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Jut

$.03 (US) per figure and $5 (US) Base Sets; how does that make you feel?

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Hi all! 

Not sure if you have heard about the guy suing GW for $62.5 Million US.  But it was an interesting video:

In this video, the guy hosting mentions, that years ago he talked with whomever GW did their plastics through, who had said: "Ya, the cost is about 3 cents a figure."  In that same section of the video, the host also mentions that years ago he had talked with one of the GW regional or national managers, who was bragging that the Battle of Macragg sets where produced for 5 bucks!!!

Now I get it: FFG is a biz, there are there to make money and employ people, but I always remember GW, back in the day when they started to switch over to plastic "This plastic modeling is a VERY expensive way to do modeling . . . blah, blah, blah."

Sure its been a few years, maybe its $.10 cents a figure now, maybe the base box is only running them $10, but dang, that is just crazy to think of actually cost and what we end up paying. 

This is NOT a FFG rant or anything, just curious on your general thoughts and yes, I will probably buy Legion and help feed FFG families and all the middle men. 

Thoughts?

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I feel fine, because the guy suing is a moron. For so many reasons, but i'm only going to talk about the costs part you raised (even though I really, really like shooting down his other mad claims....).

"I talked to a guy that said....". Right. So IF he is telling the truth about what a random guy said, it's still stupid. Maybe, MAYBE, the plastic costs that much (and since the mystery guy "did their plastic", could make sense). Ok, for the sake of this we'll say it does.

Now, what about packaging? Design? Art? Staff costs? Shipping? Store/web overheads? Printing? Mould cost? Equipment purchase/hire/replacement? Operating costs of a global logistics chain? Shareholder obligation (people often dont realise theres actually a legal obligation to tryo to make shareholder profit in many cases...its complicated)?

In short, he's full of sh......rubbish. This has been around for a few months now, and has been roundly derided/preached in equal measure, but in short....it does NOT cost that amount when you factor everything in. They absolutely make a profit, because it's literally the reason for companies to exist, but it's not even remotely close to the amount he claims.

And even if it was (it still isn't), ultimately the choice to buy is the consumers, not the supplier. Unless you are being forced at gunpoint to buy things, you don't really get to complain (the general "you" btw, not the original poster!), because you knowingly made that choice to buy it at that price.

 

Right, rant over. I'm properly sick of seeing this idiot get exposure, as you may have guessed :P

 

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46 minutes ago, Extropia said:

it does NOT cost that amount when you factor everything in.

Yeah that's a very misleading figure he's using... And that's going to be one of the reasons the lawsuit gets thrown out... The unreasonable demands is part of it too.

It may very well cost only a few cents in raw materials to produce a model.  But that's also the smallest part of the cost of making that model.  It's not like the sculpture work for free, or the people running the press, or the people who do the packaging, or the ones who design the packaging.

Some people like to pull out the cost in raw materials as a way to make it seem like we're being ripped off, but that's such a massively flawed way to look at things, because it doesn't account for 3/4th of what goes into making a product.

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Of course their margin is big, they aren't a charity. Like every company, their margin will be as large as they can get away with (FFG are no different).

But it's not even within the same hemisphere as the figure being quoted, let alone the same ballpark.

On the issue of recasts (and speaking as somebody that has bought them in the past), actually you'll note that there's very few recasts of any GW plastic models, and when there are prices are very, very close. The big recast savings are on Forgeworld resin models, who really DO make a ton of money.

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4 minutes ago, Extropia said:

The big recast savings are on Forgeworld resin models, who really DO make a ton of money.

Forgeworld proving that "A fool and his money are soon parted" is still a valid concept today.

I know Forgeworld makes some very cool looking stuff, but I just don't see how people can justify those prices...

