We need to talk about costs

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ngauger
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We need to talk about costs

Postby ngauger » Thu Jan 30, 2020 10:50 pm

OK, I know this has been brought up a million times but bare with me. I bring this up because I have decided to build an 009 box layout. I model n-gauge, so am familiar with the track gauge and allot of the chassis used. 009 combines small track, with access to the vast amount of material for 4mm scale and tight curves are prototypical in 009.

DCC seem the way to go, making operation easier on a small layout than isolated track sections. Surely I could pick up a cheap DCC controller? The entry level systems are ancient in terms of their components. Nope, it is around £100 for the very basic ez command and the frankly low quality Hornby select. Well I though sod that and looked for an alternative. Using an Arduino I can put together a system for a fraction of that.

Which is hardly surprising. I don't know much about how much it costs to create the tooling for a super accurate modern loco but I do know a bit about the cost of electrical components. You can buy them for buttons retail from China, so model rail companies will be getting them for far less. I don't know the manufacturing cost of a controller or a dcc cheap but I suspect allot here would be shocked how little they cost to make compared to how much we are charged. It is no good blaming development costs, many of these dcc chips/systems have been on the market for years.

It isn't just the chips, I see many of the same kits for scenery, buildings and things like signals, that were on sale in the 90's. Even in the 90's many of those kits were ancient and the tooling must be very worn by now. Yet they still sold at a relatively high price.

Frankly I don't buy the argument about costs, I think that manufacturers know that their customer base is older and wealthier and are bumping up their prices accordingly. Now of course they are businesses and if they can charge more, why wouldn't they? In short term it makes allot of sense, in the long run it is business suicide.

Parents aren't going to buy their kids railway sets if it means paying upto £200 for a loco or £20 for a coach. It is no good comparing those costs to things like game systems because a game system is cheaper than building a layout and frankly offers more play value than models.

It really is a shame because with cheap modern computer chips and electronics it should be possible to make a loco with sound, other stuff than adds a wow factor that will interest kids, inexpensively. Instead companies seem to have decided to milk their loyal older customers and not even bother to think about the future.

muggins
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Re: We need to talk about costs

Postby muggins » Fri Jan 31, 2020 7:32 am

ngauger wrote:OK, I know this has been brought up a million times ...

Oh hasn't it just. I remember reading much the same grumbles in Railway Modeller 60 years ago.

But anyhow ... Let's take a controller, locomotive, whatever costing you or me £100. Take off the VAT and in round numbers we get £83. I have no idea what average margin the model trade reckons to work on, but let's say the retailer makes £23. Now we're down to £60. And out of that we need to get the direct cost of manufacture, packaging including creation (and maybe translation), printing and folding of instructions, shipping, distribution, warehousing, advertising/promotion and perhaps a distributor's cut

I don't know what's left of our £100 by now, but it's fair to assume the manufacturer will want to make a profit too, but before they can do that they'll have overheads to pay for things like wages, power, insurance, depreciation, investment in new plant and equipment, repairs and renewals, local and national taxes, bank charges and so forth. And unless the manufacturer wants to stand still, there's investment in the design and development of new products to come out of what remains, plus anything I've omitted.

Where do you reckon the cuts could be made to bring the retail price down to whatever you reckon it should be?

ngauger
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Re: We need to talk about costs

Postby ngauger » Fri Jan 31, 2020 8:00 am

The answer to your question is yes because companies in other markets manage to do it. Manufacturing in the far east costs buttons and companies in other more competitive industries face exactly the same costs and charge much less.

Now like I said I don't know the costs of designing and tooling a super detailed modern loco. I do have a rough idea how much electronic and computer components cost. I can buy a cheap smart phone for £50, are you seriously telling me that smart phones costs less to make than an ancient ez command or Hornby Select controller? Especially when both of those controllers are ancient designs, so the development and tooling costs must have been paid off by now.

It is the same with basic injection molded kits, made with tooling that in some cases dates make to the 70's. Those cost pennies to churn out, the tooling was long ago paid off, so how can they justify charging a relatively high price for them?

Now I understand that businesses want to make a profit but they have got themselves in a very dangerous situation. The hobby is ageing, what are they going to do when the older generation of modelers is no longer here to buy their products? Making the hobby cheaper isn't just about saving money for someone like me, it is about ensuring the hobby has a future.

muggins
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Re: We need to talk about costs

Postby muggins » Fri Jan 31, 2020 8:34 am

ngauger wrote:The answer to your question is yes ...

Eh? The question was "Where do you reckon the cuts could be made to bring the retail price down to whatever you reckon it should be?"

ngauger wrote:It is the same with basic injection molded kits, made with tooling that in some cases dates make to the 70's. Those cost pennies to churn out, the tooling was long ago paid off, so how can they justify charging a relatively high price for them?

