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The designated "This hobby is so expensive" thread Locked

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Posted by ATLANTIC CENTRAL on Friday, March 27, 2015 2:50 PM

PM Railfan

No more proof needs be exhibited. This thread alone is proof something isnt right. Or it wouldnt be here.

I never stated "excessive profits". Yet "over the top pricing". Its the pricing that is in question, not the business model used.

Dont worry about what i know. Instead offer a solution. A fix. An idea on how to stop this and reverse it before the hobby prices itself out of existance.

As stated, ive seen folks walk away from this hobby because of the pricing alone. They didnt run hobby shops or manufacturing businesses. But they knew!

Are you telling me what I saw with my own eyes?

 

 

PM Railfan

This thread is not proof, there will always be those who whine about prices and want more than they are willing to work for.

If manufacturers and dealers are not making excessive profits, Then where will these price reductions come from?

Cost to produce, plus cost to distribute, plus return on investment equals selling price.

If there is no market at that sellng price, then the market does not exist or the product is wrong. Just ask the Sharks.

The market responed to a demand for better detail, higher prototype accuracy and more advanced features all through the 1990's - and there are still a large number of modelers on this forum who sing the praises of RTR over kits, protoype accuracy over generic models, and hi tech - DCC, sound, ditch lights, smoke, etc.

Recently manufacturers have responded with "budget" freight car lines, and even more competitive sound equiped locos, etc.

Cost dynamics overseas have changed dramaticly since the mid 90's.

And the hobby is ever increasingly more diverse, making it harder to just make 10,000 B&O F7's, knowing they will sell in some reasonable amount of time.

Companies like Athearn and Bachmann do a good job at providing both high end "serious modeler" products, as well as more afordable, more generic offerings. Yet listen to how they get bashed on these forums? Personally, I would take my money and run if I was them.

BUT, overseas batch production has driven the preorder thing out of control. You can no longer walk into a shop and look at a reasonable selection of model trains - that is killing the hobby more than the prices.

Nobody can or will invest in inventory - you cannot sell what you don't have - regardless of price.

I predicted about 10 years ago that the "collector" mania of the 90's would fade - and it has. But the manufacturers have invested all their money in multiple tooling of UP Big Boys - rather than looking for un-met demands.

Dealers, online or brick and mortar, forced to sell at heavy discounts, cannot invest in inventory that would allow them to meet the needs of future customers. They can only "get in, and get out fast" with each batch of product, at a very modest profit.

Not a good business model to sustain a hobby like this.

As for those who get out, or don't get in the hobby because its too expensive, that's a personal choice. We all choose what we are willing to aford, and not willing to aford.

I live a very "comfortable" lifestyle, but I choose not to "aford" boats or $100,000 autos. I have 130 model train locomotives instead.

I have been self employed most of my life. Once my wife asked me if I wanted to open a train shop - I laughed, and said, no, you want me to keep the family fortune don't you?

Sheldon  

    

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Posted by rrebell on Friday, March 27, 2015 3:12 PM

What a lot of people seem to forget is this is a buisness and I am sure that if Atlas could double the cost of their track (or any other company with any of their poducts) without losing market share, they would!

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Posted by andrechapelon on Friday, March 27, 2015 4:32 PM

This thread is not proof, there will always be those who whine about prices and want more than they are willing to work for.

If manufacturers and dealers are not making excessive profits, Then where will these price reductions come from?

Aw, come on, Sheldon. Tell 'em how you REALLY feel.

Cost to produce, plus cost to distribute, plus return on investment equals selling price.

You forgot the price of R&D. It takes a lot of skill to design a practical way to manufacture a product that is much more complex than it was when I had color in my hair. What's kept the price down (relatively speaking) is that CAD has made the design process a lot less expensive than it would be if 50 year old techniques were still being used.

I don't care who you are, manufacturing items for the hobby is a business whether or not you're Walthers or some part-time garage operation. Nobody's in it to sell at a loss. If you're losing money, you're doing it wrong. Profit is a necessary (but not sufficient) condition to keep a business viable.

BUT, overseas batch production has driven the preorder thing out of control. You can no longer walk into a shop and look at a reasonable selection of model trains - that is killing the hobby more than the prices.

This is where I disagree. The hobby consists of a lot of micro-markets. There's no such thing as a Santa Fe modeler without adding the limitations of era. The needs of a Santa Fe modeler in the steam era don't really overlap those of a modeler who models the 70's or 80's or 90's. In fact, there's decreasing overlap as you go from 1970 to 1999. Even a free-lancer like you is limited by era and represents a sub-market that is immune to the siren call of any and all items outside that era.

