Games Workshop Pricing Feedback Thread

[f2k]

If Games Workshop truly supported the hobby then they would lower their prices.

They’re not supporting the hobby at all. In fact, they’re quite busy killing it. Or rather, wargamming as a hobby will almost certainly survive (but probably be much reduced), but Games Workshop’s part in it seems to be coming to a very messy end.

Supporting the hobby means supporting a thriving community of both veterans and newbs. Games Workshop, however, has, for a long time, ignored the veterans entirely in their mad quest to drive up their revenue by using a churn’n’burn strategy.

Again, just look at the yearly reports – it’s all there. For a while now, they’ve had falling unit-sales and have only been propped up by favourable exchange rates and massive cuts to their infrastructure.

[loveless]

shelf, if GW thought that was in the long term interest of the hobby, they could do that starting tomorrow. In my view it demonstrates they are thinking longer term and supporting the hobby.

Or they're stuck in the past and are trying to keep a dying aspect of their business on life support.

Given the mark-up on their model kits (which must be a fair bit if stores can afford to sell it at 10-25% below MSRP and still come out ahead), a 10% net margin seems like they're doing a poor job of managing their priorities. GW Stores might work well in the UK (or they might not, I've no idea), but their absurd reliance on stores in other markets just seems busted.

Even if a GW store came into my area (which it probably never will, given the area is relatively rural compared to the American cities GW is in now), they'd be up against stores offering both sales and full-time discounts on GW product. One of them has several full-time tables and an in-store paint station and the other has an enough space to run at least eight games at once. The only thing a GW store might offer us is a slightly larger product selection.

I haven't looked at their latest financials - does their retail arm cover its own expenses or do independent sales keep the brick-and-mortar from crumbling around GW's feet?

If their products can thrive in areas without GW having a physical presence to hard-sell their merchandise, maybe maintaining that presence isn't the best use of your resources.

[Sgt John Keel]

GW makes about 10% operating margin (ex royalities) which looks a modest return in my view. The gross margin figure is sometimes mentioned on the net, however this means nothing as it's pre costs - I could have a company making 90% + gross and still lose money.

I think this has come up before, but anyway: Logically, GW could sell their stuff for several times the current price and most likely make a loss. That is, they would have a negative operating margin. And conceivably (and much argued) they could sell their stuff for less and have a higher operating margin.

Thus we can see that the size of their operating margin is not really connected to how 'fair'* their prices are; indeed I think most people would love it if GW got a larger operating margin if it also meant lower prices.

*Maybe I'm grossly oversimplifying when I assume that lower prices are fairer prices, I'm sure some people will prefer inefficient businesses that don't make any profits.

[Tuttivillus]

Unlike many companies they have not subbed out ALL their manufacturing to low cost countries, hence providing much needed jobs in the US/UK, the retail HC's also give hundreds of people employment in UK/US.

Fixed that for You

[Lord Dan]

I haven't looked at their latest financials - does their retail arm cover its own expenses or do independent sales keep the brick-and-mortar from crumbling around GW's feet?

Here is a nice breakdown of their financials for the last couple of years:
http://investing.businessweek.com/re...?ticker=GAW:LN (If it doesn't show the correct list, you can change views with the tabs towards the top)

Note that their profits for 2011 were down 2.7% from 2010 despite their massive price increases in the price of special choices and otherwise. They list their expenses as follows:

31.2 million pounds went to producing product.
1.1 million pounds went to research and development.
Here's the fun one. To answer your question:
77.4 million pounds went to "selling general and admin expenses"



Even if you assume they're spending some of that to maintain their website and HQ staff, that's a LOT of money locked up in store fronts.

Note: I recognize that this doesn't answer the question of if they cover their own expenses, but based on the fact that 62% of their profits are going in to running their stores, I would imagine the answer to be "no". Another point of note is that of their $123 million in profit they netted only $11 million.

[AGC]

GW is not just a UK retail business, it's an integrated specialist manufacturing/retail company and I wish more companies would support the UK/US by keeping
their operations based here, we may not be in such an economic mess if this was the case.

But by that logic we would be in a worse economic mess because more companies would be running at smaller margins, paying less tax and more likely to go out of business. A company that doesn't make money isn't of use to anyone no matter where it's based.

[lanrak]

AFAIK the last financial report quoted gross margins of 76%.
This means that ALL costs with the exception of logistics and retail are coverd by 24% of the retail cost!

If we work on a average cost of 15% of gross to cover logistics.(It may be slightly more or less.)

This means GW plc are spending about 50% of thier gross profit on retail costs.(The chain of B&M stores.)

Other games seem to focus on providing great game play to drive interest and add value to thier minatures.
GW plc seem to have become reliant on B&M stores to 'isolate and influence ; thier prefered demoghraphic.

Its too late to drop the rertail arm completly, as thier is currently nothing to drive sales without it.
GW plc desperatley need to add value to thier range of products,as thier competitors are growing from strenght to strenght.
(Mainly due to ex GW employees taking thier passion and talent as producing products customers actualy want!)

Some 'White Knights' say GW plc is more expencive due to it bieng a bigger company.
However the economies of scale should be working for a large company like GW plc.

