.
my thoughts
Fred W
I'm not sure I understand this logic. Once the manufacturers sell out their product to the distributors, they have already made all the money that they're going to make. Whatever the distributors and or hobby stores sell the product for above and beyond what they've paid for it goes into their pockets.
Or are you saying that the manufacturers are blowing out the product to get rid of it?
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.......
maxman Or are you saying that the manufacturers are blowing out the product to get rid of it?
Yup!
That makes it almost impossible for the brick and mortar dealers to compete with the big Online-shops that buys their stocks at maybe half of what the original wholesale price was.....
All it tells me when I see a company do that is #1, somebody realy goofed when they ordered the roadnames and or color scheme or #2, they don't have the financial foundation to be able to "own" their own merchandise. Thatis to say they're operating on "borrowed" money and I think it's pretty obvious after that last few years that that way of doing business is very risky in certain areas of manufacturing.
Something old "Irv" would never have considered doing, hence his company was always as solid as a rock, and there were others as well.
Mark
Forty Niner All it tells me when I see a company do that is #1, somebody realy goofed when they ordered the roadnames and or color scheme or #2, they don't have the financial foundation to be able to "own" their own merchandise. Thatis to say they're operating on "borrowed" money and I think it's pretty obvious after that last few years that that way of doing business is very risky in certain areas of manufacturing. Something old "Irv" would never have considered doing, hence his company was always as solid as a rock, and there were others as well. Mark
Couldn´t agree more!
Mark, Andre and Fred have covered the major points here quite well.
Companies like Broadway, have repeatedly intorduced new product, held dealer discounts and thereby retail prices high at first, sold as much as possible, then lowered dealer discounts or sold retail through exclusive dealers at much lower prices to move the "rest" of the run.
This leaves dealers who "invested" in having the product on the shelves for their customers stuck with product they paid too much for. But even more importantly it has undermined the value of BLI products in the eyes of many consumers - I know I am one. I don't by BLI until/unless it is 40% or more off.
BUT, I buy Athearn happily at 20% off - why, because it seldom goes below that by very much.
Even Bachmann, who consistantly sells direct to dealers at a deep discount, is consistant. That deep discount applies the day a new item comes out, so an expected "street" price is established and maintained. Bachmann is sold at 25% to 40% off retail - ALL THE TIME - and very seldom for any less.
These newer manufacturers who apparently cannot afford to "own" their inventory, and a number of dealers in similar situations, have done this hobby a great disservice.
By being able to "own" their inventory and wait for customers to purchase it at a fair price, manufacturers expand the market. All this "limited production", sell it out in 10 minutes non sense is running people out of this hobby in my view.
How is someone supposed to look at a model layout, and say "I'd like to do that", with no reasnable expectation that a reasonable amount and selection of supplies will be available when they need them? If I was new it would discourge me.
In a recent thread about hobby shops, "Brakie" commented about shops with "old" inventory - most of this stuff does not really have an experation date - and it would be even more "timeless" if the hobby was expanding in offerings and activity.
It's like a self fullfilling prophesy either up or down.
But what do I know, I'm just hick with some trains without brains.
Sheldon
Sheldon,
You forgot to mention the Pick Up Truck!!!
Mark ;-]
Graffen 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!
Disagree again. If a production run is sized right, they have nothing to sell out. Dealers have ordered it all. Fire sale prices are a very strong indication of producing or stocking too much. From economics, lowered prices mean supply has exceeded demand.
Importers don't own production facilities, they rent them. But even if they own them, costs are kept lower and revenues increased by re-using production facilities as quickly as possible. Even Ikea does batch runs, re-using the same lines for multiple products. Stretching out a production gains nothing, and increases costs - usually way beyond the interest costs of carrying the inventory.
The real worrisome strategic decision by most importers has been to chase the upscale market in regards to price, detail level, and quality. Nearly every manufacturer/importer has abandoned the lower price points to chase the higher profit levels from serving upscale clientele. This trend is not limited to model railroading, and has had the effect of increasing prices across the board. And with too many chasing the limited upscale market, there is always a bubble bursting when supply starts exceeding demand.
just my thoughts, based on my understanding of business and economics
None of you understand what the world economy and banking have to do with the situation. If (very big if) you can get a short term loan how many should you make? 10000 At x$ or 5000 at 2x$. By the way, good luck fguring out the fickle or cash strapped consumer. So they come in and they don't sell as planned but the bank say's give me my.money. Got any other options then dumping them?