There's no way any hobby shop can (or should) try to maintain an inventory of specific models for a specific railroad in a specific era because that market is small. I plan to buy one of Athearn's upcoming modernized SP MT-4's (DCC and sound). I live in an area where there are quite a few SP types compared to those who favor other railroads. HOWEVER, not all SP fans are steam/transition era modelers. There are a lot of SP enthusiasts who have no interest in steam or even the Black Widow diesel era, the best known of which is Joe Fugate. When you have a market which consists of a myriad of micro-markets (by scale, prototype, era, you name it), you're going to get limited runs to satisfy those markets. That's just the way it is. It's not part of a conspiracy, it's not manufacturers not knowing their market (actually micro-markets) and no amount of wailing, whining, kvetching and holding one's breath until one turns blue is going to alter that.  It's actually a tribute to the Athearn's, BLI's and Walthers of the world that they can satisfy a great many of those micro-markets without having prices double or even triple what they are now. What's got everybody's knickers in a knot is that it isn't economic to try and satisfy all those micro-markets at the same time and thus we've got the wailing, gnashing of teeth and the unspoken feelings of victimization by those whose desires can't be gratified in manner that is both dirt cheap and immediate.

I'm glad Athearn is giving nearly a year's heads up on the SP MT-4. I've been setting aside about $20/month during the last year for some unspecified purchase in the future. Well, now I have a specific purpose for it. By the time the engine hits the market, I'll have the money for it. Now all I have to do is notify my local supplier which version I want (multiple bearing crosshead guides - Athearn mistakenly calls them Laird, disc main drivers, and corrugated pilot). You didn't get those kinds of options back in the days of Japanese brass. I'm still mulling over whether or not to get a version painted for the San Joaquin Daylight. Probably will end up paying about $365 out the door. That's still less than $50 in 1965 prices, when the unpainted brass equivalent went for closer to $60. Like I said, I'll have detail options not available 50 years ago and I'll be getting it cheaper (not to mention painted and lettered). It doesn't get better than that.

Andre

 

It's really kind of hard to support your local hobby shop when the nearest hobby shop that's worth the name is a 150 mile roundtrip.
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Posted by ATLANTIC CENTRAL on Friday, March 27, 2015 5:15 PM

Agreed, R&D is cost not given its due consideration in this business.

Andre, I don't disagree with you about the micro markets, the current business model is the only way to provide those products to those markets.

BUT, the real unanswered question is this:

How much of the total market are those micro markets - and - corespondingly, is there still a "general" market for B&O or Santa Fe F7's? and if so, how big is it?

If you listen to the under current of this forum, there is a great divide between the "RTR, it has to be a perfect match to loco 857 as it appeard on September 14th 1957" crowd, and the "I just want a reasonably priced, reasonably good looking B&O F7" crowd.

AND, with each passing decade, there are more "choices" of prototypes for these micro markets - when I worked in the hobby shop in 1980, nobody was modeling 1995 and manufacturers did not have to worry about making what did not exist yet.

Yet the population of modelers does not seem to be growing at rate equal to the general population or to the ever expanding possible products to offer - so the micro markets get even smaller.......

I just went looking for a few more undecorated EMD F units for the Atlantic Central - I was very disapointed. Glad I already have couple dozen.

But if I was a new guy, I'd be discouraged - maybe to the point of finding a different hobby.

But $120, or $140 for a DC version of an Intermountain or Genesis F unit does not bother me one bit - because in 1983 the BB version was $20, and then I would have bought a better motor, a dressup kit, and GSB cab interior, and had $50 and 20 hours in the thing - The Genesis F unit is a bargin - even if it is a highliner shell kit and a drive.

Maybe I am wrong, but it seems to me that an undecorated F7, or at least one that says B&O or Santa Fe, should be to model trains what a gallon milk is to a grocery store?

Now, those of you who want DCC and sound - guess what? That is a value added feature and you are just going to have to pay the freight.

Sheldon 

 

 

    

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Posted by PM Railfan on Friday, March 27, 2015 5:20 PM

Well i guess i stand corrected....

Corvettes really do have $80k in parts in them, Big Macs really do cost $5.50 with all the meat and stuff you get in them, and there really must be $250 worth of metal and plastic in model locomotives compared to the same locos with same amount of metal and plastic in them 20 years ago.  

Ofcourse, every year new machines, new buildings, new drawings, must be bought to produce these items. I never knew Chevy, Athearn and Walthers moved every year. I mean, there really must be something in the design change of that V8 that makes it worth the cost. Extra cyclinders perhaps? 16 injectors instead of 8? A better design of 'round' shape for the tires? Maybe the bowtie is gold now instead of the same plastic they've used for 50 years. Chevy just found a way to make it still look plastic, but found a way to charge for it. Right?

Even the bun on the big mac must be a different shape, size, quality. Who knows, even the special sauce ( thousand island dressing) must be a different recipe of way more expensive ingrediants. Tastes, looks the same to me. Still takes a high school kid to slap it on the bun. Must be the way they do it that is raising the price.

