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tu33y
02-10-2009, 15:20
i was at lenton on saturday and had a conversation with a redshirt about general costs in production of the plastics. it began with a discussion about the baneblade when i said i would have trouble justifying the 60 cost to myself... just cos that is a big bag of money for a model i wouldnt use as i dont play poxyclipse. he got the wrong end of the stick and thought i was moaning about prices (which i wasnt) and he was pretty cool about it but explained much of the cost is building the moulds etc blah blah...

the real kernel of my post however is this...... he said along the lines of the land raider sprue has only JUST broke even. now this guy is a nice chap and pretty cool to talk to so i doubt he was pulling this info out his ass, he must have been told it from some decent source. now that really made me think about prices in general. if the famous and virtually mandatory LR model took a while to break even....well....the mind boggles.

food for thought eh?

Petay1985
02-10-2009, 15:24
Based on the assumtion that what you were told is true i would speculate that due to the Land Radier being an expensive model they don't sell as many as one would think, thus long term it took longer to break even, where as a cheaper model, space marine tactical squad for example, which i imagine they sell by the bucket load would break even sooner.

does that make any sense :p anyone :)

grissom2006
02-10-2009, 15:25
The production cost of making plastic moulds is quite high and when the LR came out it was very high at the time. Some of theses costs are now less but it's still not a cheap thing. You can get cheap moulds made but they do end up being limited on how many runy they can handle.

I seem to recall that a figure was actually published on how much the LR mould cost and i have 4 zero's stuck in my head on the end of it as i recall.

Mannimarco
02-10-2009, 15:27
yeah i get it

interestingly enough as metal models are being replaced with more and more plastic models we are seeing a price creep in the plastics that will guarantee the company still makes money on them, plastic being cheaper to mass produce than metal id imagine so as the price of plastic models rises profit margins will grow

Lord Damocles
02-10-2009, 15:31
Even with the cost of moulds, I'd be surprised if it took almost a decade for the Land Raider to break even.

Petay1985
02-10-2009, 15:33
yeah i get it

interestingly enough as metal models are being replaced with more and more plastic models we are seeing a price creep in the plastics that will guarantee the company still makes money on them, plastic being cheaper to mass produce than metal id imagine so as the price of plastic models rises profit margins will grow

indeed that is my understanding as well. i just hope that they strike a balance in achieving the quality that metal models still have over plastics in their future releases if they are indeed aiming for a complete switch to plastic.

grissom2006
02-10-2009, 15:33
Even with the cost of moulds, I'd be surprised if it took almost a decade for the Land Raider to break even.

Got to agree with this as i've heard that it recovered it's cost before from a close source in GW years ago.

Doppleskanger
02-10-2009, 15:35
Landraider or Landraider Crusader/Redeemer? because i would also struggle to see that for the normal LR. If it took that long you just wouldn't bother!

Baragash
02-10-2009, 15:37
At Games Day just before/after the LR was released, the production team on the moulding machine demonstration were quoting 250,000 as the cost of developing the LR.

Morlu
02-10-2009, 15:43
Injection moulding tools (the moulds) can be incredibly expensive to have manufactured, for big machines you are talking 100K+. Games workshop spures are some of the most complicated sprues you are ever likely to see meaning the cost will be pushed up even more. im not sure how long models take to design but i would say you probably looking at 12 person months for a model as big as the land raider that that might be another 25K in just man hours, if your going the whole hog and taking into account the depreciation of the injection moulding machine itself during the moulding run then thats adding much more so you could possible be looking at quater of a million pounds before any material costs/packaging has been added into the mix etc. once you take that into account and distribution and stuff it might be more like 300K, thats about 8500 land raiders, which is quite a lot to sell for a 35 kit, as has been stated for a tactical marine box set that number is probably a drop in the ocean, but for an expensive kit like the land raider i can very easily see it taking quite a number of years before breaking even and turning out a profit!

grissom2006
02-10-2009, 15:46
At Games Day just before/after the LR was released, the production team on the moulding machine demonstration were quoting 250,000 as the cost of developing the LR.

Thank you i knew i'd seem those zero's before.

