cuyama It seems odd to suggest that folks who deal comfortably with the difference between MSRP and street price every day on myriad products (automobiles, computers, cell phones, home appliances, etc., etc.) can't be expected to do the same with model train items.
It seems odd to suggest that folks who deal comfortably with the difference between MSRP and street price every day on myriad products (automobiles, computers, cell phones, home appliances, etc., etc.) can't be expected to do the same with model train items.
Steven Otte Threads have been merged. You know, guys, it really HAS all been said before...
Threads have been merged.
You know, guys, it really HAS all been said before...
Chuck - Modeling in HO scale and anything narrow gauge
--Steven Otte, Model Railroader senior associate editorsotte@kalmbach.com
Layout Design GalleryLayout Design Special Interest Group
I have noticed that many of the model train manufacturers put a very high MSRP on their products. I think this practice limits their ability to effectively market their products outside the hobby. For example, Bachmann trains has an MSRP that is often double the actual price of their products. Bachmann will only use the MSRP to advertise the price of the product - so a $150 train set is advertised at $300. Other products (outside the hobby) have an MSRP that is 20%-30% above actual cost. When its Christmas time, and consumers are evaluating purchases, why would anyone buy a $300 train set, when they see other products available for $150 (even though the actual price is the same)? Is it any surprise model trains can't compete with other products at Christmas when their price is advertised as such? I understand this practice is probably in place to give hobby stores big leeway in the actual price they offer, but I think it is an impediment on entry into the general consumer market. It seems the NMRA is always concerned about bringing new people into the hobby, and I think this is a factor. Manufacturers should lower their MSRP to a more reasonable level to increase their appeal from an advertising perspective to people outside the hobby (only hobbyists are aware that the actual price is much lower than advertised). This doesn't need to impact the actual sales price of the product. I'm only speaking about the sticker price shock the average consumer experiences when they see these products.
MSRP is just that a suggested price point. Clearly dealers cannot go far above that since you would buy elsewhere. But dealers usually charge substantially less that the MRSP, and they are sill making their profit margin, ergo the MRSP is an inflated price so that the dealer can "give you a deal". Makes you return to the dealer for the nickle and dime stuff because he his such a great guy and treats you well. And believe me, some of that nickle and dime stuff can run into a small fortune if you have to ppulate your subway layout with pedestrians, cars and truck. I just got a good deal from Trainworld on some tractor trailers, an Ice Truck, and a Greyhound bus headded to New York.
ROAR
The Route of the Broadway Lion The Largest Subway Layout in North Dakota.
Here there be cats. LIONS with CAMERAS
BRAKIE richhotrain But, Larry, your very argument treats the MSRP as irrelevant. Actually without the MSRP I would not have a base sticker price to compare and choose the better option.
richhotrain But, Larry, your very argument treats the MSRP as irrelevant.
Actually without the MSRP I would not have a base sticker price to compare and choose the better option.
Rich
Alton Junction
CentralGulf I don't believe that is the OP's point at all. He is talking about the vast difference between the list price and the so-called street price, and I think he has a point.
I don't believe that is the OP's point at all. He is talking about the vast difference between the list price and the so-called street price, and I think he has a point.
It is a very good point. Companies do this in order to protect their channel (dealers, resellers, ...) and to create an illusion of a "discount". Unfortunately this trick just confuses the end customers (us), and personally I don't think is a good idea for an industry that is flat to declining.
But for this to end, someone new, without an established channel needs to come in and blow up the market. Maybe Rapido?
NP.
Larry
Conductor.
Summerset Ry.
"Stay Alert, Don't get hurt Safety First!"
It doesn't matter what any of us think of MSRP but it IS relevant to the dealers.
They can only get the margin that they can get. The distributors won't give it away to the dealers, and if the distributor is "removed" from the equation, as with Tangent, Exactrail and Moloco and I don't know how many other companies, the profit margin available to the end dealer is still small.
It doesn't matter what any of us think, simple economics dictates that the model train shops cannot afford to make a 20% (of msrp) profit margin and stay in business, unless all they have is a big warehouse and internet/mail order staff. There is no room for any kind of customer service at all if you are buying the stuff at 80% of retail. When it gets to that point the small dealers will all be gone.
I know of one very good train store, right now, whose internet and mail order sales allow the retail store to still exist by contributing 86% of all sales volume to the overall business. So the store is only selling 14% of the product. Essentially, the internet/mail order sales are supporting the retail store. That model will work for maybe one large train store per state. The rest will be gone.
John
Another "This Hobby Is Too Expensive!" thread.
BRAKIE richhotrain So, who really cares about MSRP? It is irrelevant. Rich The MSRP gives me a base option to buy from a hobby shop or order off line. A few bucks between on line price plus shipping or a few bucks more at a shop plus tax. A example. Two RTR cars sells for $24.95 each($49.90 plus tax) or $19.95 on line ($39.90) plus 6.95 shipping is $46.85..Roughly five dollars difference with tax..The shop wins in this case.
richhotrain So, who really cares about MSRP? It is irrelevant. Rich
The MSRP gives me a base option to buy from a hobby shop or order off line. A few bucks between on line price plus shipping or a few bucks more at a shop plus tax.