But i digress. After all, models now are totally different than they used to be. Instead of plastic shells, metal motors and running gear, paint, they must be using something new now.

Silly me, last time i checked my rolling stock, it was still the same ole plastic, metal, and paint. Maybe its the way the screws are screwed in. Do they just snap in now instead of screw? Handrails are unbreakable?

I tell ya, silly me for thinking that there's nothing different in todays models compared to yesteryear huh. Silly me for  thinking they are made the same way they were 50 years ago. Silly me for thinking that since the manufacturing process price has gone down (as the afore mentioned CAD has done to 'by hand' drawing, cnc machines have done to hands on machines, etc etc)  that models would be made the same now. Cant wait to see how the shell comes off compared to an older loco model.

So whats this fancy process called now if its not injection molding? Whats it called if its not assembly?  What are we using now instead of plastic and metal? Whats in the paint other than pigments, dyes that wasnt there before? I must really be behind the times to think that model trains arent just plastic and metal any more. Cant wait to find out what these expensive mystery materials and processes are.

Beats me how you can make a scale width hood (which uses less plastic)  cost more than the ones we had in  the past (which use more plastic). I better go check under the hoods of my newer locomotives. I mistakeingly thought there would be a typical motor, shaft, and gears in there. Cant wait to see this new age expense of a motor and how differently it turns a shaft. Maybe some new way to use electricity? Let me guess, the motors are made by Telsa Car company now?

Yeah, i stand corrected alright! Forgive me for thinking trains today are the same process in make from trains of yesteryear. Boy am i ever gonna be suprised to find out when i scratch the hood of a model it isnt plastic anymore! And the metal parts are replaced with some mystery metal. Maybe gold huh! Gee i hope i can find this special paint they use now as i have alot of undecorateds to paint.

 

PM Railfan

 

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Posted by ATLANTIC CENTRAL on Friday, March 27, 2015 5:28 PM

PM Railfan,

What was the price oil in 1983?

What was the average hourly wage in 1983?

Were you working in 1983? How much did you make? and now?

Sheldon

    

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Posted by PM Railfan on Friday, March 27, 2015 5:29 PM

OOOps, forgot somethings..... R&D. That must be a big one! I just cant fathom even with all my years of design work how a manufacturer can come up with a total new design of something that already exists. Meaning, how do you make and SD40, look like an SD40, but redesign it? Shouldnt all SD40's look alike? But again, i digress, There must be a million expensive ways to redesign a hood so it looks just the same.

And for those who do the DCC with all its bells and whistles.... just so you know, theres no more electronics in your decoder (less infact) than your standard $20 portable cd player. Take for instance these things called "Arduino" and " Rasberry Pi".

Hand held computers than can do more than the puters most of you type on to work this forum. They cost $40 or less. Kinda makes you look at your $3600 crApple in a new light huh! Just so you know, DCC is also a big disappointment in the 'price' topic. All its other advantages are warranted.

But not for the price asked! Must be something special in the electronic chips on those decoders! Some kinda mystery magic other electronics users of the world havent figured out yet.

 

PM Railfan

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Posted by selector on Friday, March 27, 2015 5:32 PM

I happen to believe that, and to understand why, prices are simply too high for some people, either those wishing to enter the hobby or to stay in it.  I don't understand why that should be different from any other human pursuit, be it seeking the company of ladies of the night or running a symphony orchestra.  There will always be some who can and some who can't...or who shouldn't.

Isn't it a reality either way?  I can still picture young boys chasing a wire hoop down a street at a trot with a coat hanger as an extension of their arm.  I'll bet that was a great boon to their childhood.  Many are homeless and in great need of much more basic things than toy trains.

Yet, the toy importers, and if there are still any, distributors, need to make a living.  They, and only they, set terms for themselves as business owners.  They set their prices.  If they're smart, the prices they set will be sufficiently encouraging to keep them in happy customers.  If they price themselves out of the market, they'll end up every bit as out of the hobby as those carping about the prices of things they want.

It's another tired subject, but the hobby is dwindling ever so slowly.  Trains don't command either the interest or the respect they once did because they are as appealing as motherboards and the buses behind flat screen TV's.  Who cares?  Does it work?  Did they bring the latest smart watch or iPhone?  Now THERE'S a gotta have.  Lineups down the block on first market day.  Sleeping bags, parties over a weekend.  That's where the smart money is today.

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Posted by andrechapelon on Friday, March 27, 2015 7:48 PM

ATLANTIC CENTRAL

PM Railfan,

What was the price oil in 1983?

What was the average hourly wage in 1983?

Were you working in 1983? How much did you make? and now?

