Commercial Sense..or Just Heartbreak?

[Folkwulfe]

We on this forum, seem to talk alot about wants and needs in the hope that our opinions will (collectively) make a difference in what the manufacturers will produce and market.
I know that with rising costs of materials, manufacturing, and transportation have stopped many projects that we have been drooling over for a long time. But does the market availability of a particular aircraft model have to be so specifically codefied prior to production that....if X thousands can't be sold than it can't be made?
To me it doesn't make sense. Hear me out....
Wouldn't it make sense to gather the information, fine tune the product, get it through prototype, and then MAKE a couple of hundred and see how they sell. Call it "pre-production, limited release" and you can charge a higher price than the mass-produced (and different paint version). If it's a stinker....you haven't lost your shirt and you've given the market (US!!!) some rare and future prizes in any collection.
How many of these "almost had'em" have we seen recently? The AT SBD, the 21C and Admiral F-4, BBI Skyraider, even the A-10 was well along I understand before it was put into cold storage. The SBD was even in final paint when it mysteriously disappeared from radar. Why? Shoot the plastic, paint and box those puppies, send'em over and watch the collectors eat their young trying to get one....and at say $250 each, I bet they get close to a major portion of their manufacturing mony back. Then just change the paint (boy have we seen THAT alot!) and sell at a lower price point...assuming the "limited" edition sells well. Shoot a couple of thousand A-10's and see what happens!!!

Does this make sense to anyone else but me????

[dandaman]

Unfortunately, the only way to really "save" money during production is to place a bulk order. So there really is no such thing as a "pre-production, limited release".

It would be too expensive for them to just create a couple hundred and then hope that they recoup their cost. Sadly your dream probably won't happen.

[Folkwulfe]

I think "save money" is kind of the wrong term here. What I mean is for them to recoup money already invested in some of these "almost had'em" projects we keep hearing about. There has to be a way a model company can market, even on a limited basis, something that already has had an investment in time, effort, and cash. I realize that big orders are the money makers....and companies so far have been shy to dive deeply because the sales are iffy at best. But what I'm wondering is....isn't there some way that, once molds are produced, a smaller company able to handle the lighter orders, can produce these models for sell. I'd even be willing to fork over good bucks for a kit of say the AT SBD that I can build myself and detail to my hearts content. Just look at the great work Picklehaub has done with his P-40, P-36, and Stuka (not to mention the Tony!).
DML has been testing the waters lately with 1/6th models of a couple of their painted and assembled articles. Stuff like the Kubelwagen, Pak-37, and a new flak gun are being offered in kit form (and reduced price)...and they are doing well. Even 21C has been offering 1/32 scale aircraft in kit form...and they don't stay on the shelf very long either. Why can't something like that be tried with other offerings.....even AFV's???

[lightning2000]

Hi,
To put it blunlty, are you willing to risk several hundred thousand dollars to produce said items based upon the wants of a handful of people on this forum? Why do you think Walmart had to drastically reduce the price on several 1:18 scale aircraft a year or so back just to get rid of them and free up shelf space for other items?

Even with a big box merchant like Walmart backing the product, they STILL couldnt get full price for them, which at the time was substantially lower than what any next-generation 1:18 scale aircraft would have to retail for to recoup the tooling and production costs. Simultaneously, the price reduction destroyed the original price point, as collectors now think they can walk into a store like Walmart and pick up a 1:18 scale plane for $20-$30.

Frankly, I take my hat off to BBI for offering a 1:18 scale Bf 109 under these market conditions and at an affordable price point. Time will tell if the strategy pays off for them or it becomes another loss leader aimed at selling other ancillary product.

lightning2000
www.themotorpool.net

[dandaman]

To put it blunlty, are you willing to risk several hundred thousand dollars to produce said items based upon the wants of a handful of people on this forum?

Is someone really investing several hundred thousand dollars producing aircraft? And nobody forks out a penny to produce a single 1/18 scale Italian figure?!?

[AirstrikeToys]

To put it blunlty, are you willing to risk several hundred thousand dollars to produce said items based upon the wants of a handful of people on this forum?

Is someone really investing several hundred thousand dollars producing aircraft? And nobody forks out a penny to produce a single 1/18 scale Italian figure?!?

I've kept quiet for a while about all of the activity in the market, but I'd like to share my 2 cents here.

If the 1/18 market was really hot and most products sold any where near the asking price, then you would probably see manufacturers expand in to less common (less possible demand) items. Right now, they are going for mass appeal for highest possible sales to recoup their cost and make a buck on their investment.

