Hi all,
One question that’s on my mind lately, given that the shelf price of models here in Oz is almost double that in the USA (in some cases), despite a strong Aussie dollar, is the ‘hidden’ costs of bringing a model from manufacturer to shelf. There’s obviously transportation costs, import duties and the cost of actually making the thing, but are there any other ‘hidden’ costs that might affect the price of a model?
Cheers,
tbdanny
An obvious example is the dealer’s cost of money, assuming that most hobby shops use financing of some sort. The more expensive the financing the more intolerable unsold inventory becomes. And the manufacturer’s cost of money – if a model costs $10 and you intend to sell it for $20 to make a profit, getting that $20 next week is a way different proposition than getting the same amount next year.
Dave Nelson
Models cost money to make. There’s plastic and tooling and coca-cola to buy. If you don’t like the cost, get out of the hobby.
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(Just wanted to get there first for a change… [:P])
John
Currency exchange rates do play into this.
Material costs as well as its transportation.
Supply issues.
Labour issues.
Import/Export duties and taxes.
et cetera PP so on and so forth—
If you look at it, ANY hobby is expensive. There are several reasons behind this. For example, in this hobby, you can buy the minimum toy like loco or rolling stock that doesn’t do too well out of the box, or you can buy the more expensive loco or rolling stock that will run smooth and will need less attention.
This has worked in other hobbies as well. For example, a friend of mine has gotten into fishing in tournaments. He will not touch a reel available at a big box store like Wal-Mart because those reels are not of the best quality. He will buy his reels from a shop that has higher quality reels. Yes, the reels are just as good at Wal-Mart, but for someone who uses them more, the lower quality reels are going to give them some trouble. My friend will buy reels that I wouldn’t put that much money into buying, the reason, I don’t fish as much as him.
In this hobby, you can go to Hobby Lobby and buy a cheap Bachmann or Life Like car or engine, but how is it going fair in the long run.
John,
I’m not complaining - I just want to understand what lies behind the price tag. I was hoping that someone who works in the industry might be able to give us the ‘full picture’, so to speak.
But having read your thread on track costs, I can understand the pre-empting. [:D]
Cheers,
tbdanny
Shortly after my mother remarried, my businessman stepfather said 50% markup is a 33% margin. It took my young, agriculturally oriented mind a while to figure that out. He meant that if he added 50% of the cost he had paid to get it to the store to determine the selling price, it meant he had 33% of the selling price to pay wages, heat, lights, rent/taxes and make a profit. I don’t know how your distribution system works, but if products come to the US from China and are reshipped to your country, the extra shipping added to the other costs you have mentioned, makes the starting figure much higher for your LHS. Since hobby items ofter have a slow turnover, the afore mentioned cost of money (interest on loan or however he financed it) is more costs.
Have fun,
Easy, Big Fella!!!
Another aspect is the “exotic” factor
European prototype models in the States are much more expensive than than U.S. prototype models
Are local prototype models cheaper?
How many people are interested in U.S. prototype models?
Maybe the volume of sales is too low, driving prices up.
And of course, if people pay the price, why should a seller reduce it if he can make the profit he wants from the product, whether that person be the importer, wholesaler or retailer.
Eric
Yeah, I actually wasn’t making any statement at all regarding the pricing. I understand and recognize the various expenses behind most products-- including the (comparatively) small market for most MR type items… except for track. 
John
So maybe instead of outsourcing to china we should import the chinese and skip the shipping costs and tarriffs…
John
John, this sounds suspiciously like the rubber road/concrete tire concept. By the time they got here, activated their cell phone accounts, found the mall and bought a 6/6/3 house near good schools they’d be as expensive as “Muricans”. [swg]
Seriously though, could some of the high cost simply be a result of the old supply/demand thing. I can’t believe that there’s no distributors of model railroad supplies and products down under. Assuming that there are, the costs of supplying a limited number of customers with very specific products can’t exist without a high individual margin of profit. In Oz as well as here in the Good 'Ol, numbers make it happen or not.
In the end, rapid prototyping machines and computer power will save model railroading. This was the subject of a topic a while back and I think holds the secret for this hobby as well as many others.
In the meantime all we can do is budget, scratchbuild and rationalize it all as a way to keep lifes stresses at bay. It does a mighty fine job methinks.
Lou
Don’t forget the liscening fee’s that are paid to the various railroads for the right to use their trademarks. (And other corporate entities)
Chris
Danny
Just out of curiosity. What would you pay for a Rapido coach, a box of Shinohara code 83 track and maybe a 5 pack of Caboose Industries Ground Throws?
Brent
Brent, that’s easy. Nothing. Rapido and Shinohara are HO scale only manufacturers, to the best of my knowledge. I model in N scale. [:D]
But I think you’re asking me ‘what would I expect to pay’ and on an Australian shelf, it would be anywhere between 1.5 to 2 times the American shelf price.
What I’m getting at in this thread is that there are at least 4 perspectives on the costs of bringing a model to market:
The manufacturer
The importer/designer
The LHS owner
The modeller
We usually see things from perspective 4, and so I started this thread to try and get into the ‘shoes’ of nos 1-3.
Cheers,
tbdanny
just living over there makes some stuff cost bunchs more than in the states. My son is into slot cars , he purchased one on the net and is having it sent to me in Mesa Arizona and i will send it to him, even with the cost of shipping it is a lot cheaper that way… By the was the thing is made in china somewhere , which is a whole bunch closer to you than me
I know for me I can buy some things cheaper in the U.S. because of duty and taxes being added when imported to Canada. I think with Australia being similar to Canada in that area duties may be something else to consider.
I live 3 KMS from the U.S. border and pop over all the time to buy things. I recently bought a generator in the U.S. for $800.00 Can. It was $1300.00 in Canada. I was over and back in under an hour and as always I paid nothing when I crossed over back into Canada. I always declare everything and they just wave me on.
We have friends just over the border in the U.S. and have many things shipped to their house and go and pick them up. We declare them coming back and have yet had to pay anything. If you new someone in the U.S. that could mail you those personal Birthday and Christmas gifts[:-^] you could save a bundle. Ordering from a online retailer you are going to get tagged when it hits customs just like your retailers are.
Brent
Two things probably enter into the picture:
The Australian Government import duties.
If it’s a model of a North American prototype, it is probably shipped from the factory in China to the USA and then shipped from the USA to Australia instead of going directly from China to AU.
One thing that no one has mentioned that might weigh more heavily on models in Australia is the fees charged by the entities that handle currency exchanges. If the product traveled from a Chinese factory to an American importer/exporter to a distributor in Australia, the payment in Australian dollars had to be exchanged for American dollars, which in turn had to be exchanged for Yuan - with a surcharge of up to five percent at each exchange point. Then add in markups for one or possibly two additional levels of distribution…
I have a very direct way to gauge how much of a bite currency exchange takes. The US Dollar Postal Money Orders I send to Japan for various reasons always buy about 3% less value in Yen than the rate of exchange would indicate. And that is across a single exchange. Add in another…
Chuck (Modeling Central Japan in September, 1964)
One thought, how many extra hands does it pass through to get to Oz - each needing to make some money on it?
BTW Shinohara also makes S scale track.
Enjoy
Paul