My two cents. When my family came to the US from Germany in 1954 (I was 3) one of the few things my father brought along was a few pieces of Marklin. I grew up with it and have something like 40 years of Marklin catalogs. While Marklin was a marvel of engineering it was also aimed at the kid market. Every village seemed to have an area in the local store devoted to model trains, either Marklin or Fleischmann. The catalogs always had pictures of boys and their fathers with the trains. I suspect that the kid market gave Marklin a foundation which they used to support the more complex models. At one time Marklin even had a fantasy train collection geared to boys which showed that they were willing to fight for the attention of the youth market. The problem is not that they lost the kids but that there aren't enough kids anymore. The replacement rate among ethnic Germans is way below what is needed for a stable population. The immigrants don't seem to have the same interest in playing with trains. The market has changed drastically and the various German companies are trying to come up with ways to cope. I wish them well. I had a lot of fun with my Marklin while growing up.
Werner
The reason it's not on the stock market is that it's privately held. That leads to the question, how doi you know that IKEA has the highest profit margins? Is it required to report quarterly and/or annual financial data the way publicly traded companies are?
IKEA, sells home furnishings and related items and has a much, much broader market than any model railroad company ever could even if you could combine all the model railroad manufacturers world wide into a single company. A model railroad manufacturer will only sell to those interested in model railroads. IKEA, on the other hand, has a potential market which consists of the set of people who use furniture (a market with billions of potential customers). Comparing IKEA to the likes of Fleischmann, Roco, etc. goes way beyond the proverbial apples to oranges comparison. It's like trying to compare the market for toilet paper to the market for corporate jets. There's just no way to make a sensible comparison.
Well, one obvious lesson is that you have a better chance of success if you sell stuff everybody can use rather than stuff on which only a tiny fraction of the population is willing to spend their money.
Then there's the fact that stuff he sells in Sweden sells elsewhere as it fulfills a widely felt need. We have 4 pieces of IKEA furniture in our house. How many Swedes (or Germans, Brits, French, Italians, Aussies, Saudis, Israelis, etc.) would be willing to part with their local currency for the likes of an MTH Milwaukee Bipolar, Genesis Big Boy or Walthers new model of Los Angeles Union Passenger Terminal?
I will give IKEA credit for one thing. They do sell kits. I've assembled 4 of them.
Andrea
If companies do go pre-order only I suspect some here would set up a wail then...
But even pre-orders have failed as well...people back out at the last minute..materials go scarce...then you see prices collapsing as they needs clear inventory.
megh...it has been done before, it'll happen again...
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/
I don't own anything from IKEA, most of it offends my sense of aesthetics, but then again I live in a 1901 Queen Anne style house.
But I do respect its quality and value - just not for me.
Too many businesses today are working on too much borrowed money - it will be our economic down fall.
Too much debt - government, personal and corporate.
But the pickup, the victorian house and the trains here are all paid for.
Seems to me that, regardless of manufacturer, MSRP is a total fantasy, driven more by the idea that if someone can be induced to think they're getting a "bargain" than any economic reality, they'll buy an item. Micro-Mark is selling DCC and sound equipped Bachmann 4-4-0's for $249.95 and the MSRP is $445. That's a 44% discount from the stated retail price and it's ludicrous. If Micro-Mark can sell them to retail customers for a profit at $250 and Bachmann's making a profit wholesaling them to retailers for some percentage of that $250, why not just have the MSRP be $250? If you insist on tricking people into thinking they're getting a bargain, why not retail them for $300 or so so that people can still pat themselves on the back for scoring one for cheap?
I've finally figured out why I haven't been able to unload a well known bridge over the East River in New York. You know, this one: http://en.wikipedia.org/wiki/File:Brooklyn_Bridge_Postdlf.jpg
The problem is that I'm trying to sell at MSRP (in this case $154,999,974.95). If I give a huge discount, I can unload it in a hurry. Hmm $5000 sounds like a screaming bargain, especially since I only paid $500 for it my self (a huge discount from $56,482,356.89).
