Hornby Price Increases Part 2

[GrumpyPenguin]

On 04/09/2024 at 10:37, The Stationmaster said:

How many of the people who buy Hornby locos have ever heard of the various newcomers/not so new comers?

If it were not for the fact that the company that operates from Westwood owned the name "Hornby" it would probably be very different.

 

To us on RMW Hornby is just one of several "manufactures" (possibly the main player) j. However, to " the man/woman on the street" Hornby is model railways/toy trains & few have heard of anyone else.

Many times when Mrs Penguin & myself are socialising hobbies/interests come up, as soon as model railways are mentioned the words "ah, Hornby" are heard.

Apart from some track there is nothing from the Hornby UK range on my work in progress exhibition layout.

I do have some locomotives and rolling stock from the International range though.

Edited September 16 by GrumpyPenguin

[stewartingram]

'Fireflash' sales are probably planned for in the program of production. Price is planned to cover costs and go into profit before the whole run is sold out. If say they turn a profit on 2/3 of the run, then the remaining 1/3 can have the price reduced and still make a profit. But having them in stock rather than turning them over doesn't bring in cash flow.

[SteveM666]

18 minutes ago, stewartingram said:

'Fireflash' sales are probably planned for in the program of production. Price is planned to cover costs and go into profit before the whole run is sold out. If say they turn a profit on 2/3 of the run, then the remaining 1/3 can have the price reduced and still make a profit. But having them in stock rather than turning them over doesn't bring in cash flow.

Spot on. To give another example from a different part of the retail industry - supermarkets. You will often see a pallet of biscuits/chocolates towards the front of the store (stack'em high, sell'em cheap) and usually placed in such a location that thieving is inevitable. You only have to sell 1/3 of the pallet to cover your costs, the rest is profit/shrink and allows for a reduction after a week or so to clear the residual stock.

 

That analogy would also explain how Hornby can honour preorder prices taken when first announced - preorders cover the basic production costs as budgeted at launch. We then get increases in RRP when they hit the shelves to cover inflation and other costs that cannot always be predicted (think re-routing tankers/oil crisis etc). After that it's 'safe' to offer sales as the basic costs for that product are covered.

Of course the fly in the ointment would be overproduction of unpopular products that tend to upset the calculations (2012 Olympics, steampunk, K1). Ultimately we all end up paying for those.

[spamcan61]

55 minutes ago, SteveM666 said:

Spot on. To give another example from a different part of the retail industry - supermarkets. You will often see a pallet of biscuits/chocolates towards the front of the store (stack'em high, sell'em cheap) and usually placed in such a location that thieving is inevitable. You only have to sell 1/3 of the pallet to cover your costs, the rest is profit/shrink and allows for a reduction after a week or so to clear the residual stock.

 

That analogy would also explain how Hornby can honour preorder prices taken when first announced - preorders cover the basic production costs as budgeted at launch. We then get increases in RRP when they hit the shelves to cover inflation and other costs that cannot always be predicted (think re-routing tankers/oil crisis etc). After that it's 'safe' to offer sales as the basic costs for that product are covered.

Of course the fly in the ointment would be overproduction of unpopular products that tend to upset the calculations (2012 Olympics, steampunk, K1). Ultimately we all end up paying for those.

I follow the logic, but I'm dubious as to what extent it can be applied to toy trains, with their huge up front development costs,

 

To use a public domain example, Bachmann are quoted as having spent a million quid developing their shiny new Class 47.

 

Even if they sell 100,000 locos from that tooling suite (which is a lot of toy trains ) that's 10 quid to be recovered from every loco sold - and that is a noticeable element of total manufacturing cost I would venture to suggest.

 

The first batch of AS Class 37s was 18,000 units IIRC (still a big production run ). If we guess that their development cost was 400K, that's 22 quid per loco, with a retail price from 140 quid (net).

 

So, in short I doubt manufacturers are covering devlopment costs on the initial production batches, they have to be in it for the long term, hence very limited scope for deep discounting.

 

 

Edited September 4 by spamcan61

[Dunsignalling]

7 hours ago, The Stationmaster said:

Yes - BUT.  How many of the people who buy Hornby locos have ever heard of the various newcomers/not so new comers?  If you know of no other source and you shop online or even via some retailers you won't be looking for anything other than Hornby.  If you look on the wider 'net or look at RMweb you will know but does the 'typical' Hornby buyer, whoever they might be, know about the other offerings?

 

That might well be the approach that Hornby's sales people are taking and it might or might not work.   But look at it another way - if you want the latest in Class 60s or Class 31s and you are 'in the know'  it doesn't matter what Hornby charge for theirs if somebody else is producing a newly tooled model to 2020s standards.  

Once upon a time, perhaps, but the first thing most people do when considering taking up a hobby, is to read magazines on the subject.