As someone who spent a considerable part of his working life making injection mould tools and latterly managing a large injection moulding shop, I know the answer to that but frankly I CBA to explain it.

b308
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Re: We need to talk about costs

Postby b308 » Fri Jan 31, 2020 10:14 am

One other thing to add into the costs, economies of scale, Model railways, especially British MR is a niche market in a niche market. If you are selling millions of (for instance) mobile phones then the unit costs can be brought down but when only selling into the thousands then costs go up. Personally I'd say, for what we are getting in DC models we are getting very good value, especially when comparing current models compared with those of 50+ years ago...


To the OP, I've heard good reports of the Roco DCC starter system and they do a couple of Starter Sets in HOe which would suit your need to get into 9mm gauge narrow gauge modelling (but bear in mind that NG modelling is a niche within a niche within a niche so you'll be paying more than you do for the equivalent N scale loco)... You won't get the set for anywhere near that £100 price (which I believe is unattainable for the reasons Muggins has already pointed out) but you can get it for around the £200 mark and it's an excellent and accurate model which can be used on 009 layouts.
Last edited by b308 on Fri Jan 31, 2020 10:44 am, edited 2 times in total.

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End2end
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Re: We need to talk about costs

Postby End2end » Fri Jan 31, 2020 10:39 am

ngauger wrote:Parents aren't going to buy their kids railway sets if it means paying upto £200 for a loco or £20 for a coach.

This statement is a bit of a misnomer.
Parents will and do buy "train sets" for thier children. It's the all in one box soloution.
I doubt (unless thier child has a layout already) that parents will fork out £200 just on a loco. Dad might though, for himself.
I don't think you can lump both in together. One is a complete "toy" with everything included to "play", the other is a singular detailed model.
Also there are many loco's under £200 and if you really want to save money you can always buy second hand items.

The clue here is "know the item". Find out as much as possible before you buy it and then you wont be stuck with say, a split framed chassis that cannot be DCC'd or (Heaven forbid) you end up with Hornby's joke of a DCC controller for example.

The other thing I'd say is a lot of things you can either make yourself or make from much cheapers kits as buying "off the shelf" will always be more expensive.
I only have to point to Dad-1's wagon thread as a prime example of churning out wagon kits well under the price of pre-made items.

Also to find the best price on items, look around. Gone are the days of shlepping down to your local model shop to be offered one price and one price only, but it's no good just sitting there either.
Be pro-active and get out there to train fairs or exhibitions where prices can be negotiated or at least look at ebay where you may have the chance to win an auction at a much lower price than you expect.

Prime example - I won 50 (yes FIFTY) modelling magazines as a joblot off ebay last weekend.....for 99P :o
If you want to talk of inflated prices magazines are a prime example.
Just to add, NEVER jump on purchasing new releases. Give it at least 3 months and the price will come down and any problems ironed out usually.
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minipix
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Re: We need to talk about costs

Postby minipix » Fri Jan 31, 2020 1:03 pm

ngauger wrote:Using an Arduino I can put together a system for a fraction of that.


Good on you for taking the initiative and doing the manufacturing yourself. You're certainly not alone in this approach, there are many modellers who take matters into their own hands for the sake of budget, whether that's making your own controller using an Arduino (I'm planning on going down the DCC++ route myself, using an Arduino and a Raspberry Pi), creating a custom chassis out of white metal, 3D-printing your own scenery, printing your own textures... In fact, I'm nearly always more impressed by scratch-built items than off-the-shelf bought items. And there's no reason the electronics shouldn't be the same, albeit with more complexity.

At the end of the day, if you've got more ingenuity than cash, DIY is a perfectly acceptable way of doing your model railwaying. Conversely, if you've got more cash than spare time, buying pre-made items is also perfectly valid. That's what I love about this hobby - you make it what you want, how you want; you don't see that in many other hobbies!
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stuartp
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Re: We need to talk about costs

Postby stuartp » Fri Jan 31, 2020 1:56 pm

ngauger wrote: I can buy a cheap smart phone for £50.


Cell phone manufacturers shift 1.5 billion units a year between them. If any model railway manufacturer in any scale could manage sales (and consequent profits) on that sort of scale then locos would be a couple of quid each by now.

But they can't so they aren't.
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Dad-1
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Re: We need to talk about costs

Postby Dad-1 » Fri Jan 31, 2020 3:03 pm

All I'll say is that I needed a replacement car headlight/wipers/indicator switch
At the time it cost much more than a sound locomotive, but much less complicated.

Another interesting point, the cheaper something is the less value an owner places on it.
It all becomes throw away rubbish.

So long as the market will accept the costs at any particular time it will survive. Once there
is a way for everyone to do it cheaper companies fail, like :- BHS, Mothercare, Woolworths.

While you may be able and prepared to make your own DCC system most are not. For your
own use that's fine you don't need all the public liability insurances, provide replacements
even in some cases of abuse, develop products and pay staff a living wage. As to EVERYTHING
being as cheap as buttons in the far east (China), go check out the rural deprivations.