PS. The only reason I can think of that Bachmann doesn't have an MSRP otf $100,000 for the 4-4-0 is that most (not all, but most) people would realize that their chain is being yanked when they see that they could pick one up for $250. They're yanking chains at $445, it's just not as obvious. Still, it's probably a source of amusement at corporate headquarters, especially with the beancounters.
andrechapelon Even Bachmann, who consistantly sells direct to dealers at a deep discount, is consistant. That deep discount applies the day a new item comes out, so an expected "street" price is established and maintained. Bachmann is sold at 25% to 40% off retail - ALL THE TIME - and very seldom for any less. Seems to me that, regardless of manufacturer, MSRP is a total fantasy, driven more by the idea that if someone can be induced to think they're getting a "bargain" than any economic reality, they'll buy an item. Micro-Mark is selling DCC and sound equipped Bachmann 4-4-0's for $249.95 and the MSRP is $445. That's a 44% discount from the stated retail price and it's ludicrous. If Micro-Mark can sell them to retail customers for a profit at $250 and Bachmann's making a profit wholesaling them to retailers for some percentage of that $250, why not just have the MSRP be $250? If you insist on tricking people into thinking they're getting a bargain, why not retail them for $300 or so so that people can still pat themselves on the back for scoring one for cheap? I've finally figured out why I haven't been able to unload a well known bridge over the East River in New York. You know, this one: http://en.wikipedia.org/wiki/File:Brooklyn_Bridge_Postdlf.jpg The problem is that I'm trying to sell at MSRP (in this case $154,999,974.95). If I give a huge discount, I can unload it in a hurry. Hmm $5000 sounds like a screaming bargain, especially since I only paid $500 for it my self (a huge discount from $56,482,356.89). Andre PS. The only reason I can think of that Bachmann doesn't have an MSRP otf $100,000 for the 4-4-0 is that most (not all, but most) people would realize that their chain is being yanked when they see that they could pick one up for $250. They're yanking chains at $445, it's just not as obvious. Still, it's probably a source of amusement at corporate headquarters, especially with the beancounters.
Andre. I agree completely, but at least their wholesale price is consistant. The proof of that is that brick and mortar operations near me, likely much smaller in buying power than Micro-Mark, are also selling Bachmann in that 40% discount range.
Bachmann is the worst offender in tems of "meaningless" retail prices, but BLI still wins the awards for "fluctuating prices - wholesale and retail" and "we can't make up our mind which part of the market to target".
Meanwhile Athearn plods quietly along still selling everything they make and now controlling market prices of their product better than ever before. Dispite all the doom and gloom predictions when Horizon entered the picture. And, with a marketing method only slightly ajusted from years past.
And while many of the others fight over the high end/high detail market, Athearn still focuses most of their product effort at the moderate price range and only "dabbles" in the high end.
I am still amazed that so many modelers seem to have bought into the "preorder" non sense and that BLI and Rapido have lasted this long.
BLI is less and less on my "radar" as a source of products, especially now that they appear to have fully abandoned DC.
Just as MTH starts to see they need the DC or DCC ready customer base? - go figure?
Athearn's bread and butter has historically been in the moderate price range (and even then I've seen complaints about non-Genesis Athearn prices), so it's not as big a risk to venture into the higher end when you've got a safety net underneath. Bachmann produced low end crap for years before venturing into higher end (running quality and details) and at least had some kind of base to underpin the venture. Same with Life-Like until they came out with P2K. IOW, each of these companies had a base to underpin them.
BLI and Rapido made their entries at the "high end" of the market with products that no one else was doing or was likely to do. This is especially true with Rapido, all of whose prototypes (with the exception of the recent Osgood-Bradley coaches) are Canadian. MTH broke into the high end of HO, but with one advantage. They already had a firm footing in the 3 rail O gauge market both with the toy train market and the higher end "Hi-rail" market whose only real concessions to scale are deep flanges and 3 rails.
If you want to do a start up and do it at the "moderate" end of the market, you not only have to face the start up costs of your business, but you have to be careful what you produce. You could come up with what appears to be a sure fire winner only to find out that someone else, already entrenched in the field, has come up with the same thing. Remember the GSB SD40-2? Athearn had several advantages there, starting with a well-recognized name. Anybody who thinks otherwise has my personal blessing to try to bring back a latter day version of Athearn BB.
