How is the price of a pack of figures determined? I'll try to do my best to answer this as it is quite complex.
Each company has its own expenses, profit margins, packaging costs, labor costs, utility costs, raw material costs, etc. I based our prices roughly on the cost of metal being $8.00 a pound. Now it's nowhere near that now, but many other factors need to be considered in the current supply/demand situation for the metal.
Availability in the future: There are still predictions from people in the metal business that feel strongly that tin will be in limited supply later this summer, for at least a month.
Price changes create a heck of a lot of work for the whole industry! If the metal price is plugged into the formula at too low of a value, the prices continue to rise (please note that it leveled off for about 2-3 weeks and now rising again … steeply) another price increase must be made to maintain margins (read that: pay bills with!). Our ranges amount to over 3,000 SKU's! Imagine a store employee's time spent changing prices of our lines in their computer. A month later having to repeat the exercise and you will soon see the store dropping (or at best) cutting back on stocking those brands. Multiply that by 5-10 companies that they carry and you begin to see the magnitude of the problem.
This is one reason for why we chose a price point so we can keep prices stable for a longer length of time.
Another factor in pricing is the number of pieces (and molds) required to make a package. Many small parts require more labor; labor to dismount from the sprue wheels, sort, bin (in some cases...more on this later) and package. While some packs contain less metal, their cost may be equal or more than packs containing more metal, due to the trade-off in labor costs.
Due to this crisis, several of us manufacturers have altered the way we do things, all invisible to the average customer. This "change" usually results in a bit more time in sending out orders.
To be more specific, we are no longer trying to keep cast figures in bins except for the most frequently ordered numbers. This saves us money. How? Every time we transform the shape of the raw material into a figure, it costs us money. (Gas to heat the metal, electricity to power the spincaster, labor to pay someone to do the casting, dismounting, binning and packaging). When we run low on metal (and with these prices, not many of us can scrape together enough money to lay in large reserve stocks and have that operating capital tied up in metal without earning a return...to pay bills with), we all too often have to melt down bins full of figures so we can reform them into the figures the customer wants (but we are out of). By casting to order, not only do we save money, but the metal is at less of a risk to become overly stressed and produce lower quality castings.
Follow me so far?
Most of us raised prices while we still had stocks of metal on hand that we paid less for. We need to charge more as soon as possible so we can accrue enough money to pay for replacement raw materials, which will cost us more. Any money received in sales that accrue over and above the required profit margin must be ferreted away for anticipated future price hikes. This "stash" will empower a maker to hold the price level, longer, in hope that metal prices will drop (or at worst, stabilize) before he needs to replenish again.
Metal is not the only "costing item" we are watching! Packaging, utilities, shipping etc. are rising too! While viewed individually, the increases don't seem unreasonable. When viewed within the total costing formula, a different story is seen!
It is important for the customers to understand that the same forces affecting their home costs are also affecting the figure manufacturers....but at (usually) higher levels! Pricing of electricity for residential locations is billed at a different rate for businesses. All costs must be passed on to the ultimate user of any product.
While I have skillfully avoided talking specific percentages, I hope that I have explained how we generally go about determining our pricing. Each company does it differently, but the basics of "overhead" + profit=MSRP. (to be cont.)
There are many makers of figure lines where the owner does not do it as a full time job; they work out of their basement, garage, shed, etc. Their bills are paid from their "day job". Their products reflect the love for their hobby and price their figures on what the "full-time" boys are charging!
These guys are the ones really making the profits! Because their operation is usually done at home, they do not have to pay $1000+ in rent. they usually (and sometimes with family members help) do it all themselves. This means that they do not always have to pay payroll taxes, unemployment taxes, Social Security, etc. and the related time required to fill out and file all that bureaucratic paperwork; they can remain focused upon cranking out orders.
Because their overhead is low, many can afford to spend more on full color, full page ads in the magazines, making them look more professional than the full-time guys! This "glitz" does not mean that they have better figures, it just means that they can create greater demands as we all like those color ads of well painted figs! The full time folks have to spend their money on the items mentioned above, by law!
Because their overhead is lower, but the figures are priced "competitively", their profit margin is higher.
If the fellow develops a good following, he soon reaches a point where demands exceed his ability to keep it as a part time venture. He is faced with a choice: Quit his $50K a year job and steady income to pursue figure making full time, or make $28K a year and seeing sporadic paychecks? Or, does he sell his line to a full time maker and run with the profits?
There is nothing wrong with anyone making money in this industry as long as they: a. Do it honestly, b. Play on a level playing field (i.e., be subject to the same laws as everyone else must follow). These concerns are not unique to the gaming industry! Just look at what is now being made in China that once was made in the USA, UK, or Canada! Lower labor costs, eased environmental regulations, cheaper raw materials all are cards stacked against us all in China, Mexico, and other new off-shore-booming factory sites.
We all like to pursue our gaming hobby as an escape from the "real world" stresses and pressures of work. The "real" world just infected our long-stable sanctuary, guys!
GFI/Minifigs: www.minifigs.com
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© Copyright 2004 by George Phillies.
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