So either GW plc are targeting the wrong demoghraphic for its product, or they are NOT marketing thier product to their chosen demoghraphic efficiently!

(Looking at the period of greatest growth , 1988-1997.Focusing on great game play over a wide variety of games seemd to be the best way to grow the GW hobby.And concidering the massive drop in sales volumes from 2004 to now.Selling toy soldiers to children is the best way to ruin it!)

[frozenwastes]

I think that's a pretty solid analysis Lanrak.

The LOTR boom definitely hid the decline of their core games that snowballed from 2004 to today. Based on revenue, currency exchange and price increases, one can calculate that GW has roughly lost half their customer base in the last 8 years.

[hobgoblinuk]

In the UK many now appear happy to pay £3+ for a cup of coffee which is gone in 10 minutes, the costs of the hobby V the hopefully hundreds of hrs of enjoyment looks more than reasonable to me.
It's all about having fun and enjoyment and some appear to have forgotten that, to an extent at least.

[Tuttivillus]

In the UK many now appear happy to pay £3+ for a cup of coffee which is gone in 10 minutes, the costs of the hobby V the hopefully hundreds of hrs of enjoyment looks more than reasonable to me.
It's all about having fun and enjoyment and some appear to have forgotten that, to an extent at least.

Price for fun and enjoyment has it's limitis. Especially fun with plastic.

[Baragash]

In the UK many now appear happy to pay £3+ for a cup of coffee which is gone in 10 minutes, the costs of the hobby V the hopefully hundreds of hrs of enjoyment looks more than reasonable to me.
It's all about having fun and enjoyment and some appear to have forgotten that, to an extent at least.

Rising prices + static revenue for GW over about 8 years says that a steadily growing group of people don't agree.

Since the anecdotal evidence from other companies in the market seems to vary from "positive" to "we've never had it so good", the obvious conclusion is that people are finding plenty of fun and enjoyment, just not with GW.

[shelfunit.]

In the UK many now appear happy to pay £3+ for a cup of coffee which is gone in 10 minutes, the costs of the hobby V the hopefully hundreds of hrs of enjoyment looks more than reasonable to me.
It's all about having fun and enjoyment and some appear to have forgotten that, to an extent at least.

It's less about the cost of the hobby and more about how much GW charges for participation in their sub-section of it. Relative to the vast majority of other miniatures/games companies in the hobby, GW charge an extortionate amount more - sometimes by several times.

[I3uLLioN]

Dont like it? Dont buy it.

[Tymell]

Dont like it? Dont buy it.

Practical, but hardly a good counter-point to criticisms. Otherwise we could also respond to scathing reviews of these things as such:

Bad movie: "Don't like it? Don't watch it."
Bad book: "Don't like it? Don't read it."
Bad music: "Don't like it? Don't listen to it."

Etc. Having a way to avoid a problem doesn't make it not exist.

[strewart]

In the UK many now appear happy to pay £3+ for a cup of coffee which is gone in 10 minutes, the costs of the hobby V the hopefully hundreds of hrs of enjoyment looks more than reasonable to me.
It's all about having fun and enjoyment and some appear to have forgotten that, to an extent at least.

If there were two coffee shops next to each other, one had really good customer service, the other didn't seem to care about you either way AND charged double the price for their coffee, which would you go to? GW is now competing in an ever strengthening (but still really quite small) market and charging a LOT more than all their competitors.

Different point; what if the cost of dvd's all doubled overnight and the companies said 'hey, you can watch these loads of times plus with all the extras, you'll get hundreds of hours of enjoyment!' would you be ok with that? You can't just value purchases based on how many hours of entertainment you get out of them. Especially not when models are getting replaced every 5-10 years, army books and rule books are getting replaced ~5 years as well.

[loveless]

In the UK many now appear happy to pay £3+ for a cup of coffee which is gone in 10 minutes, the costs of the hobby V the hopefully hundreds of hrs of enjoyment looks more than reasonable to me.
It's all about having fun and enjoyment and some appear to have forgotten that, to an extent at least.

Preach what you will, you won't be changing any minds.

As others have hinted, the cups of coffee ($4-5 in the states, in my experience) handle what the market bears. A cafe couldn't come in across from a Starbucks and charge $6-8 per 20oz cup of espresso and hope to survive. The prices are going to fluctuate a bit based on ingredients - some coffee shops boast a higher quality of chocolate, so their mochas cost a bit more. Others utilize basic ingredients and a minimum of physical space, so their drinks cost a bit less. Typically, the incredibly large chains (Starbucks and, more recently, McDonald's) can offer a bit of a price break or other goodies (Starbucks often gives out free downloads of digital items while McDonald's is often $1 cheaper than Starbucks on comparable drinks).

Why, then, does one of the (if not the) largest game companies out there charge more than their competition to achieve the "goal" of their games (a finished army, often 1500-2000 points). To quickly summarize my standard viewpoint, this is worse in Fantasy because you have to buy models that may cost as much as $4.12 a piece to fill in back ranks - meaning they'll never do a damn thing in game other than be glorified wound counters.