Sheldon

 

What I find funny is the idea expressed by PM that material costs are really that important . Styrene pellets run between $2800-4000/metric ton (2204 lbs). There's probably about 4 oz. of styrene in an HO SD40 (including sprue waste). A metric ton of styrene would be good for about 8800 shells (including details ). Assuming an average price of $3400/tonne and 8800 shells,  the material price for the shell is all of $0.39. Thirty nine cents. I seriously doubt that the total raw material cost for the SD40 even gets to $5.00.

I'm on the iPhone or I'd discuss economies of scale and why unit costs fall as production volumes increase ( why handheld devices sold in millions are cheaper than model railroad items sold in small   multiples of 1000).

Andre

It's really kind of hard to support your local hobby shop when the nearest hobby shop that's worth the name is a 150 mile roundtrip.
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Posted by ATLANTIC CENTRAL on Friday, March 27, 2015 9:36 PM

PM Railfan

OOOps, forgot somethings..... R&D. That must be a big one! I just cant fathom even with all my years of design work how a manufacturer can come up with a total new design of something that already exists. Meaning, how do you make and SD40, look like an SD40, but redesign it? Shouldnt all SD40's look alike? But again, i digress, There must be a million expensive ways to redesign a hood so it looks just the same.

And for those who do the DCC with all its bells and whistles.... just so you know, theres no more electronics in your decoder (less infact) than your standard $20 portable cd player. Take for instance these things called "Arduino" and " Rasberry Pi".

Hand held computers than can do more than the puters most of you type on to work this forum. They cost $40 or less. Kinda makes you look at your $3600 crApple in a new light huh! Just so you know, DCC is also a big disappointment in the 'price' topic. All its other advantages are warranted.

But not for the price asked! Must be something special in the electronic chips on those decoders! Some kinda mystery magic other electronics users of the world havent figured out yet.

 

PM Railfan

 

I'm using a brand new HP ENVY desktop that blows most laptops away in performance - it was barely $1,000 with monitor and other extras. But, I don't need to drag a computer around with me everywhere I go. $3,600 for an Apple, talk about crazy prices - But like Andre said, economy of scale.

Who makes more money selling pickup trucks in the US? Toyota or FORD? FORD sells 750,000 of them a year, Toyota only about 120,000 of them. But they are in a market where they need to be similar in price. Who is making more money and who can invest more in quality and R&D? Might be why they stay on top. Once again, economy of scale.

Model trains are a cottage industry - overhead and labor are the real costs, materials are nothing.

Labor costs overseas have changed DRAMATICLY since the high detail revolution in model trains started 25-30 years ago. While wages and purchasing power here are crippled by........things we can't talk about on here.

And sourcing your product from around the globe subjects you to more of the whims of international money issues - politics and exchange rates. Big issues for little fish like Walthers or Athearn.

Remember, in all of model train manufacturing, there are how many publicly held companies? Only one, and none on the US stock market.

Electronics - You try that, run right down to your local electronics factory and tell them you only need 5,000 or  10,000 of a circuit board. They will ask you how many you will really need when you get done your product testing and into production.....economy of scale. 

I have had circuit boards manufactured for model railroad products.......

There simply are not enough customers for these little toys to lower prices to the levels you are talking about.

Sheldon 

    

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Posted by blownout cylinder on Saturday, March 28, 2015 12:11 AM

andrechapelon

Folks, we can chew this fat apparently all we want. The fact remains prices are way too high.

To quote Colonel Sherman T. Potter from MASH, "Horse Hockey!!!!"

The upcoming DCC and sound equipped Athearn modernized SP MT-4 has a list price that, on an inflation adjusted basis, has a lower price than its undecorated brass equivalent did in 1965 ($420 today = $56.36 in 1965). The DC version is $100 cheaper ( $320 today = $42.94 in 1965). Street prices will be at least 15% cheaper. There were no "street prices" on brass in 1965.

A Varney "economy" 2-8-2 kit in 1950 was $41.75. No tender was included. The cheapest appropriate tender was $7 ( http://hoseeker.net/varneyinformation/varneycatalog1950pg14.jpg ). In order to have an operable locomotive, you'd have to pay $48.75. The equivalent price today would be $474.80. BTW, that "Brute Diesel" powered A or B unit at $20.95 in the catalog would be $204 today. You can get an ABA set of Athearn F7's for only about $11 more (both A's powered). http://www.athearn.com/Search/Default.aspx?SearchTerm=F7A+RTR&CatID=THLD

 

In 1958, Penn Line asked $44.50 for a Pennsy K4 kit. That's more than $360 in today's currency.