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They guy is idiot and there is more to the cost than the price of the material.  You have to factor in the design costs, the cost of the mold, marketing, distribution, warehousing and more importantly the cost of all the people involved.  I am sure it costs $0.03 in plastic, but that is not the total cost.   Look at it this way, when you go to the restaurant and order a good plate of pasta.   That pasta alone is $0.50 but you have add in all the other costs.  The cost of the pasta sauce, the cost of washing the plate, the chef and assistants that made the dish, and additional items around the plate like bread, the table, the linen the waiter etc.   Pure cost of one piece does not give you the whole cost picture.   The guy is an idiot and has a lot of time to put together a frivolous lawsuit.   

IMHO, this should not even be a topic in this forum.

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I almost wonder if the guy isn't trying to just get information.  I've seen so many people call him an idiot, and say that companies like FFG and GW don't make unreasonable profit...but honestly, no one but they know their margins.  I see the arguments all the time when some fans ask for a little more (pre-paint, additional cards, etc) and then the fanboys pounce and call them unreasonable, or how it would jack the price up by some ungodly amount.

With a little research, it's not hard to figure out how much profit a car company makes per vehicle after all expenses.  It's well documented what the profit margins are for all sorts of retail businesses.  The same can't be said for miniature based games.

This guy's lawsuit may be total bunk and he may be expecting to lose.  But he may be able to make GW produce evidence to actual costs (material, production, promotion, staffing, shipping, etc) so that one could definitively see what the profit margin is.  That alone could have a HUGE impact.  If word starts getting around that FFG is ripping off customers with huge margins, Disney's name gets dragged through the mud, they renegotiate their IP contracts to have price limits to protect their own interests.  Large groups of GW fans may quit all together if they start to learn they've been robbed blind for decades.  Companies licensing IPs may ask for a bigger slice of the pie, or find other companies to work with.

Think about it.  If you pay $100 for a product and you assume the company makes profit (because that's the point), but you assume the profit is 15%.  That seems reasonable.  But if you find out that the profit is actually 80%...well now you feel like you are getting ripped off.  Sure, the company needs to make money, but most businesses operate on less than a 15% margin.  Some highly successful businesses exist on margins less than 5%.

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The guy is known for lawsuits. I believe this is like his 4th/5th of a major business. He's basically a giant turd.

 

FYI, I'm saying all of this knowing FULL WELL that these companies make massive profit margins on every product sold. Knowing some execs for some gaming companies, GW easily makes huge profit margins on everything produced (yes including all the "development" and other things people bring up, sigh). That said, they're a business, and if they can charge people for it, and they pay it, they'll do it.

Edited by Zeelobby

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These fools are the reason we cant have nice things cheap. He has no effing clue what he's on about, but it will probably make it to court at least once, and cost gw a small fortune on the legal team.......

 

Edit: As for margin, all i know for sure is my flgs gives a perma 15% off rrp on stocked models ( not online only) because they hate the pricing structure as well.....

Edited by Ralgon

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9 minutes ago, TurboCooler said:

They guy is idiot and there is more to the cost than the price of the material.  You have to factor in the design costs, the cost of the mold, marketing, distribution, warehousing and more importantly the cost of all the people involved.  I am sure it costs $0.03 in plastic, but that is not the total cost.   Look at it this way, when you go to the restaurant and order a good plate of pasta.   That pasta alone is $0.50 but you have add in all the other costs.  The cost of the pasta sauce, the cost of washing the plate, the chef and assistants that made the dish, and additional items around the plate like bread, the table, the linen the waiter etc.   Pure cost of one piece does not give you the whole cost picture.   The guy is an idiot and has a lot of time to put together a frivolous lawsuit.   

IMHO, this should not even be a topic in this forum.

They're still making a ton. $0.03 may have been an exaggeration, but it's still significant, even with all that you mentioned. Especially for GW (who run distribution/warehousing/etc. more efficiently then almost everyone else).

Also the restaurant comparison is pretty poor. Most restaurants make money on alcohol, not food. If they don't sell enough alcohol they usually go under (the exception being fast food chains, but whether that's actual food or not is questionable).

Edited by Zeelobby
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3 minutes ago, Ralgon said:

These fools are the reason we cant have nice things cheap. He has no effing clue what he's on about, but it will probably make it to court at least once, and cost gw a small fortune on the legal team.......