GW tries to boast "higher quality" ingredients, but it's a bit like switching to gourmet Belgian chocolate in a cafe mocha - it sounds good in practice, but the 30-40% price hike that follows really sours the taste. What's worse is that GW doesn't use higher quality ingredients - Finecast is still messy (though not an outright disaster any more) and pales in comparison to similarly-priced resins from smaller companies. GW plastics are impressive, but the quality of the plastic isn't noticably better than plastic (specifically plastics that take plastic glue well) from competitors...who also offer their product for considerably less.

Perhaps some time ago, when GW appeared to be the only one in the hobby, the "don't like it? don't buy it!" mentality would have worked. Unfortunately for GW (but fortunately for the gamer!), competition exists. I haven't run the numbers, but I seem to recall that GW is one of the (if not the) most expensive games to build up to the advertised points level (due in large part to expensive Fantasy wound counters, overpriced 40K transport vehicles, and ridiculously expensive rulebooks) on the market.

So why do we care? We're invested in the background. We care about the worlds established and the aesthetic created. We enjoy a game that can shift from beer-and-pretzels simplicity to tournament-driven competitiveness. We like the product and we don't want to see it vanish due to greed and/or stupidity on the part of the parent company. As such, we discuss it - looking for some semblance of a plan we don't understand or looking for some glimmer of hope that it's not as bad as it seems to be. We don't always get the answers we want.

Let's go back to the coffee example. People are happy enough to pay $4-5 for a cup of steamed milk, espresso, and chocolate, but would they be just as happy paying $10 for it? Would they be just as happy paying $4-5 for a same-sized cup of Folgers Breakfast Blend? Would they be happy with the same cup of espresso, but half the size, for $4? I think you'll find the answer is no in all three cases.

You can't open up next to Starbucks and expect to succeed by charging $6 when Starbucks charges $4 for the same product.
GW isn't the only player in the game - other companies are increasingly showing that they can offer products that are cheaper and/or better. They have to rely on the quality of their IP and brand loyalty at this point, neither of which is holding up well. They still think they decide what the market will bear when their competition consistently shows them better ways to achieve their own goals. There's a good chance this won't end until GW crashes - as it stands, a lot of their decisions just don't make sense.

[kaulem]

I already have my armies, and can afford the once in a while purchase of a new unit. (6 crypt horrors: 120$ please...wtf)

But it makes me sad when I try to get new friends into the hobby they love the game and freak out when they find out they need to dish out a thousand dollars to get started.

We (the veterans) try to downplay it, "buy used, find a discount seller", but the damage is done the second they see the GW prices.

[jack da greenskin]

I already have my armies, and can afford the once in a while purchase of a new unit. (6 crypt horrors: 120$ please...wtf)

But it makes me sad when I try to get new friends into the hobby they love the game and freak out when they find out they need to dish out a thousand dollars to get started.

We (the veterans) try to downplay it, "buy used, find a discount seller", but the damage is done the second they see the GW prices.

Emphasis mine :'(

...

No words to describe that quote. So true, and so terrible. Malifaux is the only game I'd feel comfortable pointing them too - Low entry cost, not many models to paint, etc. And even then, I'd insist on lending them all the paints they needed, even at discount, expecting a newbie to lay down ~£100 for paints and tools is ridiculous.

[Tuttivillus]

I am planning to get a Brettonnian Army. After closer search I've found that the only product i will be interested in from GW is Armybook. Price for other companies minis and their quality is astonishing really. Just an example knights from Fireforge Games : 12 multipart mounted men in plastic with nice pose (sooooooo much better than GW's) 24 euro. GW counterpart : 31 euro for 8 minis. With the infantry: Perrys war of the roses set 40 very good quality minis for 18 pounds, GW's counterpart : 20 pounds for 16 men. I won't even feel bad because of it. I generally wonder how GW is going to handle direct threat from Avatars of war. They made kits for slayers and Chosen Chaos warriors. Take their berserkers and compare to GW's plastic ddwarf warriors or miners. Where is that glorified quality GW is asking premium price for?

@Loveless : Spot on , man!
@Caulem: My empire army feels excatly the same

[Inquisitor Kallus]

I am planning to get a Brettonnian Army. After closer search I've found that the only product i will be interested in from GW is Armybook. Price for other companies minis and their quality is astonishing really. Just an example knights from Fireforge Games : 12 multipart mounted men in plastic with nice pose (sooooooo much better than GW's) 24 euro. GW counterpart : 31 euro for 8 minis. With the infantry: Perrys war of the roses set 40 very good quality minis for 18 pounds, GW's counterpart : 20 pounds for 16 men. I won't even feel bad because of it. I generally wonder how GW is going to handle direct threat from Avatars of war. They made kits for slayers and Chosen Chaos warriors. Take their berserkers and compare to GW's plastic ddwarf warriors or miners. Where is that glorified quality GW is asking premium price for?

@Loveless : Spot on , man!
@Caulem: My empire army feels excatly the same

With reference to the Berserkers and quality, yes, you are right. The only problem is GW products are always going to be at a higher price because of their stores. Other manufacturers and their high quality merchandise should get them thinking real hard about their own product, its cost/value and hopefully where they want to be as a company in the future...