Tony,I think he's closer then many manufacturers or hobby shops will want to admit..A ton of raw material along with gaylords of motors bought by the gross at a flat rate-you get my drift. I suspect Kato makes $35-45.00 per locomotive and that adds up by the thousands.You fail to mention the distributors buys from Kato and Kato has made their money even before the locomotive/car hits the hobby shop. The distributor adds their competitive percentage above their cost and sells to the shop who in turn sells at 10% off or full MSRP..The larger on line shops order by the cases and not by small numbers like Mom and Pop thus the bigger fish gets the better price deal..Having worked part time in a hobby shop I know the extra discounts a hobby shop can recieve by ordering cases and paying cash upfront.
I tend to agree with Tony Hines. Seeing we've both worked for a LHS. Brakie has pretty much summed up the how to's of product distribution. At one time I knew what the mark-up was. Back in the 90's it was less then 30% and closer to 10%. Little to no profit. To sum it up...not enough to run a hobby shop. There is over head, rent or lease, utilities, taxes and licenses, employee payroll, benefits package for full time employees, FICA and taxes, sales at less then cost and taxes, shipping and handling and more taxes. Even though items are made in China, there is still shipping of raw products to China, shipping of finished products to various global locations, all of the above including some new taxes and tariffs. We are lucky to have the manufacturing we do and that someone out there is willing to gamble or invest in of all things... a toy train line of products. Grumble and whine if you will. It's not likely to get you or I anywhere soon. If there is one thing I've learned from the past... it hasn't done much good. I think I said "Painfully slow" and we were lucky to get what we did. You are the investor. The first question on your mind is what can I invest in that will sell and give me a substantial return on my investment. Will you be willing to invest in a small locomotive to satisfy 100 customers or will you choose a locomotive that will sell to 1,000 customers. Perhaps, those numbers are to small to consider the investment? It takes initiative and putting your money where your mouth is. Willing to invest and prop up this modeling industry...then do it. You might get what you want. .
If I hadn't seen the bills and actually presented the check for some deliveries I wouldn't be wise to the other cash discounts he received either..I often wondered why he order case lots and was able to drop the price by 15%..
I see you quoted my short version. I've been at it again, with an eraser and edit pin. Yes, and I remember this kind of thing happening. Usually, well after the newness of the item had warn off. It just seemed to me that we were consistently 2 to 5 years behind times. While other shops had the latest, newest and hottest items we were still attempting to sell what was on our shelves. You can get stuck trying to sell whole case lot's and not have the customer base to sell them to. You need to know who your customers are and what there preferences are. mad:Just a thought.
You base your numbers on . . .? That means the NW2 costs Kato something like $10-20 each to design and manufacturer. That's not realistic. That's implying that everything is prepaid and it's not. If the bill to the littler guys that buy direct from Kato is sent on delivery, why should the distributors pay earlier? There's the example of the Korean model RR mfgr. (subcontractor) that was holding up shipment for payment in something other than US dollars that had become cheaper vs. other currencies in the time between contract and delivery. If prepaid, there would have been no argument with the US company. Way back in the day there was also a minimum order per month from hobby distributors, something like $3000 IIRC (correct me if I'm wrong) It would be enough to make me faint getting the bill, much less deciding on what to order, and that's not in 2010 dollars. As today, there was a couple percent discount if the bill was paid in 10 days. Hobby stores lived and died by that couple percent and did their utmost to pay it. So as many folks in other small retail businesses, they were cash poor but rich if you counted what was in store stock. That fits with: That's part of how the old LHS had that big inventory that customers liked so much. That's a FAIL business model today.
After reading this for nine pages I think it is time to chime in. First, I am from the camp that loco shells are nice, but a crappy mechanism will not be tolerated. From the detail side, who cars if the thing doesn't run well. All dressed up and nowhere to go isn't what I want to spend money on. As for cars, it is more about how well they roll as opposed to how well they look. Recently, Atlas released a beautiful run of 20,700 gal tank cars. They were beautiful! But the wheels were out of round and had flat spots. They did not roll at all. They promptly were returned for a refund. Again, it matters not how great these looked, but it was how pathetically they rolled that is enough to be rejected. So all the fantastic detaling in the world doesn make it if the product is otherwise flawed. As for the rising costs, that is the nature of things and will not ever change. As a manufacturer myself, now semi-retired, I understand the logistics and the costs models very well. A highly detailed locomotive like a SP AC-9 or PRR M1a can be done, but the volume of product to make it worthwhile is the key. The individual variations by road are more the reason these can not be done. The early brass market tried this, but so much was spent on the shell, the drivers were crap. And they cost a kings ransom. Lets look at the PRR M1a, PCM put it out there and there were never enough reservations for the locomotive to ever materialize. So there is a market limit to the cost of detailing. I guess Athearn had a better read bringing the big UP locomotives to market. And IM didn't do so bad on the SP AC-12's either. Diesels aren't as difficult, but then there is the issue of how many roads used a specific model. The whole point is that detailing is good over all, but not at the expense of performance. As for the prices, well you get what you pay for. Remember, to hold the prices firm and improve, something else has to lose. And in many cases it is the useability we all crave.
