ARE HIGH FIGURE PRICES AN OPEN INVITATION TO RE-CASTERS?

[NeilW]

This follows on from my response (as below) to Martin's question about the price ($3179) of Pegaso's 200mm Genghis Khan, so far only available pre-painted from Attica Studios.

As I said there, the whole cost/price/demand/re-casting issue fascinates me so I've migrated some thoughts on this here.

My education and professional background are in marketing but I know little about the real-life cost structures and market issues of figures/busts etc (in marketingspeak 'high involvement speciality goods') so would welcome comments (and some hard data/figures) from the trade to temper my thoughts.

My question is:

​

Does what appears to be the model/figure industries' premium pricing strategy with large margins and high retail prices and hence large contribution/profit per unit and resultant relatively low unit sales break-even act detrimentally to both hobbyists and the trade but to the benefit of re-casters?


My argument is:

​

Models are an (almost) infinitely reproducible item whose fixed costs (R&D, origination, sculpting, fixed overheads etc) are capable of being amortised/spread over large production runs: thus, the more you produce, the cheaper each unit gets.​

​

However, most manufacturers appear to adopt a premium pricing strategy with the effects of:limiting the pool of available purchasers (effective demand) to those both able and willing to pay the price (1)​

• • thereby leaving a large number of potential purchasers who cannot and/or are unwilling to pay such prices (latent demand)
  • thereby creating large unsatisfied market (2) for cheaper versions
  • thus, as mould/casting/online sales & distribution costs are relatively low, leaving an attractive low risk gap with significant market advantages for low price knock-off/pirated re-casters to fill

So, my proposition is:

If the above are correct, might adopting a lower (penetration/market share) pricing strategy have the effects of:​

• • increasing the pool of available purchasers (effective demand), both by making models more affordable (3) and negating price resistance
  • thereby reducing the number of 'unsatisfied' potential purchasers (latent demand)
  • thereby reducing the demand for cheaper versions
  • thus reducing the attractiveness of re-casting, both in terms of potential market and price advantage

With the conclusion that:

Changing to a market penetration pricing strategy with lower margins could benefit hobbyists by making products more affordable and the trade by increasing the customer base and, potentially, generating greater overall profit whilst, to the benefit of all, reducing the market advantage and hence demand for counterfeit re-castings.


DISCUSS...

I'd be particularly interested to hear from sculptors, manufacturers and distributors about costs, capacity, pricing etc and am perfectly happy for you to knock down my little tower of cards

In the meantime a further posting will outline what I've found out so far.

NOTES:
(1) I have no data on price resistance, but suspect that it would not need a 'race to the bottom' matching of re-cast prices to significantly increase the number of potential customers both able and willing to purchase.

Speaking for myself (a sample of one: always a dangerous thing ;-), I am able to afford but unwilling to pay current prices and would for instance not buy an item at, say, £45 but may well at £25 (my research of re-castings suggest they would charge at c£14-18, often inc P&P). There must also be a large number of less well-off hobbyists (notably younger people: the future of the hobby) who just cannot afford current prices.

By contrast, judging from the number and size of untouched grey armies amongst members of this site, it strikes me that there is a hard core of impulsive, dare one say promiscuous, purchasers with very little resistance or restraint (is this Perito's 80:20 rule in action?).

(2) This is sometimes exacerbated by offering 'limited editions', thus artificially creating shortages (and frustrated demand) and stimulating early purchase despite the product being inherently reproducible. I don't know whether such releases are offered at inflated prices to reflect their rarity value, but it does strike me that it must limit sales potential and, possibly create some antipathy from those who missed the boat.

(3) Data on costs are difficult to find (the best I've found is this... although it is more about small scale gaming figures that larger scale, quality collectables).
One good point it makes is to ask whether you would prefer 80% profit from a small number of sales or 50% from a 'massive number'. This was said in relation to losing profit to distributors but the principle remains the same (ie, make £40 on 250 items @ £50 = £10,000 or £20 on 750 @ £30 = £15,000)

I am unsure of the impact of 3D modelling, prototyping etc compared to traditional sculpting, but suspect that it also offers the potential for substantial cost savings.