A example. Two RTR cars sells for $24.95 each($49.90 plus tax) or $19.95 on line ($39.90) plus 6.95 shipping is $46.85..Roughly five dollars difference with tax..The shop wins in this case.
CentralGulf richhotrain Does anyone really take the MSRP seriously? Snip. So, who really cares about MSRP? It is irrelevant. CG
richhotrain Does anyone really take the MSRP seriously? Snip. So, who really cares about MSRP? It is irrelevant.
Does anyone really take the MSRP seriously?
Snip.
So, who really cares about MSRP? It is irrelevant.
CG
Very few people today fail to price shop, and the Internet makes price shopping a breeze. My 7 year old grandson can readily find the lowest price on any toy on his personal iPad.
For someone to spot a Bachmann train set advertised at $300 and walk away discouraged, deciding not to enter the hobby, that same person would likely pay full sticker price on a new automobile.
CentralGulfTo knowledgeable buyers, yes. But someone considering entering the hobby may not understand this. That is the OP's entire point. CG
The flip side is this is 2016 and just about everybody including old folks knows about e-Bay and shopping on line for better prices.
richhotrainSo, who really cares about MSRP? It is irrelevant. Rich
I do and here's why.
A example. Two RTR cars sells for $24.95 each($49.90 plus tax) or $19.95 on line ($39.90) plus 6.95 shipping is $46.85..Roughly five dollars difference with tax..The shop wins in this case. I won't add the gas needed to shop at my closest shop-a 52 mile round trip because I will do other shopping as well and of course a stop at Coney Island for a coney dog or two plus a slice of apple pie is a must..
A rant about the high prices of the hobby in disguise, nothing else!
How many times have we been through this in the past 12, 24, 36 months?
Bis repetita non placent, as Julius Cesar would have said!
To knowledgeable buyers, yes. But someone considering entering the hobby may not understand this. That is the OP's entire point.
The use of MSRP could well be considered a form of price fixing if it could be shown that the pricing arrangement is part of an illegal agreement among manufacturers. But our top court decided a decade ago that there is no price fixing where a manufacturer simply sets minimum resale price restrictions.
The golf industry is a good example of the minimum resale price restriction approach. If I want to buy the latest Titleist driver, the price is the same everywhere. No discounting permitted.
But the model railroading hobby does not appear to be engaging in any form of either price fixing or minimum resale price restrictions. When I set out to buy something like a locomotive or structure kit or a piece of electronics, I start my search based upon price, and I never look at the MSRP. Discounting is widespread and competitive.
The obvious solution to this is for manufacturers to stop publishing MSRPs. Realistically though that is not what's stopping new people from entering the hobby IMHO.Rather it's that we have trained people with electronics and the internet into the I want it NOW gratication mode.
Joe Staten Island West
Paul3Today, many manufacturers have dropped that 40% to 30%, 25%, or even 20%. Why did they do that? Because it keeps the MSRP lower. Bachmann, for all their issues, have kept the old 40-10-10 system when practically everyone else stopped.
And that is want help kill LHS..You can buy that $99.99 engine on line for around $79.00 in the case of Bachmann that discount drops to around $59.00-69.00. I paid $89.00 for my Bachmann Alco S-4 with DCC/Sound with free shipping after the feeding frenzy was over.
passenger1955,Do you realize that model manufacturers have essentially already done what you've asked them to? They've lowered the MSRP by squeezing the margins...well, other than Bachmann, that is.
In yon olden days, you got a straight 40% off the MSRP if you were a retailer, with another 10% off of that if you paid within 10 days (the old 40-10-10 rule). So a $100 item would be $60 to the retailer, but if he paid promptly, he'd get another $6 off and it would only cost him $54.
Today, many manufacturers have dropped that 40% to 30%, 25%, or even 20%. Why did they do that? Because it keeps the MSRP lower. Bachmann, for all their issues, have kept the old 40-10-10 system when practically everyone else stopped.
It seems like there is a lot of space between 20% and 100% MSRP markup that still allows hobby stores to make a profit and offer discounts. One of the most popular items last Christmas is Sphero, which has an MSRP of $129 and sells for $99. A loco company that puts out locos that sell for $99 but has an advertised price of $200 will never be able to compete in the eyes of an average consumer. My discussion isn't about the merits of a tech toy in comparison to a locomotive, but just about the MSRP pricing structure. I realize many manufacturers don't really advertise and leave it up to the retailer to advertise the product and price (for those companies this point isn't as meaningful). But for a manufacturer that puts out catalogs and large magazine ads all of which advertise trains at ridiculously high prices, I have to question if they are shooting themselves in the foot and reducing their chances to reach the biggest market possible.
passenger1950,Wow, do you want to drive LHS's out of business? By having manufacturers keep all costs the same but lowering the MSRP to discount levels (20% off or more), it would mean that the retailers would then never be able to offer a discount at all (unless they were dumping it). Instead of a store normally selling items for a discount, they'd then become full-blown retail. Sure, the price is exactly the same, but the optics are awful. Buyers just wouldn't like it: "Hey, where's my normal 20% discount for this new engine?" Retailer: "Sorry, no more discounts." Buyer, while putting back the loco, "Too bad." Buyers have now been trained to expect discounts. They're more likely to buy that $100 MSRP item at 20% off than that $80 item at full list, even tho' it is exactly the same price. One wants to feel like they're getting something extra, even when they're not.It's the same reason that $99.99 is used instead of $100.00. We all know it's only a penny difference, but one looks much more appealing than the other. The $99.99 item will always outsell the identical $100.00 item.