There is a lot to it. Besides the design, the steel mold plates alone can cost $60K to $75K with average detail (early XD). Add more detail and the cost get closer to $90K and up. The plates need to be designed for the production machines being used in the plant you selected. Its kind of like a car, the same rims won't fit all models so switching factorys gets a little tougher unless you have your own machine to move with the molds (used late models injection mold machines average $35K a piece).

Then you add assembly (labor), packaging, graphics and finally the licensing.

Yes, hundreds of thousands of dollars. That is why models with a wide variety of repaints possible with mass appeal, even to non-collectors, are selected for production by the primary manufacturers.

Thanks.

[pickelhaube]

I have heard that the going rate for a prototype is $3,000 to $12,000 and to make dicast plates $30,000 to $100,00 for the metal forms. So if you do just 100 models the models would have to cost at least $330 apiece . Minimum

Now if they make 5,000 of them the cost would be $6.60 apiece but they do several repaints and when they do repaints that is were they make there money.
Anybody can have a model done . You just need to pay up front . The guys who have done this are tight lipped, but I think that 5,000 ordered models can put you in the driver seat. The models may cost $6.60 to MAKE but the cost to you would be about $40 to $60 for a WW2 type fighter. So you would have to come up with about $200,000 to $300,000 For a A-10 or the F-4 Phantam you can expect to pay double that. So if anybody wants to put up his own money anything can be made. It would be easier for the manufaturs to do this because the money is not coming out of there pockets but yours. So this would be a win win deal for the Chinese.

[Jesse James]

I'm not sure I entirely follow the idea, but if it's just "See if this works in limited numbers and if it doesn't, move onto the next thing". That's a nice thought, but highly impractical in toy manufacturing unfortunately.

When toys are made en masse, usually there's a minimum number to produce for it to be worth the costs involved in getting started. Those minimums are usually nowhere near the 100's though, they're more like in the 1000's or 10,000's... And that's minimum. The fixed costs must be met before they're profiting, and that's your minimum. If they can't go beyond that, they have a very difficult time making profit off that toy.

Tooling up a toy like a plane or whatnot in the XD line is expensive... That's the main cost. People cite oil prices rising as a major impact on price, but the larger reality is that oil's increases still do not compare to the costs of steel mold toolings for the injection molding process. THat is, and always has been the single biggest hurdle to getting a toy made. Can the return justify the investment? That's the question...

Hasbro's found a formula that's worked for Star Wars/etc. where certain figures keep getting put back out on the shelves. They've become almost pure profit to the company, and because Hasbro keeps re-releasing them (even though people bitch about it), it's helped to put out obscurity where the risks involved in making this or that dull character are pretty high.

21st tries (tried?) similar things though with repaints... Various repaints of such and such plane makes it possible for them to look at maybe doing a slightly lesser important/popular/known piece. 21st though has a much larger risk in going for "obscurity" even with the re-use of various molds to make something "new" and save a buck in the process.

[[CAT]CplSlade]

Pickel,

Expanding on your cost per unit theory, If a minimum run of 5000 nets you units costing $6.60, and considering most retailers want to make their money back at the very least they may want charge double their cost so the unit retail is at least $13.20. Obviously, that can't be since 21st needs to recoup some of that original $6.60 so they need to sell to vendor at at least $6.61 - which nets a profit after paying the pressing plant of a whopping $50. 21st can't sell them off that cheap, so lets say they sell them at $7 to vendors; that's $2000 profit per run now. But that $2k is about to get hit by utilities, payroll, other business expenses, etc.

At my WM's the 38t's and Marder were retailing at $14.96. If we assume WM wants to get all its cost back, then we assume that they paid 21st $7.48 per unit. That alone increases 21st's haul to $4400 per run. Considering the etailers and specialty hobby shops generally sell them at $19.99 or up, then the assumption is they double up on ~$10.00/unit; profit now $17K.
Obviously WM has the ability (or so one would think but has proven otherwise) to expose 21st to customers across the U.S. and create sales by sheer volume, when this is obviously NOT a volume hobby, at least not if detail and accuracy and breadth of selection is at stake. Instead, I believe diverting a significant portion of inventory to WM resulted in most product being scattered willy-nilly as we currently witness. I understand the appeal of a sweet deal with a big chain like that, especially in light of early troubles, but sticking with smaller outfits situated closer to the actual market base would have been better in the long run since those who wanted it would have found it and 21st would make more per unit with smaller volume discounts to vendors.