 

[NeilW]

My response to Martin's question from the Genghis Khan thread:

Are we experiencing the birth of a new kind of business model?

Hmnnnn... the old premium vs penetration cost conundrum.

I don't know enough about the cost breakdown of figures* (ie master sculpting, mould making, casting, packaging, promotions, sales and distribution) but the basic issue is about balancing sales volume vs sales income to achieve break-even, then profit. The traditional options (as below) include premium and penetration (though this painted fig looks like ultra premium, just aiming for the very top of the market)

It strikes me that most manufacturers currently adopt a premium (high) price strategy, with some creating short supply (and hence high desirability) by limiting the number of items cast. This has three effects: first it limits the potential market to those able (and willing) to pay a premium price; second, in doing so it encourages re-casters to 'fill the gap' with lower cost/quality clones; thirdly, high unit contributions means that break-even, then profit, is achieved with low unit sales.

Adopting a penetration strategy, with lower prices and larger runs might: open the market to a wider range or customers (both able and willing to pay a lower price**); discourage re-casters as the margins would not be as large; low unit contribution, but still allowing B/E and eventual profit but across a larger number of sales.

Well, of course this is all theory, but the existence and presumably success of re-casters seems to suggest that there's a ready market for lower priced figures*** and the mathematical fact remains that you can make the same (and potentially more) profit by selling more at a lower price as fewer at a higher one (see below).




*can anyone give us an idea of these?

** here are a few comparisons of the prices for recasts (aliexpress) vs original busts (most are ex P&P):

• Berdan Sharpshooter: £14.68 inc P&P vs £35 (Mitches Models)
• FAM Indian Scout: £14.68 inc P&P vs £45.76 (el Greco)
• Pegaso Save the Tambourine!:E18.24 vs E54.90 (Pegaso)
• Young Mins 92nd Highlander: £9.91 inc P&P vs £39.99 (SK eBay)
• Andrea After the Battle: E11.37+2.95 vs E43 (Andrea: metal)
• no original manufacturers were harmed in the making of this table (mind you, they are tempting-notably the 92nd Highlander!)

The prices generally seem to be c30-40% of the originals. Not having relatively expensive packaging (fancy wooden boxes, tins etc) no doubt also allows them to keep costs down.

*** including me: I can afford the prices but am loathe to pay them

 

[Tecumsea]

A pity you were not at the white rose club meeting in Leeds last Saturday most of your questions would have been answered as we had a manufacturer presentation..

 

[NeilW]

A pity you were not at the white rose club meeting in Leeds last Saturday most of your questions would have been answered as we had a manufacturer presentation..

Well, I'm more of a Red Rose man myself

But, what did they say?

 

[Babelfish]

Bit of a "heavy" post that Neil with all that economic theory, but some interesting observations nonetheless.

Haven't got time to write much in reply (and I must confess I have no idea what "Perito's 80:20 rule" is even ) so I'll just say make one unsophisticated layman's observation, namely that since Pegaso announced their recent "fire sale" with massive reductions and flat-rate shipping, most of the the reduced figures seem to have been flying off the shelves and are now showing as Sold Out. So clearly lower pricing is persuading guys to sling cash in their direction. Myself included, having snagged a couple of 90mm foot figures that I would never have paid close on 80 quid each for (plus P&P) from Historex Agents, but decided were worth getting direct from source at half that amount.

And I would guess that even with these reductions Pegaso are still making a modest profit on said pieces, having presumably already broken even on them as they've been around for a while now (some longer than others).

- Steve

 

[NeilW]

Thanks Steve, interesting about Pegaso and, yes, they are no doubt still making a profit.

Perito's Rule/Principle is quite simply that 20% of the population account for 80% of the cases (put the other way, 80% of people fall within 20% of height ranges). With markets it usually means that 20% of customers account for 80% of sales (walk into any UK pub to see this in action )

 

[Martin Antonenko]

Even the sculptors and boxart painters have the right to live from their work!

And if a figure is well sculpted, I'm also willing to pay more for it.

Also, we should not forget that the figure hobby is a luxury for most of us.

And if the manufacturers actually cut prices, then the recasters would still undercut them.

This "rat race" for the lowest price is not to win by honest editors.