I bought an Athearn Santa Fe caboose kit in 1957. It cost me $1.89 ( http://hoseeker.net/AthearnBrochuresAds/Brochure%201957%20pg2.jpg ). That's the equivalent of $15.79 now. The latest Athearn RTR release of the same caboose is $24.98 (street price will be around $20). You get paint and graphics an order of magnitude better, metal wheels, plastic window inserts and knuckle couples. Incidentally, $24.98 is the equivalent of $3.35 in 1965 and that's just about what Silver Streak caboose kit cost back then and it's also about what you'd pay for a set of Central Valley Bettendorf or Archbar trucks.

The $184.98 MSRP for Athearn's latest RTR SD45 is the equivalent of $25.53 in 1966, when Athearn first released the model. However, now you get prototype appropriate details, superb details on the trucks (the originals were lumps of metal by comparison), an excellent mechanism and SCALE WIDTH hoods. The Athearn SD45 went for just under $15, but that for was a bare bones model with a mediocre mechanism (and overwidth hoods) and X2F couplers. By the time you got it reasonably detailed and running well, you could very well be bumping up against $25.

Athearn RTR passenger cars had an MSRP of $3.50 in 1962 ( http://hoseeker.net/AthearnBrochuresAds/Brochure%201962%20pg6.jpg ). That's $27.20 today. The current equivalent is $29.98. Better paint and graphics, metal wheels and knuckle couplers. http://www.athearn.com/Search/Default.aspx?SearchTerm=Streamline+Diner+RTR&CatId=THRP  Street price will be less.

Y'all can go ahead and stick with the meme that you're victims of a great price gouge even though the truth is otherwise. Me, I feel like a kid in a candy shop. Being retired, I've only got a dime to spend, but, oh what a variety there is from which to make a selection.

Andre

 

 

 

 

Andre: There you go trying to use common sense plus a little historical facting...I know what you are getting at but opinions are the name of the game on the interwebzzz.....

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Posted by blownout cylinder on Saturday, March 28, 2015 12:16 AM

Laptops? Someone mention laptops?

I'm picking this up soon!! Ordered it already...super recording studio here  we come!!!

Eurocom Launches World's First Laptop with 12-core Intel Xeon E5-2697 v2 CPU

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...

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Posted by cedarwoodron on Saturday, March 28, 2015 6:12 AM

The economics of prices in the 1960s versus their equivalent ones in adjusted dollars today should also be considered in terms of "our" ages back then. In 1966, I was 12 years old. My principal income came from lawn mowing and snow shoveling, seasonally. In the winter. $10 for a suburban driveway and walkway to the front door was my usual price. Same price for a front and back yard lawn job in the summer. If I mowed 5 lawns twice a month, my summer income was about $100.- but only during the summer, when (up north) the season was at its peak. So, a $20 locomotive in 1966 was affordable to me as a kid- but I paid no rent, purchased no groceries, gas or paid utility bills. Today, I have those other priority obligations, so a $180 diésel represents a significant purchase- relative to those 1966 hobby days. That is perhaps the point being made by some commenters, who complain about high current prices.

 

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Posted by BRAKIE on Saturday, March 28, 2015 6:49 AM

rrebell

What a lot of people seem to forget is this is a buisness and I am sure that if Atlas could double the cost of their track (or any other company with any of their poducts) without losing market share, they would!

 

If anything they may have lost customers over the problem they had getting track produce.

I now use Peco switches and Micro Engineering track..I will never go back to Atlas track for several reasons.

Larry

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Summerset Ry.


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Posted by jecorbett on Saturday, March 28, 2015 6:55 AM

BRAKIE
 
rrebell

What a lot of people seem to forget is this is a buisness and I am sure that if Atlas could double the cost of their track (or any other company with any of their poducts) without losing market share, they would!

 

 

 

If anything they may have lost customers over the problem they had getting track produce.

I now use Peco switches and Micro Engineering track..I will never go back to Atlas track for several reasons.

 

I bought Micro Engineering track for my branchline extension because Atlas wasn't available. I am considering Peco turnouts as well.

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Posted by BRAKIE on Saturday, March 28, 2015 7:02 AM

ATLANTIC CENTRAL
I predicted about 10 years ago that the "collector" mania of the 90's would fade - and it has. But the manufacturers have invested all their money in multiple tooling of UP Big Boys - rather than looking for un-met demands.

Actually there are more collectors today simply because of the limited runs manufacturers uses today..Recall back in the 90s there was no preorder limited runs unlike today..

Preordering is a collector's paradise.

 

Larry

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Posted by jecorbett on Saturday, March 28, 2015 7:13 AM

I've found this inflation calculator to be a handy tool for figuring the price of anything in terms of inflation adjusted dollars.

http://www.bls.gov/data/inflation_calculator.htm

Whether you have the All Access Pass or just have old issues of MR from way back, you can compare how exensive items were back then to what they are now.

