I have to admit, I'm a Life Like fan, have a bunch of their stuff, GP-18's, SW-1200's, GP-20's. SD-7/9's, PA's, E-6s etc. The only life like loco that isn't up to much in my opinion is their GP=38's don't run well at all. The RS-11's have been going for under $50.00 for either Atlas or LL. I watch evilbay a lot and I think one can get them for a lot less than $90.00. I know there are some guys who insist on trying to rip us off all the time, and usually if you watch, they don't get bids on their stuff, and rightly so. I agree with the $90.00 as being ripped off though.
The only problem with this is that while there is still a $2 gain on the car you paid $8 for, your rent has gone up. Your electric bill has gone up. Your cable TV or satellite bill has gone up. Your credit/debit card transaction fee has gone up. The food you eat has gone up. Everything you buy or consume has gone up. Maybe only pennies, but it has gone up. That $8 car was priced at a time when $2 would be sufficient. That $2 probably wasn't profit anyway, it probably was consumed to cover operating cost. If everyone else in the chain is raising thier prices to cover thier costs, you will have to do the same. How many cars per hour have to be sold at a $2 markup to keep the lights on, the toilet flushing, and the shelves restocked? More than you had to sell two years ago. Meanwhile the quality of new releases keeps going up, making the old inventory even less apealing. So we pound our fists on the counter and demand the hobby shop take a loss on products that are out dated, making the decree that the only way to stay in business is to sell your old products at a loss, restock your shelves with new product (with what money?), only to take a loss when that stock becomes stale. The shop would have to pad the markup on new items quite a bit to be able to cover the loss we demand they take on whats left when it becomes stale. What do you think happens at car dealerships every year? Suckers rush out and pay big money for the newest cars when they come out, the dealer makes enough on them to be able to sell the remainder to vultures at a lower price later in the year during thier "inventory reduction" sale to make room for the new models. Alot of members here who really have no idea and could not run a successfull business. Fortunately there are lots of great modelers here though, which is what I really browse the site for anyway. Good busness advice can be had elsewhere.
Wowsers Doug....you and I agreeing on anything...I believe I need something a bit stronger then coffee...LMAO !!!
Once again...you are NOT taking a loss on old stock...lol The profit margin set at the time the piece was first set out for sale is still there. The profit margin on NEW stuff is so inflated it more then covers the smaller profit on the OLD stuff. How can one justify jacking the price of older stock up 100% plus? !!! You are selling NEW stuff that hopefully the profit more then covers expenses. You are not basing your entire bussiness on the sale of ONE item...but the whole of your inventory. It's not the consumers fault your older inventory didnt sell way back when. Did you 'over order" and it didnt all sell ? Was it a 'lame duck' item to begin with? No need to jack the price up...Sell it lower...make it a 'loss leader' to get people in the door who will most likely buy newer items while there. The old adage of "The end justifies the means." is poor planning on the bussiness end. When your stock (old or new) doesnt sell and the doors close...believe me...there will be few tears shed. There will be more grumbling about how the bussiness screwed everyone over though. As an FYI...no...I have no bussiness degree but did own a bussiness with my son years ago. BUT...I can tell you I am a CONSUMER giving my opinion on what I perceive as bad bussiness paractices. By the other replies...it seems I am NOT the only one who thinks this way. Thnxs
The way I look at it, why not dump the older remaining items at a lower price with a sale and get your original investment back and maybe make 5%. Then you can use it to help re-stock your shelves with the newer quality items that WILL sell. Your not loosing anything, you're just not making anything on that part of the original investment. But how many of those items did you sell when you first bought a batch of them? Hopfully you made something. Not every item [or batch of items] that gets placed on your shelf will sell. A retailer makes a gamble by buying items that he hopes will sell and make a decent profit on. In this case lets say that you bought 100 of these items and you sold 95 of them. Now you have 5 items left that didn't get bought before a newer version comes out with a better something that makes the older version less attractive. How much did you make on the 95 that you did sell? So you take a little bit of a loss on the last five, get you capital back [if your lucky, maybe make a minimal profit] and use it to help buy the newer versions that will sell. Why leave an item on the shelf with a higher tag and hope it sells.....later? Why not clear it out, take the capital [which you have not lost anything on yet] and use that capital and shelf space to try another item. My old man always told me "If you take a loss on something, then write it off as cheap advertisement." Sales always attract buyers, and when they come in to see what the sales are all about, then maybe they will pick up a few other items at the same time. Meanwhile hopefully your store is selling other stable items that keeps the capital flowing in and not just this one specific item. There is no rigid marketing plan in retail. Sometimes you win, sometimes you loose.
If you have an older item on the shelves that you paid 8 for and it say there unsold until the going wholesale rate went up to ten, then what kind of twisted logic makes you think you're suddenly going to sell out at a higher price? All of the small business owner stocking math is irrelevant. If you couldn't sell it at $10, you won't sell it for $12. The rent and cost of cable don't matter.