My 2 cents...


Cheers

 

[Tecumsea]

Neil-20% of figures represent 80% of sales and that is part of the problem? will my next figure be in the 20% or 80% unfortunately as in all product launches there is no answer until the product hits the ground-no amount of Marketing Theory will change that. Unfortunately small businesses aren't able to spend millions on market research, advertising, direct marketing, brand placement, etc, etc to try and mitigate the problem.

You are right prices are too high but the uncertainty of sales in such a saturated market make it necessary to at least break even on the figures in the 20%.

I could go on at the risk of being very boring-I'll try to dig out a response to a similar question from Luca Marchetti of Pegaso a few years ago and PM it to you. It answers some of your questions but the problem is even more acute for smaller businesses.

One thing is certain, recasting is having an effect but how much is difficult to quantify, if prices are high those with loose change only will be driven to them. One thing is clear they are not going away.

Keith

 

[Forté]

Nothing justifies recasting.

And as has likely been mentioned, that 200mm figure is sold painted.

Simple option for that is if you don't like the price, don't buy it. Plenty of other miniature companies out there who would love your money and reinvest it into more releases.

 

[Tecumsea]

Nothing justifies recasting.

And as has likely been mentioned, that 200mm figure is sold painted.

Simple option for that is if you don't like the price, don't buy it. Plenty of other miniature companies out there who would love your money and reinvest it into more releases.

I agree with your first statement and was not trying to justify it-just stating a fact, people buy recasts for whatever reason, and will continue to do so as long as they exist. I know modellers who buy recasts, they also spend considerable sums on legitimate products as well.

Keith

 

[Forté]

I agree with your first statement and was not trying to justify it-just stating a fact, people buy recasts for whatever reason, and will continue to do so as long as they exist. I know modellers who buy recasts, they also spend considerable sums on legitimate products as well.

Keith

Sorry Keith but recasts just take away any reinvestment to keeping companies going and producing new products. I have no time for anyone happy to buy recasts just so they can add another miniature to their pile.

And for context, I'm a house husband with two kids and practically no disposable income. Yet still won't touch a recast even if the miniature is out of production.

 

[kevininpdx]

People who buy recast will continue to do so as long as they are cheaper than the original, which they will always be. However I think it’s important that producers keep their price competitive with other manufacturers of similar quality. The best we can do is be vocal and remind people of the harm recasting is doing to the future of the hobby. In hopes that people appreciate that if they enjoy this hobby, they can’t go to the pirates and expect to see companies stay open and keep releasing figures. Also that these are not faceless corporations we’re talking about. These are families with a passion that they share with us.

 

[NeilW]

Just to clarify.

I'm not supporting or condoning re-casters and I hoped that this discussion wouldn't be hijacked by that.

Neither am I condemning or criticising or accusing manufacturers of exploitation.

My proposition is simply that a different pricing model may be beneficial to us all.

 

[Babelfish]

The best we can do is be vocal and remind people of the harm recasting is doing to the future of the hobby.

That's it in a nutshell. We can't wish it away or virtue-signal it away no matter how much we might want to. It always disappoints me when I read these threads and I see guys who are just adopting a realistic and pragmatic approach to the problem being accused of justifying or condoning recasting.

- Steve

 

[NeilW]

Thanks for the various thoughts and views so far (but still few from manufacturers?): a few responses below:

Martin: Even the sculptors and boxart painters have the right to live from their work!

Totally agree: my point is that lower prices may have the effect of increasing sales revenue and protecting income/jobs. Having said that, as we all know, few jobs nowadays are secure and industries have to adapt to new technologies and challenges (like Chinese pirating).

Keith: 20% of figures represent 80% of sales and that is part of the problem? will my next figure be in the 20% or 80% unfortunately as in all product launches there is no answer until the product hits the ground-no amount of Marketing Theory will change that. Unfortunately small businesses aren't able to spend millions on market research, advertising, direct marketing, brand placement, etc, etc to try and mitigate the problem.

You are right prices are too high but the uncertainty of sales in such a saturated market make it necessary to at least break even on the figures in the 20%.