I had saved Walthers 50th anniversary catalog and compared the prices from it to the same items in the 75th anniversary catalog. When adjusted for inflation, most items cost pretty much the same as what they did back then in terms of real dollars. A few were more expensive and others were less expensive. Amazingly, Instant Horizon backdrops which haven't changed as long as I've been in the hobby were selling for exactly the same price. That has since changed but still are a lot cheaper as compared to what they sold for back then.

Structures are probably the best comparison because so many of them are exactly the same product that had been sold 25 years earlier. Adjusting for inflation, most of them cost about the same as now. 

Locomotives are a difficult comparison because the modern ones have so many more features such as sound and DCC as well as much better detailing than back then. Comparing an Athearn BB F7 to a Genesis F7 would be an apples to oranges comparison. Of course the Genesis is going to cost more.

The bottom line is the hobby for the most part is no more expensive now than it was back then. If you want to build a DC layout with no sound in your locos it is going to cost you about the same now as it did 30 years ago in terms of real dollars. If you want sound and DCC in your locos, you are going to pay extra to get that.

PS. I hope I am around to do the same comparison when Walthers 100th anniversary catalog comes out. 

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Posted by jecorbett on Saturday, March 28, 2015 7:19 AM

wabash2800

We were discussing this on another site. Nickel Silver, Atlas Flex was about $.79 a section in 1983. It is now about $6.39 (retail). That's a 809% increase! Folks, that's not all inflation. We speculated that the price might have to do with the increased cost of materials like the Nickel Silver used in electronic gadgetry and the petroleoum in the plastic. Anyone know for sure? Laying track for a multi-level, double-track helix is a major cost even if you can get the track discounted.

With locos and cars we received more for our buck with improvements and add-ons since 1983. But if Chinese labor has held the cost down on the track, I wonder what it would be without it???

Victor Baird

Fort Wayne, Indiana

 

That's easy to understand. Look at what has happened to the price of silver. There is much greater demand for it because of it's use in modern electronics.

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Posted by jecorbett on Saturday, March 28, 2015 7:24 AM

rrebell

What a lot of people seem to forget is this is a buisness and I am sure that if Atlas could double the cost of their track (or any other company with any of their poducts) without losing market share, they would!

 

Exactly. Prices now and always have been dictated by the law of supply and demand. Businesses set their price points where they think they will maximize their profits. Set them too low and your profit margins go down. Set them too high and you will lose sales and profits. That's true of virtually every commodity, not just model railroading stuff.

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Posted by jecorbett on Saturday, March 28, 2015 7:37 AM

PM Railfan

Well i guess i stand corrected....

Corvettes really do have $80k in parts in them, Big Macs really do cost $5.50 with all the meat and stuff you get in them, and there really must be $250 worth of metal and plastic in model locomotives compared to the same locos with same amount of metal and plastic in them 20 years ago.  

 

I don't know where you buy your Big Macs but unless it is at the airport, I doubt it is $5.50. The value meal probably costs that much, but not the sandwich alone. My first job was at a MacDonald's in 1968 so I have some perspective on this. The Big Mac which had just been introduced shortly before I got my job cost 49 cents. Adjusted for inflation, that should be $3.30 and that is close to what I see them sell for around here. The Filet-o-Fish (I learned early on not to call it a fish sandwich) cost 30 cents. That converts to $2.02 in today's dollars. They actually cost around $3.00 now although during Lent, most fast food places have specials on their fish sandwichs and MacDonald's offers two filets for $4.00. 

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Posted by wdcrvr on Saturday, March 28, 2015 10:01 AM

Well . . . . . . I really don't see the point of people going on about how expensive this hobby has become.  The current prices are obvious to anyone in the hobby and the old prices don't really mean anything at this time.  Complaining about the cost does not serve any purpose that I am aware of.  Everyone would be happy to have the cost of their hobby reduced.  There is another thread out there about how to cut costs while pursuing this hobby.  That is helpful, this is not.  So, I leave this thread to those who feel it somehow helps them to heal their wounded wallets.  Have a great day and many thanks again to all of those who have already helped me thru this forum.  Great resource!!

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Posted by Geared Steam on Saturday, March 28, 2015 10:22 AM

This thread was created (IMHO wisely by Steve) to allow people to vent about this ever ongoing subject, where in the past when these threads started to run this course they would ultimately get locked. This wringing of hands about hobby prices will never go away by locking threads, so they might as well have a designated thread so people can have an open, mature discussion, which btw, up to this point, has been an interesting read as far as I'm concerned.

"The true sign of intelligence is not knowledge but imagination."-Albert Einstein

http://gearedsteam.blogspot.com/

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Posted by riogrande5761 on Saturday, March 28, 2015 11:04 AM

ATLANTIC CENTRAL
 There simply are not enough customers for these little toys to lower prices to the levels you are talking about.