Corrode
02-10-2009, 15:48
I was also told this fairly recently - I think when I brought it up someone mentioned that at the time the Land Raider mould cost an incredible amount. It's no longer the case that plastic moulds cost as much as the LR one did, but the Raider certainly struggled to pay for itself.

Quite a few people are bringing up the whole 'it's a 35 plastic brick' angle - but it's a 35 plastic brick which features in the flagship army, often played by children who're quite happy to pay out that amount for TEH UBEREST TANK IN THE GAME (or rather, get their parents to pay). It's also a part of the Chaos army, also very popular, Ork players get mileage out of it for Battlewagons, and the Inquisitorial armies can also make use of the Raider. It's a pretty popular bit of kit and I suspect 10 years to sell 8500 is lowballing it - 850 a year is barely anything in context.

shaso_iceborn
02-10-2009, 15:52
Even with the cost of moulds, I'd be surprised if it took almost a decade for the Land Raider to break even.

It didn't but didn't they recently make a new sprue for it?

VenrableOne
02-10-2009, 15:57
At the time the LR was made everything was done by hand as well. Someone had to sculpt a 3-up of the model, then it had to be transferred/copied to the mould, etc, etc. Also every mould had to be copied this way as they make more then one mould. (I'm sure someone can better explain the process.)

Now they are able to design everything on a computer and let it take over the mould making saving a lot of money on manpower alone.

Brother Loki
02-10-2009, 16:13
Back then they had to send their 3-ups out to a different company to make the steel moulds for plastics, so they were effectively buying the moulds at full price. Now they have their own tooling facilities and can make their own moulds (which is what they spent all the money from the LOTR boom on) and therefore they're effectively paying cost for the moulds instead of full price. With the increased automation and use of CAD, My understanding is that they've reduced the price of moulds for more recent kits from hundreds of thousands to tens of thousands.

Templar Ben
02-10-2009, 16:22
I heard 3 years ago that the LR had just paid for itself.

I think that is a yarn that they use just to explain how expensive it is.

That and a redshirt knows less about GW than a fry cook knows about McDonalds.

Bunnahabhain
02-10-2009, 16:28
Back then they had to send their 3-ups out to a different company to make the steel moulds for plastics, so they were effectively buying the moulds at full price. Now they have their own tooling facilities and can make their own moulds (which is what they spent all the money from the LOTR boom on) and therefore they're effectively paying cost for the moulds instead of full price. With the increased automation and use of CAD, My understanding is that they've reduced the price of moulds for more recent kits from hundreds of thousands to tens of thousands.

+1 on this. GW have made a big capital investment in plastic mounding equipment, to reduce their ongoing costs.

I can't believe the land raider took that long to break even. It's used by the most popular 40k army, and chaos marines who are not exactly rare, and a fair number go the Inq and Orks for assorted uses. If the Land Raider has only just broken even, then that would mean a large proportion of plastic kits never do, and that seems unlikely...

Putty
02-10-2009, 16:46
...... he said along the lines of the land raider sprue has only JUST broke even....

I believe in Santa Claus too.

galahad67
02-10-2009, 16:50
ten years sounds like the right number for AMORTIZATION of the inital investment. that's just an accounting/tax thing for writing off the initial investment - it is not directly related tothe actul returns on the sales of raiders.

Corrode
02-10-2009, 16:57
+1 on this. GW have made a big capital investment in plastic mounding equipment, to reduce their ongoing costs.

I can't believe the land raider took that long to break even. It's used by the most popular 40k army, and chaos marines who are not exactly rare, and a fair number go the Inq and Orks for assorted uses. If the Land Raider has only just broken even, then that would mean a large proportion of plastic kits never do, and that seems unlikely...

Again, as far as I'm aware the Raider cost an exceptional amount being a huge undertaking for its time and having been created at a time when GW didn't have all this stuff in-house (see the above about buying moulds from a third party etc.)