DRS-6-6-1500. OH... yeah one of those that look just like a AS-616. Okay lets get back to the topic at hand... Why didn't Atlas follow-up the VO-1000 with a VO-660 AND follow-up the H15-66 with the H10-44. Oh... sorry... wrong topic... but the following paragraph may answer this too. The manufacturers must make money in order for them to continue to produce model trains. The money made on current runs serves as the seed money for newer models. They have to turn a profit off of the tooling at some point... but it is not always on the first run of the product. Some of the models we're requesting may be a little to obscure and do not have a sufficient [perceived] following for the manfacturer to take a chance on the tooling. Every time the manufacturer miscalculates the market... it sets back their timeframe for new releases. They are in the business for profit AND the love of the hobby... but... the money has to be there for them to take the initiative and run products. It's up to us not only to send a clear message to them [as to what we want] and then follow-up by purchasing the items. This has been a difficult time for hobby manufacturers... because many of us have requested items that they are providing... but... many of us are not able buy what we've asked for. All of this is setting back the timeframe for new releases and improvements to the models. Eventually this will pass; and, hopefully the manufacturers will provide more new models for us to enjoy. At least I hope so.
my point was that kato will run a model for all it's worth how many thousands of csx,ns,bnsf c44-9w's were made from that mold..
With few exceptions (like SDA&E), the lack of accuracy/quality hasn't spurred most N scalers into becoming modelers. Most of the modelers now were tinkerers from the get go, probably feeling they had to be then. If you don't have the chops, then you commission something custom built, no? If money was no object (and I think it is), then custom builders would be a flourishing cottage industry. Of course, if we all became modelers, the LHSs would probably be starving with us stopping by for the proverbial bottle of paint once a month.
Actually you are assuming wrongly to think that was the "old" days.. Nope.. That was 7 years ago. We had the customer base and product turnover because of that 15% discount and we had what Mom and Pop couldn't afford to stock and we had the lower price plus "Saturday morning specials".. It worked then and it would work today if you have competitive prices like we had. He retired( due his wife's constant nagging-well he was 72/73?) and closed shop in 2003 and move to Arkansas.
Depends on how large the run is I guess. I'll take a wild guess here that there is probably only about $5 to $10 worth of raw material in each locomotive made. And probably less than that to assemble, depending on where it is made. Considering workers in China are lucky to make much more than $100 a month.... it's a good guess that it costs just a few dollars to assemble them at the most. Obviously of course that depends on where the manufacturer is, and how complex the model is. The cost of tooling up and designing is going to be the real expense. If it costs something like $10,000 to $20,000 to tool the shell of a locomotive, and who knows how much to design and tool the chassis. How that will effect the price will depend on how many models the company decides to produce, of course. That's one reason that old molds seem to live on forever I guess. Companies don't necessarily have to pay off the costs of the initial tooling on the first run either.
It's quite realistic. The first production run of any loco does not yield any profit in most cases. Any money made on the first production goes toward paying off the tooling and investors. The manufactures are not making money hand over fist like many believe. That is why they keep coming up with new runs of product to keep the cash flowing. That is also why they are not making all 20 or so variations on the GEVO because each new tool and die takes away from the final ballance sheets. The couple of percent of sales they loose to the rivet counters and picky customers does not justify the cost in tooling all the variations.
I fully agree with BarstowRick. There is no denying that there has been progress and quality has improved. For those who modeled in N from the late '60's and early '70's will remember the poor running 3 pole motors and poor detailing and back then they were not cheap! I think it was in the 80's when things started to improve and take off. KATO started making under their own name which sort of set the standard for good quality running engines. It was no more 'take it or leave it', a new competitor wakes everybody up. New manufacturers evokes competition and I believe this improves the products. Atlas, ConCor, IM had to improve their quality to sell their products. In the same way we should welcome Athearn & FVM to give KATO a good run for their money. Today, we can be selective, there is a variety to choose from. You choose whether you want to pay for good quality stuff or just something that is mediocre. Prices have indeed gone up and so have incomes. I am an old modeler and have seen and paid mark up prices by LHS. Today I have the benefit of ordering through the internet and although I pay for the shipping I am quite satisfied with the prices. I am optimistic the quality of N scale products will improve for the better but now sure of the time frame.
One man’s meat is another man’s poison. DCC ready locomotives or locos that come standard equipped with DCC and sound are what many now think is “Better”. Personally I like heavier locos and the milled frames make that a bygone feature. I don’t enjoy sound so locomotives that come equipped with such are stricken from my purchase list. More and finer details are sought after by many, yet that very feature is driving the cost of rolling stock to prohibitive levels and making many of our latest offering so fragile they are relegated to “Special occasion” operations rather that everyday use.
I fully agree as I seen the same thing happen in HO and I really don't want to see that happen in N since you can't see the mintue details anyway even in HO.
I admire detail, I am curious about DCC, sound seems overreaching, I am more interested in seeing as many prototypes produced to keep us all happy ! Namely GP-60M & GP-60B fatalxsunrider43