I could go on at the risk of being very boring-I'll try to dig out a response to a similar question from Luca Marchetti of Pegaso a few years ago and PM it to you. It answers some of your questions but the problem is even more acute for smaller businesses.

One thing is certain, recasting is having an effect but how much is difficult to quantify, if prices are high those with loose change only will be driven to them. One thing is clear they are not going away.

Interesting take on Perito (80:20: what I meant was that 20% of hobbyists buy 80% of the figures ;-) also applying to individual figs (sometimes looks like the 80% are all WW2 Germans with machine guns?)... you're probably right. Also true that small firms can't spend much on marketing (inc research) but surely most are 'in touch' with the market to know what sells and others tend to focus on specialist niches. Whether it's a saturated market is debatable: if re-casts sell then doesn't that suggests that there's unsatisfied demand, but it is at a lower price point than the traditional pricing? One of the the traditional ways of getting out of a saturated market (Ansoff's Matrix: marketing theory if you will) is to find a new unexploited one. My proposition is that lower prices would stretch the available customer base, hence 'de-saturating' the market.

And, yes, re-casters are not going to go away, but at the moment the price advantage they enjoy is massive: lower prices could perhaps help reduce this (as said, based on a sample of me, I'd buy at £25 but not at £45).

Forte: Nothing justifies recasting. And as has likely been mentioned, that 200mm figure is sold painted.

Re painting: the discussion was sparked by Martin's query of whether this (figs initially only available painted at an astronomical price to recoup costs) was a new strategy: I spun my discussion off from this. Ref re-casting (whataboutery, and shoot me down if you wish- others have): neither does anything justify the unlicensed pirating of copyrighted film/TV etc characters and to do so displays a dual standard (see other threads ref this).

Kevin: People who buy recast will continue to do so as long as they are cheaper than the original, which they will always be. However I think it’s important that producers keep their price competitive with other manufacturers of similar quality. The best we can do is be vocal and remind people of the harm recasting is doing to the future of the hobby. In hopes that people appreciate that if they enjoy this hobby, they can’t go to the pirates and expect to see companies stay open and keep releasing figures. Also that these are not faceless corporations we’re talking about. These are families with a passion that they share with us.

True to some extent, but my proposition is that if prices come down sufficiently then price resistance might be sufficiently reduced to make people buy (as noted, for me, I'd buy at £25 but not £45: this is still above the re-caster's prices but an acceptable trade-off). Re the future: might it be that re-casts encourage newbies (especially younger/less well off people) into the hobby who, once they can afford it, will buy the originals (note Keith says he know people who buy both), thus 'creating' the future... or is the hobby already an 'old-white-men' segment who will die out over the coming few decades? Interesting about the impact of re-casts: if as Keith says above, the market is saturated with figs and from my daily observation of this and other sites new figs come out daily, then the hobby seems to be in pretty rude health. Some are 'faceless corporations', others may well be small family businesses 'with a passion' but (as Steve says), we must be pragmatic and acknowledge the realities of economics and the market (especially the online marketplace direct sales business model).

Steve: We can't wish it away or virtue-signal it away no matter how much we might want to. It always disappoints me when I read these threads and I see guys who are just adopting a realistic and pragmatic approach to the problem being accused of justifying or condoning recasting

Totally true: I see my proposition is a pragmatic way of tackling the problem.


I've done some further research ref pricing etc which I'll post later.

 

[Henkm]

Ref re-casting (whataboutery, and shoot me down if you wish- others have): neither does anything justify the unlicensed pirating of copyrighted film/TV etc characters and to do so displays a dual standard (see other threads ref this).

While both are forms of piracy and I wouldn't buy either, the difference in how it 'feels' to me is that someone sculpting an unlicensed bust of a movie character (or whatever) still puts in the creative effort while a recaster brings nothing at all to the table.