Max Jet
02-10-2009, 17:09
The initial price for the mould sounds about right 250 000 pounds doesn't sound like an exaggerration, when compared to the prices of other model kit manufacturer moulds. However, they cannot possibly tell me, that it seriously took them 10 years to sell 7143 Land Raiders. This is something I will not believe, it sounds like a lame excuse for the high prize, hinted by the fact that I am hearing this story for almost two years now.
My local GW is selling 2-3 Land Raiders per week. Thats 130 Land Raiders per year... one shop.. one single shop in a city 300 000 people (half of them over 49 years old) in Germany where the Land Raider does not cost 35 pounds but 45. Now how many online Shops are there? How many do these sell? Fantasy shops, GW shops..
As if!


Games workshop spures are some of the most complicated sprues you are ever likely to see meaning the cost will be pushed up even more.

I will kindly ask Santa to put a large Hasagawa model kit under your tree. That will prevent such statements.

Egfy
02-10-2009, 18:06
However, they cannot possibly tell me, that it seriously took them 10 years to sell 7143 Land Raiders.

Bear in mind that most of the land raiders will be sold at wholesale price so the income GW makes will be less. On top of that you have wages, packaging, transportation, tax, insurance and all the other outgoings that apply both to the model and the company as a whole. I wouldn't be surprised if only 5% of the RRP was considered as 'paying off the mould'.

Lord Damocles
02-10-2009, 18:07
It didn't but didn't they recently make a new sprue for it?
Sure, they released the plastic Crusader/Redeemer sprue with the 5th ed. Marine release, and that one sprue may well not have made it's cost back (although with the reduced cost of mould making, and the alarming numbers of redeemers I see about the place, I'd again be surprised if it was far off), but I really can't see how the basic 'Raider sprue(s) can't have made a profit in ten whole years - particualrly as the standard sprues are used in every single variant of the tank across eight (current) codexes.

Angelwing
02-10-2009, 18:38
I used to work in a food factory that used plastic trays for the food and sealed a peelable film on top. The machines to seal the film had metal toolings for each type of plastic tray. The company allocated a ten year span for the machine to pay for itself. Thats not to say all profits from the product went on paying for the machines for 10 years, but that a percentage of the profits was allocated to the machine cost as a type of 'running' cost.
I can quite easily see the landraider molds taking 10 years to pay back the initial outlay for them.

JHZ
02-10-2009, 18:50
And against something like this, GW keeps doing recuts of its old sprues when they could simply do a much cheaper accessory sprue and be done with it. What was wrong with the old Leman Russ kit that you couldn't just make a sprue for it to make a demolisher and the other variants? Surely would have costed less than to redo it all.

What I find even more interesting, is that there's a ton of companies out there that make highly detailed, multi-part plastics for the fraction of the cost that GW sells theirs. Do they get their stuff from space aliens or something? I guess it's the same reason why "leading brand" stuff costs more than equally good "cheap alternative" stuff: the leading brand has a whole army of stuff to pay for, like marketing, etc. So lots of GW money is poured into marketing, planning, BL, website, customer service, all those blood sucking lawyers that do everything in their power to screw with people... Take most of those away and I'm sure GW prices would fall in line with the rest of them.

decker_cky
02-10-2009, 19:11
It doesn't cost nearly as much now, and they fit more onto less sprues (and have superior detail and easier assembly).

The land raider was a particularly large kit when it was made wasn't it? That means part of that 250,000 pounds probably went into the R&D of making larger scale kits.


The initial price for the mould sounds about right 250 000 pounds doesn't sound like an exaggerration, when compared to the prices of other model kit manufacturer moulds. However, they cannot possibly tell me, that it seriously took them 10 years to sell 7143 Land Raiders.

Profit has to equal cost to break even. I don't believe the 'just paid off' part, but on a huge investment like that, it would take several years to pay off (look at the operating profits GW has on a whole, and consider how small the land raider is in the scale of all sales).

Karhedron
02-10-2009, 19:21
The initial price for the mould sounds about right 250 000 pounds doesn't sound like an exaggerration, when compared to the prices of other model kit manufacturer moulds. However, they cannot possibly tell me, that it seriously took them 10 years to sell 7143 Land Raiders.

The trouble is that once you have the moulds, it is not free to simply bang out an unlimited number of models from them. First of all you have the material costs, packaging etc. These are reffered to as "unit costs".

Then GW has to cover its running costs (stores, wages etc). Obviously all the products they sell pull their weight so a percentage will be to cover these costs.