 

The obvious choice for the unaware will be the one with the Hornby name on the front and, as soon as anyone opens a copy, the cornucopia of alternatives will be apparent.

 

I think one would really have to work at maintaining such a level of ignorance for long in this information age!

 

Just to check, I Googled "Hornby model trains" and the item illustrated at top left of the first page was a Dapol B4, and Bachmann is mentioned at the end!

 

John

Edited September 4 by Dunsignalling

[ColinB]

There is one thing about the price rises that is quite interesting. Hornby has finally realised, as most of us did when they first marketed HM7000, that they were selling those fitted with HM7000 too cheap. It worked out that the HM7000 fitted ones were only about £30 more expensive that the ones without. In their latest prices rises they increased that differential to something more sensible.

[SteveM666]

7 hours ago, stewartingram said:

 

Duplicate post deleted 

Edited September 4 by SteveM666

[jonnyuk]

2 hours ago, Dunsignalling said:

Once upon a time, perhaps, but the first thing most people do when considering taking up a hobby, is to read magazines on the subject.

 

The obvious choice for the unaware will be the one with the Hornby name on the front and, as soon as anyone opens a copy, the cornucopia of alternatives will be apparent.

 

I think one would really have to work at maintaining such a level of ignorance for long in this information age!

 

Just to check, I Googled "Hornby model trains" and the item illustrated at top left of the first page was a Dapol B4, and Bachmann is mentioned at the end!

 

John

That has more to do with google advertising than the search algorithm though, and to be fair also depends allot on how the web site is constructed, and if you pay google to be at the top.

[SteveM666]

13 minutes ago, ColinB said:

There is one thing about the price rises that is quite interesting. Hornby has finally realised, as most of us did when they first marketed HM7000, that they were selling those fitted with HM7000 too cheap. It worked out that the HM7000 fitted ones were only about £30 more expensive that the ones without. In their latest prices rises they increased that differential to something more sensible.

That's referred to as a 'loss leader' in retail. It's a sales strategy not an error.

An attractive price to draw in punters to a new product (HM7K) then once they commit to the system, return prices to 'normal' levels. They did the same, understandably, with TT.

Clever marketing and strategy.

[Dunsignalling]

10 hours ago, jonnyuk said:

That has more to do with google advertising than the search algorithm though, and to be fair also depends allot on how the web site is constructed, and if you pay google to be at the top.

 

My point (in reply to Mike's post) is that, even if one specifically searches for Hornby, it is difficult, if not impossible, to avoid becoming aware of other brands.

 

Edited September 5 by Dunsignalling

[The Stationmaster]

6 hours ago, Dunsignalling said:

 

My point (in reply to Mike's post) is that, even if one specifically searches for Hornby, it is difficult, if not impossible, to avoid becoming aware of other brands.

 

True - but how well known are they as 'a name' to many (most?) people outside the hobby?  And don't forget that a lot of Hornby's sales have to be to those people because they won't otherwise get the volume and revenue they require.   Hornby are well aware of price resistance and are clearly beginning to target that problem in the 'toy' area of marketing (even if the results don't go down well with some on RMweb when they see a new Railroad HST).  But equally they know that the brand name matters to many folk and a known brand name can carry a price cachet even id f something from an 'unknown' company is that much cheaper - but that only applies really in the hi-fi market area.

 

We'll no doubt find out over time if they are getting it wrong  (I still think they misread what in the past they have called 'the collector market'). The heavily reduced price sell-offs will tell their own story - but that was just as applicable to Hornby prices a year or three back as it is today and might be in the future.  If they can sell what many regard, rightly or wrongly, as 'over-priced' models through their direct sales channel in the quantities they desire they will be happy.    If that doesn't work they'll go in the surplus mountain or be offered out through another channel at, probably, a reduced price

[Dunsignalling]

18 hours ago, The Stationmaster said:

True - but how well known are they as 'a name' to many (most?) people outside the hobby?  And don't forget that a lot of Hornby's sales have to be to those people because they won't otherwise get the volume and revenue they require.   Hornby are well aware of price resistance and are clearly beginning to target that problem in the 'toy' area of marketing (even if the results don't go down well with some on RMweb when they see a new Railroad HST).  But equally they know that the brand name matters to many folk and a known brand name can carry a price cachet even id f something from an 'unknown' company is that much cheaper - but that only applies really in the hi-fi market area.

 

We'll no doubt find out over time if they are getting it wrong  (I still think they misread what in the past they have called 'the collector market'). The heavily reduced price sell-offs will tell their own story - but that was just as applicable to Hornby prices a year or three back as it is today and might be in the future.  If they can sell what many regard, rightly or wrongly, as 'over-priced' models through their direct sales channel in the quantities they desire they will be happy.    If that doesn't work they'll go in the surplus mountain or be offered out through another channel at, probably, a reduced price

 

Things seem to be developing the way I thought they might when Hornby first announced their TT:120 venture.  