Sheldon

Basically.

wdcrvr

Well . . . . . . I really don't see the point of people going on about how expensive this hobby has become.  The current prices are obvious to anyone in the hobby and the old prices don't really mean anything at this time.  Complaining about the cost does not serve any purpose that I am aware of.  

I think you implied the unspoken answer - the purpose is just to vent and complain.  It has been well established the current status of the market etc.  Especially people of lower means aren't going to be happy they can't afford the goodies - I'm not either but I still accept reality and realize complaining isn't going to do any good, but rather I have to 1) do with out, 2) save up, 3) sell some stuff and raise extra cash, 4) try find a way to earn more money so I can have the stuff I want.  Thats pretty much the way it is.  

My mom used to be that way when I was a kid, complain about stuff all the time and I was like, what are you going to do about it, or can you?  If you can't, then stop complaining - all it does is make you feel worse - it's unhealthy emotionally and pyschologically.

Rio Grande.  The Action Road  - Focus 1977-1983

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Posted by ATLANTIC CENTRAL on Saturday, March 28, 2015 12:39 PM

BRAKIE
 
ATLANTIC CENTRAL
I predicted about 10 years ago that the "collector" mania of the 90's would fade - and it has. But the manufacturers have invested all their money in multiple tooling of UP Big Boys - rather than looking for un-met demands.

 

Actually there are more collectors today simply because of the limited runs manufacturers uses today..Recall back in the 90s there was no preorder limited runs unlike today..

Preordering is a collector's paradise.

 

 

Larry,

While there are no doubt more HO collectors than ever before, Model or Toy Train Collecting as a whole is no where near the levels that is was at in the late 90's.

My information comes from a number of shop owners who experianced the MTH and Lionel crazyness of that time, which has dropped off considerablely. It has long been my view that it was this decline in high rail collecting that prompted MTH to look at he HO market.

And MTH did everything they could to foster the same kind of collecting in HO, which had already been steadily on ther increase ever since the "high detail" RTR products started showing up.

But collectors are not always modelers and there is more evidence to suggest that collectors don't generally stay active in the hobby as long. And their buying habits are driven more by the rise or fall of their bank book.

Modelers will plod along at their modeling goals, always spending what is for them an afordable sum, for decades. Collectors are more likely to spend like crazy for a few years when times are good and they "interested", then stop spending when times get tougher and/or their interest has faded.

Sheldon

 

    

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Posted by csxns on Saturday, March 28, 2015 1:05 PM

BRAKIE
I now use Peco switches

That is all that i use but have two Atlas #8's because Peco don't have any in code 100 but i will all ways use Atlas cocd 100 flex.

Russell

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Posted by riogrande5761 on Saturday, March 28, 2015 1:08 PM

csxns

 

 
BRAKIE
I now use Peco switches

 

That is all that i use but have two Atlas #8's because Peco don't have any in code 100 but i will all ways use Atlas cocd 100 flex. 

I have some Peco code 100 in my staging section where I used that size, but above is code 83 and Peco Code 83 are nearly double the cost of Atlas code 83 and cost prohibitive for me right now.  I will be needing some turnouts as I don't have enough saved from my stash from the old layout so it looks like I'll be going with Atlas code 83 for the near term.

Rio Grande.  The Action Road  - Focus 1977-1983

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Posted by PM Railfan on Saturday, March 28, 2015 1:15 PM

Jecorbett - i buy my big macs (or used to, i dont patronize McD;s anymore) at McDonalds, the only place to get them. And yes, the sandwiche alone cost $5.15, the meal is just over $6 (regular size, not super!). And just so you know, in 1986 while vacationing in Waikiki, Hawaii, the Big Mac there was $5 then! Five bucks 30 years ago!!! Granted, you have to understand, everything in Ha. is imported. Even the Ferrari's that you could rent on the corner were $100 an hour (this is back when Magnum PI was a popular tv show).

I dont know what coversion charts you and others are using, but the formulas are way off for all of them. None that i have seen even come close, in the figures posted. For instance......

Andre - the claim that there is about $5 worth of materials in an SD40 (as example) is just about spot on. More like about $15. Even still, when they go for $250..... some ones gouging $245 per at the $5 per unit cost. NO  WHERE has anyone ever taught at ANY business college that your profit margin should exceed the actual cost of what your selling. Nice if you can, but thats bad business on the customer end! You wont be in business long at all!

Even if you take out the overhead, it still wouldnt come up to $245. And that is adding in profit margin too. One more point to the $5 per unit cost, if they were actually paying that price per unit, theyd be made in America because our labor, as bad as it is, can afford to produce this model at that low cost. This is the point im trying to make.

 

I guess the best thing i like about this post is some seem to think there is alot of whining going on. True to some degree. But not from this poster. I can easily afford a $250 loco (but why????). So it isnt whining on my part. I have an honest claim that prices ARE too high. I can look from the outside in and see what this is doing to our hobby. Ive stated more than once i have heard AND seen people walk away from this hobby because of the price alone. Sure there are other hobbys as, if not more expensive. That isnt the point!!!