Then GW has shareholders to take into account, it actually needs to turn a profit in there somewhere.

So only a small percentage of the Land Raider RRP goes into paying off the R&D costs for the moulds. You would have to sell a lot more than 7143 to break even. Having said that I am sure the Land Raider has broken even a long time ago. A company like GW cannot afford to make products that will not break even for 10 years. I am sure they achieved this within a couple of years of launch. The extra profit margin probably goes now to develop new plastics making the economies for future kits more positive.

Templar Ben
02-10-2009, 19:55
Bear in mind that most of the land raiders will be sold at wholesale price so the income GW makes will be less. On top of that you have wages, packaging, transportation, tax, insurance and all the other outgoings that apply both to the model and the company as a whole. I wouldn't be surprised if only 5% of the RRP was considered as 'paying off the mould'.

Then they are idiots. The gross margin across the lines is about 70% which means 30% covers production costs, material costs, and packaging. Don't let them kid you on how long it takes for a new mold to pay off.


The trouble is that once you have the moulds, it is not free to simply bang out an unlimited number of models from them. First of all you have the material costs, packaging etc. These are reffered to as "unit costs".

Then GW has to cover its running costs (stores, wages etc). Obviously all the products they sell pull their weight so a percentage will be to cover these costs.

Then GW has shareholders to take into account, it actually needs to turn a profit in there somewhere.

So only a small percentage of the Land Raider RRP goes into paying off the R&D costs for the moulds. You would have to sell a lot more than 7143 to break even. Having said that I am sure the Land Raider has broken even a long time ago. A company like GW cannot afford to make products that will not break even for 10 years. I am sure they achieved this within a couple of years of launch. The extra profit margin probably goes now to develop new plastics making the economies for future kits more positive.

Payback on an investment does not cover other ways the company spends money. It covers that particular investment. It is really just calculating the IRR and comparing that to other investments.

smicha6551
02-10-2009, 19:56
Molds are expensive - but I'm betting that a good part of the cost has to do with where the models are made, and the expensive way they are sold. A Land Raider or Battlewagon costs as much as a Tamiya B1 Bis - which is about the same size (longer but thiner). If you think GW sprues are impressive you MUST see what Tamiya (and many other companies) are doing - the main body casting BLOWS AWAY anything from GW. Yes to include the Baneblade which I've built. Remember, Tamiya has all sorts of research and accuracy requirements GW doesn't have - there's people with micrometers making sure Tamiya gets it right.

Here's another example - Academy's M113 ACAV - basically a real life Rhino with a few extra guns. It's cheaper than GW's Rhino (and I paid full retail on it), it comes with more extra bits, has all sorts of internal and external details that the Rhino doesn't have (that's OK) - AND 4 or 5 figures.

grissom2006
02-10-2009, 20:06
They've also been working with the technology for a good deal longer than GW has been so compairing them i like compairing a toddler to a teenager their years apart in what they do. Only got to look at the new instruction leaflets by GW to get the impression they've been taking a leaf out of someone elses book.

Bodysnatcher
02-10-2009, 20:45
I miss instruction manuals with written text in though - sometimes the diagrams are wrong or just plain confusing.

smicha6551
02-10-2009, 21:11
The technology for casting plastic models isn't a huge secret - and GW could easily subcontract the actual model making to a company like Academy, Dragon, or Tamiya, and get a better, cheaper product. And GW has had over 20 years to figure it out. They could probably do a better instruction pamphlet too - I've built some of the earliest models Tamiya made, with Japanese language instuctions (which I don't read) and I had no trouble getting the model together. GW, which has far fewer parts in their models, were harder to get together.

grissom2006
02-10-2009, 21:23
No it isn't a secret but GW hasn't been producing it's own plastics for that long all it's early plastic we're out sourced for the moulds. The first LR, Rhino and plastic Guard RTBO1 Marines we're all GW products but production was made by someone else for them. Out sourcing can deliver a cheaper option (isn't always true) but runs the risk of others getting hold of your designs, GW as we have seen is in a lock down state and are keen to produce their own models. After all they like telling us they sell Models they just so happen to run a game that goes with them.