 

Their inability to compete on both quality and price with leaner rivals was already apparent by then, a situation they evidently consider they can sidestep by splitting their emphasis between the budget market (TT:120 and Railroad), that is less bothered about specification or detail, and those who must have "full fat" Hornby at any price with "Dublo" being clearly aimed in that direction. 

 

That certainly seems to work when only 500 of each item are on offer, but seems to hit some price resistance with £250+ makeovers of items from the back catalogue.

 

Taken to its logical conclusion, that might indicate an effective abandonment of the "middle ground", which would be music to the ears of their competitors, freeing up headroom for them to grow. 

 

It will be interesting to see how many of the "uninformed" would stick exclusively with one end or the other of Hornby. However, it will be equally fascinating to see what proportion of "brand blind" customers, (those who do keep up with developments) discover (as I have) that what Hornby does is no longer pivotal to their enjoyment of the hobby. 

 

I review that position every January and am open to persuasion if they come up with personal "must haves" as they have in the past. Others (particularly Eastern devotees) will lean the other way, but I reckon that Hornby has deserted me at least as much as I have deserted them....

 

John

 

 

Edited September 6 by Dunsignalling

[rogerzilla]

Remember they reduced their warranty from 12 months to 6 months, so it's hard to escape the conclusion that the quality of the running gear has been reduced.  So you're paying more for less in that respect.  Motor life is typically 100-200 hours and spares availability has been poor for years.  £250 for a throwaway toy doesn't seem like good value to me.

[smr248]

On 05/09/2024 at 16:41, Dunsignalling said:

 

Things seem to be developing the way I thought they might when Hornby first announced their TT:120 venture.  

 

Their inability to compete on both quality and price with leaner rivals was already apparent by then, a situation they evidently consider they can sidestep by splitting their emphasis between the budget market (TT:120 and Railroad), that is less bothered about specification or detail, and those who must have "full fat" Hornby at any price with "Dublo" being clearly aimed in that direction. 

 

That certainly seems to work when only 500 of each item are on offer, but seems to hit some price resistance with £250+ makeovers of items from the back catalogue.

 

Taken to its logical conclusion, that might indicate an effective abandonment of the "middle ground", which would be music to the ears of their competitors, freeing up headroom for them to grow. 

 

It will be interesting to see how many of the "uninformed" would stick exclusively with one end or the other of Hornby. However, it will be equally fascinating to see what proportion of "brand blind" customers, (those who do keep up with developments) discover (as I have) that what Hornby does is no longer pivotal to their enjoyment of the hobby. 

 

I review that position every January and am open to persuasion if they come up with personal "must haves" as they have in the past. Others (particularly Eastern devotees) will lean the other way, but I reckon that Hornby has deserted me at least as much as I have deserted them....

 

John

 

 

TT120 is no longer "budget".  You appear to be somewhat "uninformed" yourself.

[Robin Brasher]

1 hour ago, smr248 said:

TT120 is no longer "budget".  You appear to be somewhat "uninformed" yourself.

I don't think TT120 ever was budget.  Hornby said that it costs the same to produce a TT 120 model as an 00 gauge model yet a metal bodied TT 120 Duchess was considerably cheaper than an 00 gauge Margate Hornby Dublo Duchess. I think they introduced the TT 120 models at a lower price to encourage people to buy them and have put the prices up now that people are beginning to build layouts in that scale,

[ColinB]

2 hours ago, Robin Brasher said:

I don't think TT120 ever was budget.  Hornby said that it costs the same to produce a TT 120 model as an 00 gauge model yet a metal bodied TT 120 Duchess was considerably cheaper than an 00 gauge Margate Hornby Dublo Duchess. I think they introduced the TT 120 models at a lower price to encourage people to buy them and have put the prices up now that people are beginning to build layouts in that scale,

The thing is with TT120 must people won't have a lot because Hornby haven't made a lot, so it is not so difficult for people to abandon it, if it gets too expensive. So Hornby should be careful. As to the price when I am regularly looking up locos and rolling stock, Dapol seem to make the same thing in lots of different scales. In their case there is a substantial difference in price of items between scales, so does that mean Dapol have their pricing completely wrong.

[woodenhead]

18 minutes ago, ColinB said:

The thing is with TT120 must people won't have a lot because Hornby haven't made a lot, so it is not so difficult for people to abandon it, if it gets too expensive. So Hornby should be careful. As to the price when I am regularly looking up locos and rolling stock, Dapol seem to make the same thing in lots of different scales. In their case there is a substantial difference in price of items between scales, so does that mean Dapol have their pricing completely wrong.