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viewtopic.php?f=22&t=32187 and Another on viewtopic.php?f=22&t=28436&start=60&st=0&sk=t&sd=a

ngauger
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Re: We need to talk about costs

Postby ngauger » Fri Jan 31, 2020 4:46 pm

I do think there is a boiling the frog thing going on here. Railway modelers have got so use to high prices, so it doesn't bother them anymore.

Yes some items are low volume, though that isn't true of things like dcc components and running gear, which is can be shared across different markets. However that is a circular argument. By keeping prices high, companies keep volumes low, meaning they don't get economies of scale.

I am aware of trainsets but the reality is parents aren't buying trainsets and the cost of additional track, stock, locos and other items matters. I have overheard a father in a model shop absolutely shocked at the prices. His son had caught the railway bug but they left without buying anything.

As for how to reduce prices. If I was targeting the younger market, I would make a limited range, reduce the detail on models and make dcc standard and built in. Making delicate complex detail locos is the costly bit. Electronic stuff, including sound, would cost buttons to make. Thanks to mobile tech, things have been miniaturized and made in bulk. Basically I would unashamedly make a limited range of toys trains and put cost reduction above detail.

That is how you get younger people buying the stuff.

I agree with what is said in the youtube video https://www.youtube.com/watch?v=HanqNOWgiNs

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End2end
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Re: We need to talk about costs

Postby End2end » Fri Jan 31, 2020 6:33 pm

ngauger wrote:I have overheard a father in a model shop absolutely shocked at the prices.

I bet he didn't say the same when it came to buying a bleeding Ipad to keep his kids quiet. :roll:
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Bufferstop
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Re: We need to talk about costs

Postby Bufferstop » Fri Jan 31, 2020 7:25 pm

The models currently being produced are too far removed from toys to be sold for much less simply by leaving off a few details. There's a limit to how many versions of the old 0-4-0 can be pushed out with a circle of track. The battery powered high speed train was a good attempt but they go the pricing wrong. The Thomas series became to high priced, and their 1950s derived mechanisms were no longer cheap to make. Bachmann produce some well made Thomas models, they have toy features but as imports they are just as expensive. I noticed in the last few days, that a Chinese company is producing cheap "not quite copies" of LGB models. I think we may see a very simple chance of really cheap Chinese toy trains if there's enough demand for them. Take a look at the "Sam's Trains" YouTube site to see a sub £10 train set stock running on a settrack layout, it can be done. It won't help us get cheaper models but it could help keep up the supply of new recruits.
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Buelligan
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Re: We need to talk about costs

Postby Buelligan » Sat Feb 01, 2020 12:01 am

ngauger wrote:I am aware of trainsets but the reality is parents aren't buying trainsets and the cost of additional track, stock, locos and other items matters. I have overheard a father in a model shop absolutely shocked at the prices. His son had caught the railway bug but they left without buying anything.



Sorry, but you're wrong there. In the last year we've bought 3 train sets, one for each of our kids, plus a now fairly large collection (for kids) of locos, coaches and trucks. A mix of new and 2nd hand.

It is all expensive, in the Hornby releases for 2020, I could've spent nearly £1200 on pre-orders. However I can only afford one engine, that makes the choice more important, and the owning of it more special.

ngauger
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Re: We need to talk about costs

Postby ngauger » Sat Feb 01, 2020 9:13 am

End2end wrote:I bet he didn't say the same when it came to buying a bleeding Ipad to keep his kids quiet.
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End2end


Why would he? You can easily pick up a tablet for under £100, for the cost of putting together a layout with a couple locos, contoller track and stock for a few trains. The father could get a top of the line tablet.

The tablet is far cheaper than a trainset.

These prices might seem reasonable to those in the hobby but the future of the hobby depends on new blood.

ngauger
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Re: We need to talk about costs

Postby ngauger » Sat Feb 01, 2020 9:16 am

Bufferstop wrote:The models currently being produced are too far removed from toys to be sold for much less simply by leaving off a few details. There's a limit to how many versions of the old 0-4-0 can be pushed out with a circle of track. The battery powered high speed train was a good attempt but they go the pricing wrong. The Thomas series became to high priced, and their 1950s derived mechanisms were no longer cheap to make. Bachmann produce some well made Thomas models, they have toy features but as imports they are just as expensive. I noticed in the last few days, that a Chinese company is producing cheap "not quite copies" of LGB models. I think we may see a very simple chance of really cheap Chinese toy trains if there's enough demand for them. Take a look at the "Sam's Trains" YouTube site to see a sub £10 train set stock running on a settrack layout, it can be done. It won't help us get cheaper models but it could help keep up the supply of new recruits.


If a company wanted to produce a relatively simple model, they could do it for very little money. The reality is, the technology use to make locos and rolling stocking is primitive. Motor, gearbox, injection molded body. As long as you're not going for super accuracy, producing a cheap model is not that difficult.


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