I've only got 1 BLI engine, a Santa Fe 3751 class from the first run. It was just one of those I just gotta have it things. The reason I don't have any others has nothing to do with BLI's pre-order policy or its pricing. They just don't make what I really really want although I do have to admit to having a hankering for the modernized Santa Fe 3800 class 2-10-2 even though I'm an SP fan. I have no objection to "pre" ordering per se. However, I wouldn't order directly from the manufacturer, but through The Train Shop in Santa Clara, CA. Let them consolidate the individual orders and order multiple examples from BLI or whomever.
I'm also not so sure that manufacturers are totally to blame for crazy pricing. There are multiple Athearn Genesis DCC ready SP MT-4's on EBay right now with Buy It Now prices ranging from $179.99 to $254.98 from retailers. Wow. Such a deal, especially the one at $180. I just love SP Mountains. However, I'm not a buyer at any price for any of the as built engines.
Andre,
I agree, but I still think marketing and pricing consistancy would have worked to Broadway's advantage, as opposed to the course they have taken thus far.
As for Rapido, they have yet to make ANYTHING my layout needs or wants, at any price, so I guess its hard for me to judge the wisdom of their approach.
As for the crazy pricing, I agree it not all from the manufacturers. There are obviously dealers playing games as well. Some of them seem cash straped as well, buying large quantities on credit and then needing to move quickly what they don't sell at top dollar or modest discounts.
I would not be surprised to find that some of these Ebay "deals" are the back door of some otherwise higher priced outlets.
And, I will use a "bargin" I picked up years ago as an example: On Ebay, the same seller had Bachmann 2-6-6-2's (orginal release, no sound/DCC) at a starting price of $75.00. I bought several. It turned out that the seller was SoundTraxx, and they had bought them with plans to add DCC and sound, as they did to several other brands/items back then. They changed their mind and dumped the locos.
At first these locos were bid up to "normal" street prices, but they must have had 30-40 of them, two listings a week, for weeks and weeks. After a while the demand droped off, I picked up two for $75.00 each.
Having owned my own retail business (not in model trains), and having ran a train department in a hobby shop, and worked other retail jobs, I have little sympathy for people trying to run businesses without enough capital and without a good understanding of their market. Its like planning failure in advance.
They haven't made anything I want either, but what you or I want individually is irrelevant. Apparently someone is buying their stuff at a rate that's allowing them to add new items. The only thing that even comes close to anything I would buy from Rapido is their upcoming SP versions of Osgood-Bradley coaches. They were actually used in the SF Bay area for a while after SSW got out of the passenger business.
In general I would agree. However, the fact that any business operates using a business model that either or both of us disagrees with doesn't mean that the owner doesn't know what he/she is doing, is undercapitalized or doesn't understand the challenges of his/her target market Rapido's only been in business for 7 years and BLI about a year or so longer. Let's give 'em at least another 5 years to see what happens.
The other side of the spectrum are the companies that crank out the same thing year after year after year with little or no change (e.g. Mantua, Bowser steam kits) and seemingly think that the good times will roll on forever and then wonder why their inventory valuation method has morphed from FIFO (First In, FIrst Out) through FISH (First In, Still Here) all the way to LUMAD (Lost Under Massive Accumulations of Dust).
Mr Werner is correct about the lack of children in Germany and most of Europe being the main reason Marklin and others are struggling. The toy train market was their bread and butter and Marklin did mention the decline of this market as one of the main reasons for seeking bankruptcy protection. The other problem was the very high cost of manufacturing in Germany, most of Marklin's production has now shifted to China and Hungary. Hundreds of the positions in Goppingen, Germany have been eliminated. Marklin/Trix did try to make a big push to expand in the U.S. market, but their price structure was not competitive with Chinese made trains sold by U.S. companies. Being a Marklin dealer it was sad to see their U.S.A operation shut down along with LGB. Walthers is doing a good job trying to revive and distribute these lines. However even though they have moved most production to China, the product prices are still very high. I can't see many new comers to the hobby starting with Marklin or Trix products, This unfortunately might still lead to their ultimate demise.