By the way, by lowering the MSRP it also means that any popular items that a hobby shop may actually be able to get full list for would then be forever out of their hands. You are literally taking money out of the pockets of all hobby shops by lowering the MSRP to discount levels. I doubt they'd appreciate it.
As seen by the public (and undereducated school teachers) trains are kiddie toys.
Actually, they are big kid toys. So they should be compared to two seat automobiles, Purdy shotguns, armed-combat warship models and such - pricey, not very useful and looked at as unnecessary by the mundanes.
To be honest, I never even bother to check MSRP. The only price that interests me is the one I have to pay to get the product. If CAN AFFORD exceeds WANT I'll pop it in the cart. If not, I won't. If I can't afford it, WANT is sitting pat on a busted flush.
Chuck (Economic realist modeling Central Japan in September, 1964 - inexpensively)
Obviously a lot of people don't pay much attention to computer equipment prices, or appliance prices, or automobile prices, or a lot of other things.
Disclaimer: This post may contain humor, sarcasm, and/or flatulence.
Michael Mornard
Bringing the North Woods to South Dakota!
Yeah, but clothing doesn't have a MSRP. Neither do chain saws, light bulbs, or vine-ripe tomatoes. Just put sticker prices on stuff and go with that.
Robert
Actually Robert, chainsaws DO have MSRP's, at least Husqvarna and Stihl show MSRP's for their saws, (Husqvarna 395XP, with 36"bar is $1,279.95 MSRP, right from Husqvarna's website)
trust me, when looking for a BIG chainsaw, I have been looking around, and actual retail and MSRP, is UNFORTUNATELY very close in the chainsaw market, I WISH that the saw makers over inflated their MSRP's, the way that Bachmann does.
Doug
May your flanges always stay BETWEEN the rails
challenger3980 PRR8259 More features drove pricing higher, and perhaps folks here are ignorant of clothing prices which have significantly higher margins than hobby margins. Clothing is less of a discretionary spending item, and most people are more familiar with shopping around for clothing, than they would be about entering ANY NEW hobby interest. The OP's point(as I read it) is that by having the listed MSRP's so far above the actual retail prices, many potential NEW hobbiests are lost before they ever learn more about the hobby, because of the High PERCIEVED cost of the hobby. I think the OP has a very valid point, Doug
PRR8259 More features drove pricing higher, and perhaps folks here are ignorant of clothing prices which have significantly higher margins than hobby margins.
More features drove pricing higher, and perhaps folks here are ignorant of clothing prices which have significantly higher margins than hobby margins.
Clothing is less of a discretionary spending item, and most people are more familiar with shopping around for clothing, than they would be about entering ANY NEW hobby interest.
The OP's point(as I read it) is that by having the listed MSRP's so far above the actual retail prices, many potential NEW hobbiests are lost before they ever learn more about the hobby, because of the High PERCIEVED cost of the hobby.
I think the OP has a very valid point,
LINK to SNSR Blog
This is simple, basic marketing. The idea is to make you think that somewhere along the line some nice person wants to do you a huge favor, and to take less money for themselves. Isn't that nnnniiiiiiiiiiiiiiiiiiiiiiicccce of that person?
We get fliers weekly, inserted into the local papers. Several businesses show red or black slashes through prices quite a bit higher than the ones they list to hook you. Yes, we have this limited time offer (quantities limited!!) of the ABC circular saw that normally retails for $299, now on sale for only $199.
Yes, really!
Ask yourself how several large etailers we all know can sell seemingly endless quantities of DCC/sound 2-8-2 steamers for 30% less than all other MSRPs published for that locomotive. It's because there is a sizeable markup to an inflated price purposefully set so that the various distributors and retailers can entice us with these "bargain basement prices."
A decent point-and-shoot camera costs these days about as much as a decent steamer with DCC/sound. I think they're generally priced reasonably, and almost all of them sell soon after they are issued.
Again most manufacturers do not dump product like Bachmann and cannot control what distributors masquerading as dealers may dump it for. If you reduce dealer discount below 30 percent off retail you will drive all remaining local train stores out of business. BLI, Morning Sun books, and others are squeezing the dealers already.
I used to fly RC, so I just looked at how RC models are price structured these days. Most models seem to be selling at or near list. I found no significant discounting in my brief examination. In fact, Amazon was selling above list.
My take on this is RC MSRP prices reflect the actual selling prices of items in that field.
Like model railroading, flying RC models is 100% discretionary.