With Dapol in O you have their standard Dapol Branded which are good value, but the owners can also use their other branding Lionheart for their more exquisite O gauge with appropriate uplift in cost.  In OO you have the good value wagons using the old medium of one van fits all in different liveries, though with variations and again good value plus their more recent offerings at an appropriate price point.  In N there were a lot of basic wagons, again for some items one size fits with lots of liveries plus also some specific coaching for GW, LNER and SR, then the lovely Mk3s.  Again lots of runs and good value remains.

 

The problem for TT120 might come if it stays the same price as N and availability of stock remains sparce, hopefully Hornby do enough to keep people's interest sparked and they keep staples on regular release so later entrants can find stock.  There is a lot more coming from Hornby in TT120 and soon those who are dabbling will find themselves with a reasonable amount of BR stock that they can focus on one era, it might be a little longer for steam era but with an A3, A4, a J70 and a green shunter you could do a simple Eastern Region inspired terminus.

[Dunsignalling]

5 hours ago, smr248 said:

TT120 is no longer "budget".  You appear to be somewhat "uninformed" yourself.

It's a lot more "budget" than main range Hornby OO! 😄

[jjb1970]

My direct experience of Hornby TT is a blue/grey HST I bought to sample TT and in worst case as a display curio, but I am impressed by what Hornby are doing in that scale. The HST and Mk.3 coaches strike me as an excellent balance of detail/cost. As is typical for smaller models they look much better in the hand than in pictures which tend to magnify issues. 

 

[Robin Brasher]

Hornby are offering 15% off in-stock items to celebrate 70 years in Margate so good things come to those who wait.

[Sjcm]

It's very much like the uproar of football or concert ticket prices to me as a unconcerned neutral. Everyone knows they're being fleeced but they just can't bring themselves to stop buying them, which I guess is what Hornby are counting on. Now I would never buy a new Hornby model. I don't want a super-detailed model that bits fall off  or bend every time you pick it up. Just not practical for me with no layout I can keep them on all the time. I'm not that careful and I have no wish to have to think about how I pick up a model or get out the packaging - if it looks okay from 3 feet that's fine by me. Not interested in sound, to my ears they always sound  crap, annoying and unrealistic. I certainly don't want all the faults that come as standard, the pain in the @rse of servicing them and the fact that your paying a premium for something that seems to have an intended limited shelf-life so you will buy another one in 10 years. I've seen about 10 or so videos on YouTube with people complaining about the price increase, but the same people then review faulty models or ones with damaged parts/bad build quality and barring being completely broken, they keep them and fix them!  it's like the need for detail has superseded everything else like performance and quality. I've said it before but you wouldn't buy a new car and then spend time in making sure the wheel axles turn correctly, finding out why the electrics cut out going round corners and gluing the front bumper back on.  Come to think about it you wouldn't put up with that if you were buying a non-premium item like a 30 quid kettle. With that sort of captive clientele i 'm not sure there will ever be a "tipping-point" where people will stop paying the prices - the "need" to have the latest model outweighs the logic in most cases and those that won't do it like me stopped years ago but it's quite funny watching the annoyed punters complaining for the 100th time😉

 

Edited September 16 by Sjcm

[GrumpyPenguin]

1 hour ago, Sjcm said:

Everyone knows they're being fleeced but they just can't bring themselves to stop buying them, which I guess is what Hornby are counting on.

Indeed, we, as a species are our own worst enemies.

 I am in the tiny, tiny minority that will not be "fleeced" - if more of us followed that principle then prices would come down.

[Phil Parker]

2 minutes ago, GrumpyPenguin said:

Indeed, we, as a species are our own worst enemies.

 I am in the tiny, tiny minority that will not be "fleeced" - if more of us followed that principle then prices would come down.

 

Only if you assume the companies are making massive profits. The other option is they will stop making models. Better for the wallet, perhaps less good for the hobby.

['CHARD]

On 04/09/2024 at 11:13, jjb1970 said:

 

 Heljan's 86 seems to have an SRP of £240-255, their new 47 is £249, the NBL Type 1 had an SRP of £249 I think. And there was the Ruston gronk at £199 and didn't have the decency to be well done for £199. And the 304 looks to be £489 for a three car unit.

 

 

Eh??? EH????

 

What have I missed?  And I assume they'll tool up the original fourth car too when they release the non-gangwayed AM4?

 

 

Edited September 16 by 'CHARD
Illiteracy

[Sjcm]

Well companies will always plead poverty. My view is if they were making a good profit in 2005 selling their bestest A4 for 100 pounds, then selling one now for 239 pounds now is about 70 pounds above inflation. Of course you can get the presumably same(?)  20+ years now railroad model for 150 pounds which is below inflation, but the fact remains has it really cost them an extra 70 pounds on top of inflation to produce the updated model? I doubt it. They obviously think the market can handle that and they'd be right