And if we let it continue, we wont have a hobby left except for those of us experienced enough to build our own stuff. Thats very few people in this hobby folks, very few! Who here can wind a motor? What newbie here can cast a complete boxcar, wheels to roof top? Who scratchbuilds there own DCC power systems? Or DC for that matter? 

If you read my original post, and read it correctly you would notice im not complaining. Thats already been done. I am asking what can be done to lower the prices, keep manufacturers in business, and keep us (the modellers) happy at the same time. IT CAN BE DONE!

One last thought, if it wasnt for complaining or whining as some put it we wouldnt have this country for one, we wouldnt have affirmitive action, we wouldnt have MADD, we wouldnt have a billion things we have today! ANd if we let this continue unmentioned, next year locos will be $300! Then $400. You want to tell me where this will end?

So one more time i ask calmly, and collectively.... just accept the fact things are amiss in the hobby. Complaints have been made, proof offered, and bantering abounded. Can we now focus on how to fix this? Some of you cliam to be such great business geniuses, lets here it! Answers, not excuses. Ideas, not ways around the problem.

Everyone already knows how to model on the cheap (see thread). But that DOESNT stop the price gouging! Only a poor way to turn your head and let it happen and dismiss it as someone whining. It isnt whining when one can afford it, but chooses not too. And decides to do something about it. All im asking is WHAT can be done? Pretty simple question to ask!

 

PM Railfan

 

 

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Posted by betamax on Saturday, March 28, 2015 1:29 PM

jecorbett

 

 
wabash2800

We were discussing this on another site. Nickel Silver, Atlas Flex was about $.79 a section in 1983. It is now about $6.39 (retail). That's a 809% increase! Folks, that's not all inflation. We speculated that the price might have to do with the increased cost of materials like the Nickel Silver used in electronic gadgetry and the petroleoum in the plastic. Anyone know for sure? Laying track for a multi-level, double-track helix is a major cost even if you can get the track discounted.

With locos and cars we received more for our buck with improvements and add-ons since 1983. But if Chinese labor has held the cost down on the track, I wonder what it would be without it???

Victor Baird

Fort Wayne, Indiana

 

 

 

That's easy to understand. Look at what has happened to the price of silver. There is much greater demand for it because of it's use in modern electronics.

 

 

That would be an accurate assessment, if nickel silver actually contained silver.

The primary cost drivers are the cost of copper (the largest component) and nickel, which can be even more costly since it is used in a lot of alloys.  At INCO the miners got a bonus based on the price of nickel, and when it was high, they did well too. (Before someone starts ranting about that, ask yourself, do you want to work underground in miserable conditions? They did it because the pay plus bonus made it worthwhile.) 

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Posted by Steven S on Saturday, March 28, 2015 1:30 PM

jecorbett
That's easy to understand. Look at what has happened to the price of silver. There is much greater demand for it because of it's use in modern electronics.

There is no silver in nickel-silver rail.   It's a copper-nickel alloy.  The term 'silver' just describes the color (as opposed to the brass or steel rail that people had been familiar with.)

 

Steve S

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Posted by ATLANTIC CENTRAL on Saturday, March 28, 2015 1:46 PM

PM Railfan,

Someone will likely scold me for this, but the old pricing/distribution model in this hobby was like this:

$100 MSRP locomotive

Dealer cost from regional distributor - $60

Distributor cost from manufaturer - $38 to $40

Manufacturers net to produce before overhead, profit, debt service - $20

Portion of that representing raw materials - $5 or less.

Manufacturers likely overhead - $10

Net profit at manufactuer $8 - $10 or about 25%

Even Walmart, Target and Sears need to make about 30% gross to stay in business - a small hobby shop needs that 40% defined above.

The distributors are mostly gone now - most products in this hobby move directly from manufacturer/importer to retailers.

That 25% to 30% the distributor was making has been given to the customer in discount pricing - and then some.

Way back when the first mail order places started the discounting that's how they did it, bought the product direct, cut out the middle man, did a higher volume via nationwide exposure and low prices.

Small shops could not buy in the quanities necessary to deal directly with the manufacturers who wanted higher volume and case lot sales to distributors.

Now many manufacturers sell direct to retailers, and in return have changed their pricing to cover the added costs of smaller orders and more accounting.

But still, at least some of the money that once funded regional warehouse inventories has been given to us in discounts.

Retail prices may be slighly inflated now, but when you look at actual selling prices from major retailers in this hobby, prices are lower than they have ever been - adjusted for the the value of Federal Reserve Notes......

If you think the old business model was too much profit, you have never run a business or risked your own money on one.

Sheldon

    

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