 

[Mirofsoft]

It seems you are here completely out of subject
You are referring to a painted figures at 3179$, a normal 200mm at Pegaso cost circa 110€ with taxes ( 122$) https://www.pegasoworld.com/product-category/pegaso-shop/pegaso-browse-by-scale/pegaso-browse-200mm/

So it's not 3179$ versus a recast,,, in fact versus what ? another painted subject ? a recast painted the same way ( Museum Quality ) by the same painter it would be 3179$ versus 3119$
In fact we face here the well known Russian figurines painters who made a reputation amongst, mainly the American, Toy Soldiers collectors who are known to pay very unjustified ( in the eyes of the amateur painters we are ) very high prices, according usualy no interest in the accuracy but only in the a kind of Hollywodian rendition, remember those are peoples who made usualy Arts School and in the past were decorating wooden boxes for tourists ( their obvious talent and technical knowledge is not contested here )
But if you are ready to pay such prices, it's your choice, not something unavoidable, and accepting a recast would change absolutely nothing .

So back to the basic :
Copying kits is a crime that hurts original artists & producers. Help support your favorite artists by buying their original works. PlanetFigure will not tolerate any activities related to recasting, and will report recasters to authorities. Thank you for your support!

 

[Tommys War]

My answer as a figure manufacturer and also someone with a degree in Marketing, and working as a Marketing Director;

However, most manufacturers appear to adopt a premium pricing strategy

Are they?

Most?

I'd say some do, most don't.

In terms of my business, I price at £16.00 per figure with a discount for members of my Collectors Club (ie rewarding those who are most loyal to my brand) to £12.80.

To manufacture a figure, I have the following costs;

1. Purchase of the sculpt
2. Box art painting of the sculpt (optional, but beneficial)
3. Manufacture of the figure (based on an initial run of 100 casts)
4. Packaging and costs of marketing the figure
5. General business expenses; cost of attending shows, promotion (including advertising), accountancy fees, cost of running the website and support, storage etc

It takes, on average, 18-24 months for that figure to sell that 100 initial casts. The revenue from that 100 casts just about covers the cost of all 5 points above (if I'm lucky). That means from the point I pay for the master it can take up to 2 years to recoup my investment.

To put this in context, of the releases from 2018 (from the top of my head I think there were 14 in total) I estimate 6 'broke-even' - this means 8 have not yet broken-even. Of the 10 figures released in 2019 none have broken-even. So, in 2 years 75% of my new releases are running at a loss.

I'd say that based on those numbers I offer exceptional value, and as far as I'm aware those manufacturers with similar products have the same pricing strategy and issues. I understand the concept of Price Elasticity of Demand, but from my perspective I'm priced as low as I can, any lower and it's at the point where I wouldn't invest in new releases.

I think you can understand from that why recasting is problematic - if modellers were to buy recasts of my figures I simply could not justify creating new products. Yes, you might get that Tommy's War figure a couple of quid cheaper, but then you're probably one of the people that come up to me at shows and say "what are you releasing next then?" with no intention of buying it from me.

It's tempting to think that figure manufacturers are all eccentric billionaires whose biggest problem is how to spend the millions we make, but the reality for me is that I work full time, and juggle Tommy's War around my family, career and all the other pressures of the modern world. I don't produce figures to make money (which is a good job, because it doesn't make money), I do it because I enjoy it.

Yes, some figure companies do lift prices to create a premium product, but I'd say those are the overwhleming minority. As buyers of model figures we've never had it so good, an oversupply of fantastic products at competitive prices. If any modeller chooses to buy recasts then they are killing this market, I don't care about the justification, it's another nail in the coffin of figure modelling.

If you don't like the premium pricing, don't buy it, there are a lot of good value manufacturers that need your business.

But the one thing I would add emphatically, most manufacturers don't offer a premium pricing strategy.

By the way, the 80/20 rule is the Pareto Principle, I've marked-you down 20% for that ;-)

 

[Hawk_Uk]

Hi Darren,
I could not have put it better myself and totally agree with what you have said.
People forget about the hidden costs of running a company and the big one for us is attending a multi day event so we have to factor in fuel, hotle and food on top of the event costs.

See you at the weekend.

 

[JonP]

I'm pretty sure most figure manufacturers have a sound basis for the prices they charge for their products which you may or not agree with. If you feel a certain manufacturer's items are too expensive for you then that's unfortunate but, as the Rolling Stones said, you can't always get what you want. Not being able to afford an item doesn't mean that you should go and buy the re-casts just because you really want it; just buy an original that you can afford. Would you apply this logic to everyday consumer items?