Seriously, if I had a HobbyTown that wasn't 50 miles on the wrong side of Atlanta from me, and 21st could guarantee product on a timely basis, I would gladly pay the extra few bucks to avoid ebay prices and never buy from WM again. The slightly higher Target prices from the recent test would be a good boost to 21st's economy if they've negotiated a good deal. If it does well enough, perhaps retoolings of older vehicles would appear for us guys who started only recently. Making a new 1/32 Tiger wouldn't hurt the older Tigers if it was different enough from those previous as to make those still desirable and yet entice the oldsters to buy the new version as well - avoiding the disappointment many felt about the new KT and Panther.

Of course, this is all just an assumption.

[JamesW]

With respect to risk: perhaps companies would be willing to produce products like this if the risk for them was reduced...

what if customers were asked to pre-order and pre-pay for their orders?

Would enough customers accept such a risk by forking out cash months before they even get a product?

[olifant]

I have worked in plastics for 20 years and you guys are correct on costs.

Prototyping entails mainly CAD work and rapid prototyping or old school handcrafting. Costs are low for this. The big money comes to make the injection mold.

When you buy a model kit and all the parts are on the sprue tree, you are viewing a multiple cavities of the injection mold. Depending upon the size of the injection molder and how you choose to spend your money on the die depends upon how many molds you need to make your parts. The trick with injection molding die making depends upon equipment size, material type used, and balancing flow and cooling time. The flow balancing is the tough part; there are quite a few computer flow design software models available but it still remains a bit of an art. This is what contributes to the huge costs of the molds. I think for a 1/18 piece $100k would be the starting point for the tooling.

Only now are you ready for production. Material at $2+ a pound now, labor, overhead, paint, packaging and all that jazz. Trust me, your costs are fixed and there are very few tricks to bring cost down.

All the work we have seen for the Sheridan, F4s, Dauntless, Spad and other never released pieces is ready for production. All you need is $250-300K to turn on the spigot...

[flayrah]

I find all this very interesting stricly from a consumer/collector standpoint. Most everyone on this board probably knows more about the military and military equipment than the typical Joe Smith who walks into Wally, or Target, or even the local hobby shop, or comes upon an on-line storefront selling military models. So what is Joe going to buy? Probably not the P-39 model that he doesn't recognize - he buys the P-51, or Me109, or something else 'familiar' - IF he buys anything at all. Now I'm tired of P-51's, and Me109s, etc and I WANT that P39, but I am part of a very small group who even knows what a P39 is, let alone wants one with a two foot wingspan hanging from my ceiling. It all comes down to consumer 'demand', or a better term might be the 'lowest common denominator'. And we, my friends, are not the lowest common denominator for this hobby, we are the specialists. Unfortunately, there are too little of us to dictate to the companies what to make or how to make it.

Now if Hasbro had only taken the money they put into those Mutt Williams and six kinds of Harrison Ford as Indiana Jones figures and put it into making realistic military pieces......

[pickelhaube]

Pickel,

Expanding on your cost per unit theory, If a minimum run of 5000 nets you units costing $6.60, and considering most retailers want to make their money back at the very least they may want charge double their cost so the unit retail is at least $13.20. Obviously, that can't be since 21st needs to recoup some of that original $6.60 so they need to sell to vendor at at least $6.61 - which nets a profit after paying the pressing plant of a whopping $50. 21st can't sell them off that cheap, so lets say they sell them at $7 to vendors; that's $2000 profit per run now. But that $2k is about to get hit by utilities, payroll, other business expenses, etc.

At my WM's the 38t's and Marder were retailing at $14.96. If we assume WM wants to get all its cost back, then we assume that they paid 21st $7.48 per unit. That alone increases 21st's haul to $4400 per run. Considering the etailers and specialty hobby shops generally sell them at $19.99 or up, then the assumption is they double up on ~$10.00/unit; profit now $17K.
Obviously WM has the ability (or so one would think but has proven otherwise) to expose 21st to customers across the U.S. and create sales by sheer volume, when this is obviously NOT a volume hobby, at least not if detail and accuracy and breadth of selection is at stake. Instead, I believe diverting a significant portion of inventory to WM resulted in most product being scattered willy-nilly as we currently witness. I understand the appeal of a sweet deal with a big chain like that, especially in light of early troubles, but sticking with smaller outfits situated closer to the actual market base would have been better in the long run since those who wanted it would have found it and 21st would make more per unit with smaller volume discounts to vendors.

Seriously, if I had a HobbyTown that wasn't 50 miles on the wrong side of Atlanta from me, and 21st could guarantee product on a timely basis, I would gladly pay the extra few bucks to avoid ebay prices and never buy from WM again. The slightly higher Target prices from the recent test would be a good boost to 21st's economy if they've negotiated a good deal. If it does well enough, perhaps retoolings of older vehicles would appear for us guys who started only recently. Making a new 1/32 Tiger wouldn't hurt the older Tigers if it was different enough from those previous as to make those still desirable and yet entice the oldsters to buy the new version as well - avoiding the disappointment many felt about the new KT and Panther.