JHZ
02-10-2009, 23:09
I miss instruction manuals with written text in though - sometimes the diagrams are wrong or just plain confusing.
Oh, you should have seen this one old battleship model I once found and built. The instructions were on one page, a single diagram. Just imagine a pile of bits spread across a single sheet of paper, roughly in a battleshipish form and more pointing arrows than a whole Chaos Space Marine legion would have.

Dexter099
02-10-2009, 23:15
Here is an article on all the production costs of models that GW sells.

http://www.fightingtigersofveda.com/roarseconomics.html

Don't forget that the Government in Britain has caused tremendous inflation in Britain through excess spending, so GW has been hurt very, very badly. Plus the taxes were also raised on the wealthier people, so GW keeps on getting hit hard.

The US is about to get hit with heavy inflation after the trillion dollar deficit from the stimulus bill, so that won't really help them much either. Still, at least they're not losing as much in inflation to the US, though the inflation in the US has many other negative effects on GW.

Imperius
02-10-2009, 23:50
This is quite revealing, I doubt it took 10 years, 5 might be more realistic, but then you realize the sheer NUMBER of models that Gamesworkshop puts out and then you realize:

Hey, they might be running a defecit here.

Makiaveli
03-10-2009, 03:30
Then they are idiots. The gross margin across the lines is about 70% which means 30% covers production costs, material costs, and packaging. Don't let them kid you on how long it takes for a new mold to pay off.



Payback on an investment does not cover other ways the company spends money. It covers that particular investment. It is really just calculating the IRR and comparing that to other investments.

I don't think you quite understand it as well as you think you do. Percentages are meaningless standing alone like that.

Does GW own the actual factories where they are made or just the molds themselves? Chances are they have to pay for the molds, and then pay a factory to make the things. So add a profit margin to the actual cost of making them that GW has to pay. Then they sell the things to a distributor who might even sell them to a local distributor* to pass along to stores. Which raises the price you pay.

**EDIT** Oh yea, I think the 10 year thing was a misunderstanding on the amortization as well. So yes, technically it did take 10 years. But that's just because of how they "paid" themselves back for it. Bookkeeping is a evil art form...stay away from it ;)

*Many moons ago I was part owner of a hobby store. We didn't get most of our stuff from a "actual" distributor because we had one store and needed to order say 5 copies of a book, not 5 cases of a book. So we bought from a guy who owned several stores and was acting as a distributor for a lot of other "local" stores. Cost us more apiece, but we could get what we needed and thus have a wider variety of product than we otherwise would have had for the same money.

MajorWesJanson
03-10-2009, 06:46
Comparing the detail and thickness of GW models to hobby models is problematic, as the two are designed for different purposes. Hobby models are designed to be built, painted, and then displayed. Gaming models are meant to be built, painted, then played with on a regular basis, and have to withstand actual use and transport. Many of the fine details on hobby models would be lost almost immediately if you drop the thing once, whereas a Rhino may just have a few paint scrapes.

grissom2006
03-10-2009, 08:42
Comparing the detail and thickness of GW models to hobby models is problematic, as the two are designed for different purposes. Hobby models are designed to be built, painted, and then displayed. Gaming models are meant to be built, painted, then played with on a regular basis, and have to withstand actual use and transport. Many of the fine details on hobby models would be lost almost immediately if you drop the thing once, whereas a Rhino may just have a few paint scrapes.

I was planning to put this up.

Bregalad
03-10-2009, 09:33
Fact #1) Plastic moulds are so incredible expensive that even popular must-have tanks like the Landraider only just break even after a decade.
Fact #2) GW wants to do every metal miniature including low run special characters in plastic in 8 years max.
Erm .... something doesn't fit here! :wtf:

They even make plastic sprues for one shots like Space Hulk now, not using them without any reason!

zedeyejoe
03-10-2009, 09:48
The production cost of making plastic moulds is quite high and when the LR came out it was very high at the time.

Indeed 4 years ago I was quoted 45,000 for a small (stainless steel) mould now it is 20,000.

Plastics have become more affordable and as a result lots of people have started making them.

Still shedloads more expensive than making metals though.

So for small production runs, metal is the economic option, plastics for larger runs.