James Sanchez
There is hardly any European model railroading business which has not been or still is in financial trouble. Marklin/Trix, Fleischmann/Roco, Lima, Arnold, Jouef, Rivarossi, those three now being Hornby brands, Faller, Kibri - you will find all the big names on this list. All of them once thriving businesses, which are now just struggling along. Most of them blame a shrinking market for their failure, but I doubt that this is the sole reason, as there are still businesses which are doing quite well.
What happened?
Marklin, for many decades being the market leader in Europe, made a tremendous development in post-WW II years, in a time, when money was VERY short and people had to struggle to stay alive. Two factors kindled that development:
Marklin´s trains were always a little more expensive than those of other brands, but consumers were prepared to pay for that to get the quality. Each year, Marklin would release one or two new locos into the market, which were readily accepted. Detail was sufficient not only to attract kids, but even the more serious modeler, yet still crude when compared to today´s standard. New products were ready just in time for the Christmas business, and as catalog items, the were always available - no limited runs, no pre-order, no bargain runs.
In the mid 1980´s, Marklin and all others realized that the baby boom years were over and that their customer base would be rapidly shrinking. The industry answered by upgrading their products, increasing the level of detail and adding electronic gadgets and features, thus moving away from a kid´s toy market into the serious hobby market. Prices went up as a consequence. In order to attract more buyer´s in a shrinking market, Marklin increased the number of new products in the market and introduced limited runs to urge the buyers to buy immediately - a policy which led to exploding costs and skyrocketing prices. Moving production out of Germany to low wage countries like Hungary and partly China while at the same time keeping the high price level did not help at all, so the downfall was foreseeable.
What went wrong?
Model railroading is still the # 1 hobby in Germany, with an increasing attractiveness. We even have a bi-monthly TV show exclusively covering model railroading! But it is not Marklin/Trix or Fleischmann/Roco who is capitalizing on this attractiveness, it is the former state-owned East German manufacturer Piko who has developed a budget line of products being sold at prices people still can afford - and buy. Piko still offers high end products, but on a platform of a bread-and-butter business which pays their bills.
The lesson to be learned?
Don´t offer a Mercedes if the market is prepared only to pay for a Toyota, unless you are prepared to sell the Mercedes at the price of a Toyota.
Makes me wonder if part of the reason Bachmann maintains such high MSRPs is an attempt to dispel the bad reputation of some of its past offerings.
Dan
AHM used the same marketing strategy as Bachmann does back in the 1960s and it worked well for them for many years, Life-Like did much the same thing.
It all comes back to who's money you're working on, your's or the bank's, and how well you know your market.
Obviously some know theirs better than others...........
ndbprr None of you understand what the world economy and banking have to do with the situation. If (very big if) you can get a short term loan how many should you make? 10000 At x$ or 5000 at 2x$. By the way, good luck fguring out the fickle or cash strapped consumer. So they come in and they don't sell as planned but the bank say's give me my.money. Got any other options then dumping them?
I understand this completely, I just think it is crazy. You may as well just take the banks money and go to Las Vegas or Atlantic City for the weekend and see how you do. The odds are about the same.
Short term business models like this are gambling - long term business models are investing.
I've been self employed most of my life, never made any money gambling, made lots of money investing.
From what I see, the high end, collector, RTR bubble in HO is busting as we speak - the only question is how much of the steady, modeler, life time in the hobby market will be left when it's over, and wht that market will want or be willing to pay for.
AltonFan Makes me wonder if part of the reason Bachmann maintains such high MSRPs is an attempt to dispel the bad reputation of some of its past offerings.
You are on the right track here, they price a 2-6-6-2 the way Broadway would, then just sell it at a bigger wholesale discount.
LifeLike did the same thing until Walther bought them. Then production runs got smaller and wholesale discounts got shorter - raising street prices.
I think a lot of big and even medium sized dealers invested in lots of Proto2000 in the early days when LifeLike was selling it cheap. And a lot of them held the line on prices to make the bigger markup for a long time. Then, realizing that the market was seriously over supplied, starting lowering prices to keep it moving.
I'm not complaining, I have dozens of them I only paid $40 and $50 a piece for. But in todays market, I don't hesitate to pay $100 for a nice DC diesel - a price similar to those original retail prices on LifeLike.
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...