Of course, this is all just an assumption.

The $6.60 would be the COST to MAKE the model. The RETAILER would pay $40 to $60 per model. When I talked to Bad Cat a few years ago The price that Wall Mart was charging $39.99 was about the price that Bad Cat was paying whole sale.

[Dauntless]

I think that really the only hope at this time for the 1:18 hobby is the online retailers.

But there is still hope when there are companies like BBI that are putting out new molds, and are willing to take the risk, because they know there is a hot market out there for a quality product.

Why can't the e-tailers form some sort of partnership or co-op, pool their money for new projects, communicate just which project they want by commitee, agree on the development, then they wouldn't take such a hit for the cost because it's spread out amoungst the co-op.
Then a few can order exclusive paint schemes much like Bad Cat did with the Pearl Harbor Zero and Cripes a Mighty P-51. To further profits, and differentiate what the other guy has for sale.

Really it comes down to without risk there is no gain. That's what business is. Smart companies will do well, because there is a market.

[lightning2000]

With all due respect, you expect the online retailers will fly out to the Orient where this item is being made to hire a factory, oversee production, schedule shipments, etc? And, you expect all the online retailers, some of whom dont sell much in the way of 1:18 scale products, to put up that much dough, agree upon a plane, agree upon a scheme, agree upon a price (thats called collusion and violates the Robinson-Patman Act), all in the name of bringing a plane to market, only to watch it sit in inventory until it gets marked down?

If the risk doesnt seem like much of a problem, then perhaps you can write us out a check for $250K to start the ball rolling...

This isnt designed to be hurtful, but I really think you need to get a sense of what is practical in today's marketplace. If a 21st Century Toys and Walmart partnership couldnt move inventory, what makes you think that small online dealers could do any better?

Lightning2000
www.themotorpool.net

[Sabrefan]

Very well said Lightning 2000.

[Jesse James]

what if customers were asked to pre-order and pre-pay for their orders?

Again this is nice in theory, but in practicality it's just not there...

Say you try it, and you ask for pre-pay. So X000 are able to pre-pay, but you need y0,000 to actually get the production ball rolling (and make a profit). So you cancel this item... Right off the bat, you've annoyed your consumer base. Next model maybe less people sign up for a pre-sale then or whatnot.

The idea of pre-paying to determine demand isn't new, it's just not practical is all. Production numbers are usually based on a variety of factors the company has pre-determined, and it's always a gamble. Make too much and you're cutting into your profit margins. Make too little and you're cutting into them another direction, but more important you're annoying your consumer base... Usually companies aim for the lower end but try to make sure enough is made to meet demand. It's just a gamble all the time, and tough for the company to get just right.

Unfortunately I'm not sure that the consumer base is there to support these large pricey vehicles from military history. I think the figures do fine, and the risks/costs involved with them are significantly less than planes and tanks, but I think 21st (and others) really shot themselves in the foot with too much too soon. If they'd cut the planes down to a max of 2 a year and one maybe being a repaint, they'd have perhaps had better sell-through rates. Armor I think they could've tried maybe 2 larger pieces a year with 2-4 of the $20-$30 range pieces a year as the lower the price the higher the sell-through-rate generally.

Something I've noticed with Star Wars though, is that once you hit $30, things tend to slow down in sales... Anything above that, the risk is increased greatly with every dollar.

[VMF115]

Nice points but I just want my F-4, mig 21, B-25, A-1, SBD, that are nicely detiled.

[Dauntless]

With all due respect, you expect the online retailers will fly out to the Orient where this item is being made to hire a factory, oversee production, schedule shipments, etc? And, you expect all the online retailers, some of whom dont sell much in the way of 1:18 scale products, to put up that much dough, agree upon a plane, agree upon a scheme, agree upon a price (thats called collusion and violates the Robinson-Patman Act), all in the name of bringing a plane to market, only to watch it sit in inventory until it gets marked down?

If the risk doesnt seem like much of a problem, then perhaps you can write us out a check for $250K to start the ball rolling...

This isnt designed to be hurtful, but I really think you need to get a sense of what is practical in today's marketplace. If a 21st Century Toys and Walmart partnership couldnt move inventory, what makes you think that small online dealers could do any better?

Lightning2000
www.themotorpool.net

Well I'd pay $250 for an F-4 Phantom
I didn't think about the anti-trust laws when I posted. You would know you are in business.
I guess we will see whether all that sort of investment is worth it when Military Toys 1:18 SBD Dauntless is finished.