Haha. If there's anything GW has spent money on, it's hiring a good legal team. It's why everything is name Orruks and Aelfs. I'm sure the lawsuit will come to nothing, which is sad. Dude should be thrown in jail, lol.

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9 minutes ago, VanorDM said:

Forgeworld proving that "A fool and his money are soon parted" is still a valid concept today.

I know Forgeworld makes some very cool looking stuff, but I just don't see how people can justify those prices...

Tbh, whilst i kind of agree....it's a luxury item.

I honestly feel the same about people that buy designer clothes, so it really depends on the individual.

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1 minute ago, Extropia said:

Tbh, whilst i kind of agree....it's a luxury item.

I honestly feel the same about people that buy designer clothes, so it really depends on the individual.

Exactly. These plastic toy soldiers are definitely luxury items. I always laugh when people will scoff at a $100 handbag, but then go out and buy a $100 plastic model. I mean it's not like the model has any physical value. Heck it has even less than the handbag. They charge as much as they think people are willing to pay, and GW players are willing to pay boatloads (including myself).

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12 minutes ago, VanorDM said:

Forgeworld proving that "A fool and his money are soon parted" is still a valid concept today.

I know Forgeworld makes some very cool looking stuff, but I just don't see how people can justify those prices...

You'd be surprised how often a brand and a new packaging/casing has you paying ridiculous markups on everyday items and tools.....

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Does that $0.03 include the cost of creating the mold? The time and labor involved in creating the model? Time and labor to change production lines? Time and labor creating the testing the correct plastic?

I'm sure there are tens of thousands of dollars being invested into these models which will allow for cost reductions when the product is launched. Pretty standard business practice. 

 

Further, I'm more than willing to pay FFG the $80 ($90-$10 to produce) profit margin if they continue to make good games. 

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Don't forget the cost of the artist to draw out the design. The artist to turn drawing into a 3d model. The prototypes, the tweaks, the people who think up the rules, the people who play test, the designers for the packaging, There's a lot of brain power that needs to be compensated before any physical production is made.

Edited by Kardek

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2 minutes ago, Undeadguy said:

Does that $0.03 include the cost of creating the mold? The time and labor involved in creating the model? Time and labor to change production lines? Time and labor creating the testing the correct plastic?

I'm sure there are tens of thousands of dollars being invested into these models which will allow for cost reductions when the product is launched. Pretty standard business practice. 

 

Further, I'm more than willing to pay FFG the $80 ($90-$10 to produce) profit margin if they continue to make good games. 

$0.03 might not, but it's probably only around $5/$10 at this point for models they sell for $50+. Now that all of GW's manufacturing is in-house, it's not all that expensive. Even before it wasn't that bad. In the end it just depends on volume. Models may take significantly less to produce than sell, but if only several are sold, the difference has to recoup those costs. Execs also get pretty massive pay outs in these companies.

I totally agree that so far FFG's price point seems reasonable.

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26 minutes ago, kmanweiss said:

Sure, the company needs to make money, but most businesses operate on less than a 15% margin.  Some highly successful businesses exist on margins less than 5%.

The only business anyone has on saying how much profit a company should make is in the form of buying their product or not.  If you think the profit margin is too high then don't buy from them.

But the fact is few companies actually make anywhere near 80% margins, not when you figure the markups between manufacturer, distributor and then retail.

Sure there maybe a 80% markup between manufacture and retail, but the manufacturer doesn't actually get that much.   Retailers may have a 50% markup but they also have to pay overhead and the rest while that product sits on their shelf earning them not a single dime.

Also the companies that make less than 5% survive because of the massive volume they sell.  Coca-Cola can make it on 5%, GW or FFG can't because there's a crap ton more bottles of coke sold every day then there are tactical squads or decks of Star Wars LCG.

Edited by VanorDM
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So...  discussed heavily on several big 40k forums.  Key takeaways...