Suppose you run a small shop you buy 10 cars that cost you $8 each. You figure you need %10 to cover your operating cost. You mark the item up 20% to generate a nice profit. You sell 8 of them right away. If you recieved your original 10 cars on credit, you can now pay back your debt, unless there was interest. If you were lucky enough to have cash on hand to make the purchase you have your initial investment back. You have not covered your operating costs yet, so at this point you have not broke even. Nevermind any profit. You have two cars left on your shelf, one of which must be sold to cover your operating cost, the last will have some profit. A new release of the car is available. The new one has metal walkways and wheels. Your cost to buy the new product is $10. You also now must make a minimum order of 10 cars. You are tired of your customers complaining about bare shelves. You use your $80 cash and are extended credit for $20. Or you are extended credit for $100. You markup the new cars 20%. You sell 8 of them. You can now pay off your debt and have recouped some of your initial investment, but not all. You have not paid any bills. You have not made any profit. That money is sitting in four little boxes on the shelf collecting dust. You discount the items 10%, and sell one of the new cars and pay back the rest of your debt, or replenish your bank account from the inital investment and have $5, one new car, and two old ones left to pay your operating costs with. There still isn't any profit. You decide aren't buying any more cars untill these are gone. You discount the ones you have 10% more. They are now priced at your inital cost to buy them. You sell 1 more new car at $10 and are not quite able to cover your operating costs and break even. The remaining two old cars are marked down to $5 and hauled to a swap meet to unload on someone else. You haggle with a guy to $8 for both cars. $3 of that takes care of your operating cost, $5 is your profit. Your shelf is emtpy and you are reluctant to order more items, but take a risk and go for it. Now they come with body mounted couplers too. The new cost is $12/car and you still need a minimum order of 10. You reinvest your $5 back into the shop, and combined with your original $80 cash on hand you take out a line of credit for $35. Or you use your $5 and borrow $115. A 10% markup on these cars will still cover your operating costs, which have gone up slightly over the past years, but 10% of $12 is more than 10% of $8 so you're in good shape there. You expect a 20% markup to take care of this and give you a nice profit as well. List price is now over $14. The Internet is alive and well, and you're starting to hear from your loyal customers about high costs for "this new car is the same car we used to get for $10, and can be had at swap meets for $4, this hobby shop is ripping me off for $10!" You're hearing from these same people that "Everyone on my Internet forum agrees that N scale has come a long way in the past few years, and we like the added details, but for $14 it should have air pipes and wire grab irons too." The model is ultimately not well recieved. You sell 4 of them. If you did not use cash you're on the brink of bankruptcy, you can't pay back the debt or cover your operating costs. If you did use cash, you use what is left to pay your operating costs. You did not make your inital investment back. Profit? What profit. Now the new cars are two years old and people are offering you $12 or less for them because a newer car has been made available with wire grabs and air pipe and retails for $18. A customer comes in and wants you to deeply discount the older cars because it's good business sense since it hasn't got the air pipe. You cringe and offer to order the new car for them, but they decline stating "That new car is too expensive. Everything is ready to run nowadays. Nobody does any real modeling anymore, and it's driving the cost up. The air pipe on that car is specific to an afternoon in July 1st 1956 at 12:02am. I model June 30th 1956 at 11:59pm and have no use for it.. Now are you going to give me a discount on the old car because it doesn't have the air pipe I don't want or not?"
1) Any business that consistently buys 20% more than they can sell is gonna fail. 2) Apply this across not one item but 5,000 (many with much higher margins) and you will understand that taking a bath on a few items to get capital to buy more of the stuff that IS selling is the right idea.
OK, this has gone beyond pointlessness. You win, I have more important stuff to do than argue with someone who's smart enough to know everything but won't even bother to look on the flip side of the coin for a broader view of things for just a second so you can see both sides. Pointless. If your going to run a hobby shop, or any type of retail store for that matter, that bases it's entire business strategy on only one or a few items, then yes, you will fail just as you have described. Have a nice day.
Again, if you couldn't sell it at the original price, you aren't going to sell it at a higher price. Ask all those LHS owners that are still mired in Athearn BB kits for models and roads nobody wants.
I thought this thread was going to talk about Atlas increasing the prices on new stuff not some LHS selling old LL GP18's for more than they were worth to start with.
I will add my 2 cents here. You don't get any money for something that does not get sold so you sell it for what you can get. I laugh all the time when I look on ebay and people are trying to get twice the price that most other sellers are charging for the same thing. I also noticed some always sell used and have it priced the same as the new ones for currently avalible items.
Here is a new wrinkle. I had a LHS owner tell me that the original issue of an Atlas engine was worth more than than the newer one because the older locomotive had real lead for weight and could thus pull more so was worth more. I could not argue with that logic so I left. I was laughing but I left. The LHS is no longer in business. Now back to the RS11. Didn't Atlas make two versions of this engine?
There is a shop in Spokane like this, except they got their kits in an estate sale. Had a Walther's coil car kit from 20 years ago, was gonna get it, until they told me they wanted $35 for it, too bad I was able to get one last year for $10. This shop has pretty much every piece of rolling stock from the estate still, and they bought it a few months before Christmas.
Oy, that's pretty horrible. There's a shop down here in Auburn that is only old stock. He prices things pretty well so I give him business when I can. At swap meets, I refuse to pay a dime more than the printed on the box price for non-rare new old stock. If the seller paid more than that for the item, then he's dumb.
Well to get prices he does a comparison to online Walther's prices to check. When I asked for a price on the Walther's car, he first came up with the Atlas coil car...nice try dude, but not even close to the same type of car. But thats what we get when an RC shop gets a bunch of rolling stock in.
