Discounts?

Started by Leon, 17 February 2016, 01:21:29 AM

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Spartan

18 August 2021, 01:50:53 PM #120 Last Edit: 18 August 2021, 02:44:10 PM by Spartan
Quote from: sean66 on 18 August 2021, 12:23:57 PM
I feel the problem with pricing and even discounts is, no one really knows the company's overheads.
I feel a 15-20% profit margin after all other costs is a fair pricing structure.
70-80% Profit Margin is a wrong in my opinion.

As a believer in a relatively free market economy, the potential customers decision is limited too how much of X to buy from Y at what price & over what timescale. Hence knowledge and judgement of various forms of profit isn't required :-) :-)

If 70-80% is EBITDA, this is very high so am assuming that its Gross Margin, this level is almost a pre requesit for most businesses.  Personally i would not consider 30% a discount high as to my knowledge upto 45% discounts are available in the hobby.

As leon says its up to each company to decide its pricing policy :-)

Leon

Quote from: Spartan on 18 August 2021, 01:50:53 PM
If 70-80% is EBITDA, this is very high so am assuming that its Gross Margin, this level is almost a pre requesit for most businesses.  Personally i would not consider 30% a discount high as to my knowledge upto 45% discounts are available in the hobby.

Depending on the company/genre that 70-80% would be net margin, so quite a tidy profit level.  A 28mm metal figure costs around 30-40p to produce (inc. labour) so if you're retailing them at £1.50 a piece there's some real money to be made.  Working from home your only other outgoings would be website hosting, banking/payment fees, postage costs and stationary.  Maybe some utilities if you're putting a portion of electricity and phone costs through the business.  Obviously there's some variance in that if you have someone else sculpt your figures, or if you use a contract-caster, etc. 

One of the downsides of smaller figures from a business perspective is the labour aspect of production becomes a much higher percentage of your costs as the scale comes down.  A 28mm mould with 15-ish figures in it is producing over £20 per spin, whereas a 10mm mould with 30-ish figures in it is only producing £5.50 per spin.  So your £10 per hour worker can make £300 worth of 28's per hour, or £80 worth of 10's.  As a result our gross margin is somewhere around 55% of RRP, way below what you'd be wanting in Dragon's Den!

The ideal wargames business would be sculpting, moulding and casting your own stuff, working from home, and making 28mm Sci-Fant figures with a £4-£5 retail price on them.  Net margins on that would potentially be over 90% and leaves a lot of room for discounting.

Funnily enough on the metal itself, the metal for 10mm figures is actually more expensive than the metal used for most 28mm's, due to the extra additives needed for smaller cavities and flow rates.  The metal used by most of the big historical wargames companies is the same GW alloy from the 1990's and is about 30% cheaper than the one we use.  There are some of the higher-end companies though who use a 'lead-free' pewter that's about double the GW alloy, so they're at the top end of metal pricing.
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You're forgetting the one off fixed costs in that. There will be caster and mold costs upfront.  Don't do yourself down.
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