  • Rob Baer (the speaker in the video above) seems to hate GW for a variety of reasons (one possible reason is not being included in the recent 8th Edition play testing) and is probably covering this to be a bit of a jerk.  Pretty much everyone else in the community is dismissing this guy as a crackpot.  It's unclear why Rob is taking this lawsuit seriously.  The suit has already been rejected for being filed incorrectly.
  • GW is a publicly traded company.  A look at their annual financial statements and a bit of math readily tells you that they're not selling 3 cent models for a kajillion dollars.  They have a decent profit margin, as is to be expected from this sort of niche company, but it's not nearly as high as some people seem to think.
  • The plastic that goes into a sprue of 5 models may very well be cheap, but then you have to factor in...
    • design costs
    • packaging costs
    • transportation costs
    • website maintenance costs
    • retail costs (rent, etc)
    • payroll
    • etc, etc, etc

In other words...  nothing to see here.  Move along.  

 

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36 minutes ago, VanorDM said:

The only business anyone has on saying how much profit a company should make is in the form of buying their product or not.  If you think the profit margin is too high then don't buy from them.

You know nothing about humanity do you. lol

In our society, basically everyone assumes everyone is playing fair.  People generally assume that no one is ripping them off because if they were, they'd get in trouble.  People assume that companies are only making a reasonable margin.  People tend to be VERY wrong.  Enron, housing crisis, Wells Fargo, etc.  People fall for scams every day because they trust that everyone is good and everyone is looking out for their best interest.

I personally believe FFG and companies like GW likely make pretty darn good margins (which is necessary for a relatively low volume business model), but I don't believe they are predatory.  But that's an assumption with no basis in fact.  We have no way to estimate if we are getting a good deal.  Once profit margin is a known factor, the consumer is more knowledgeable and is able to make better informed decisions.

Without margin info, you make your purchase decision based on how bad you want it, and can you afford it.  Once you introduce 'is it a good deal' into the equation, things change.

Sure, I don't think FFG pulls a 80% margin.  That's crazy.  But if they did, would you still buy?  If that $100 box of minis and cardboard cost them all of $10-$15 to produce all things considered.  Would you not start to hesitate at that purchase, where as now when you assume it's only a 10% margin and have no issue purchasing multiple copies.

Ultimately, this lawsuit looks more like a discovery exercise.  He wants to pull enough info so that everyone can actually see the costs.  Such information could ultimately support the fans or the critics, but it would be very enlightening.

Again, to clarify, I have no problem with FFG.  I think this lawsuit is bunk.  But I think the lawyer isn't trying to win, I think he's just fishing for information to back up his complaints.

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16 minutes ago, KrisWall said:

So...  discussed heavily on several big 40k forums.  Key takeaways...

  • Rob Baer (the speaker in the video above) seems to hate GW for a variety of reasons (one possible reason is not being included in the recent 8th Edition play testing) and is probably covering this to be a bit of a jerk.  Pretty much everyone else in the community is dismissing this guy as a crackpot.  It's unclear why Rob is taking this lawsuit seriously.  

 

He isn't taking it seriously....as you said, he just loves to fling **** at GW given even the slightest opening. Baer is an absolute tool.

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1 hour ago, kmanweiss said:

In our society, basically everyone assumes everyone is playing fair.

We call people like that children.  No adult actually assumes everyone is playing fair.

Quote

People generally assume that no one is ripping them off because if they were, they'd get in trouble.

Define "ripping them off", but do so without the assumption you have the right to decide how much someone should be paid.

1 hour ago, kmanweiss said:

People assume that companies are only making a reasonable margin.

People should assume that companies are making as much profit as they can... Anything else is wishful thinking at it's worse.

Quote

I personally believe FFG and companies like GW likely make pretty darn good margins (which is necessary for a relatively low volume business model), but I don't believe they are predatory.

A luxury item can not by it's very definition be predatory.  They aren't offering anything anyone needs, so no one has to buy it if they don't want to.

Quote

But if they did, would you still buy? 

As long as they were offering me a product I wanted and at a price that I considered reasonable yes.  How much profit they make isn't a consideration.  

Edited by VanorDM

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