Chaos and Evil
03-10-2009, 11:47
The (then) regional manager of GW's London retail stores (since promoted to run all of the South) has said that it took six months for the Land Raider sprues to pay themselves back, and everything since then has been profit.

So I'm gonna go out on a limb here and say that either the London Regional Manager was lying to a room full of his employees, or a random Redshirt was lying to a customer.

Or maybe they both were. *shrug*

demanufacture
03-10-2009, 13:52
I'm pretty sure using the original sprues in the Crusader/Redeemer kit helped out.

=)

Max Jet
03-10-2009, 15:47
I admit, perhaps they had to sell way more than 7200 Land Raiders, but I still doubt, that it took so long to break even, as they use this argument too often in the context of high costs. Model kit companies wouldn't sell 2 different king tigers with different turrents. A model I have seen only once on the shelf of my buddy, while the land raider has been spottet 9 times throughout them.
It takes a lot of land raiders to justify the costs and GW prices are higher, because they do not sell as much as other companies. However they stretched the facts on this one here, I think we all agree.

zedeyejoe
03-10-2009, 15:49
GW makes them "in house" now which would cost them far less.

Only if the mould making operation is considered part of GW. If it is run as its own profit centre then it too would be looking to make money. The way GW seems to operate, I would imagine they have to 'buy' mould making from GW mould making. It seems crazy but it does help with profit and loss.

smicha6551
03-10-2009, 16:41
I didn't mean to imply that hobby models were appropriate for gaming, but only to provide comparison. Imagine if Academy (which had the cheaper M113 ACAV) left all but 1/2 of a figure out, didn't have to do research, really worry about scale, dimentions, or even details (compare the old Rhino to the current one), and could leave out almost all of the internal details. My point was not that hobby models (at least as is) are appropriate for gaming, only that will all of the disadvantages companies like Tamiya and Academy has over GW, they still produce an equivilant (and in many ways superior) model for less. All GW has is ruggedness, which (with a loss of some realisim and detail) Tamiya or Academy could do themselves.

Templar Ben
03-10-2009, 22:49
I worked for a manufacturing company where we made products in set 1 that could be used as is or converted by us in different facilities or by our competitors into product set 2. Set 2 was more valuable but had very erratic demand. We would do transfer pricing from our set 1 manufacturing mills to our set 2 plants with the price depending on how our machine time was running.

If set 1 goods are selling faster than we can make them, the set 2 plants buy them at market price.

If set 1 goods are not selling and we have idle machine time, the set 2 plants buys at cost.

We had special codes so that the mill managers were not penalized in profitability.

That was normal within our industry.

Grimstonefire
03-10-2009, 23:43
Something I was always curious about is whether GW manufactures the same models in their different facilities around the world? Metal models for instance, do GW have duplicate moulds? Or are they all shipped from UK?

@Mechanical horizon.
Seeing as you no longer work there... Could you tell us roughly how many land raiders GW do sell each year? ;)

Crazy Harborc
04-10-2009, 01:03
I very much doubt that much over 25% (if THAT high) of GW's current inventory is made up of minies from newly added to the lines moulds. At any given time IMHO, it is a safe bet that the vast majority of GW's minies are made from/with/in moulds that have already paid for themselves.

Lack of well done costs control methods are likely to be causing more money problems for GW than the drag downwards of the new to the lines moulds costs.

starlight
04-10-2009, 01:25
Last I knew:

All resin: made in Lenton at FW.
All metal: made in Lenton.
Injection moulded plastics: North America - made in Memphis, Rest of the World - made in Lenton.
Vacu-formed plastics (terrain, etc): made in Shanghai.
Printed materials/packaging: made in Shanghai.

Pretty much everything else (hobby materials/dice/paint/etc): outsourced.

Oh and On Topic, the Land Raider had long since paid for itself when I worked at GW in 2004...at least according to the in-house info we had. :)

Grimstonefire
04-10-2009, 10:15
Smartass?

I'm sure it would be interesting to see production info for everything, but I didn't know how much you wanted to say. Hence me asking only about the land raider, the thing we seem to be focusing on here.

If you wanted to email a spreadsheet send me a pm and I'll give my email address.