Will Snubbing the Pre-Order System Get Us the Products We Want?

We are drifting off topic a bit, but I understand the affordability issue. I read the annual report of the HMA and MRR sales are steady at about $410 Million over the last five years, which means they are really dropping 1-2% a year, maybe more with bigger price increases. From memory, some of other losses were offset by older guys with money really pumping up O scale and Lionel sales in the last decade, trying to relive their youth.

Its not uncommon for stagnant industries to "go where the money is" and try to capture the richest buyers at the highest price, ignoring the low end and beginners. Also from memory, but it seems that other than Atlas Trainman, which seems to offer about the same product for lesser price, anyone trying to sell less detailed, less expensive models come up short. For instance, Walthers thought they were doing the right thing in N by offering less detailed products at reasonable price, and got killed. As mentioned, we seem to want more detail and performance every year, and that in part drives up cost and even the pre-order system.

Like buying most anything, we always end up paying more than we want, and we always really want high quality at low prices, which isn't really feasible in most cases. In other words, if we want to blame someone, collectively, we only need to look in the mirror.

 

At days end... 'affordabilty' does affect 'preordering'. "I cant afford it so why even bother thinking about preordering one." This in the long run affects those who do want, need, and can afford one...as low preorder numbers are bound to kill the desire by a manufacturer to build one.

So back to the OP's question....
Will Snubbing the Pre-Order System Get Us the Products We Want?

I dont think its 'snubbing' by definition as much as 'affordabilty'. Are the items being considered really something everyone 'wants' versus what only a few 'want' ? Sound is only a recent example. "It's the latest and greatest and everybody wants that." is a high overrated/overused statement in todays society.

Model Railroading is a very fickle hobby. Like you said....if we want to blame someone, collectively, we only need to look in the mirror. That includes manufactuers right on down to the modeler...JMO

 

As to the original OP, I guess snubbing would only work if we were really strong in numbers in NOT pre-ordering anything. But, my gut says most of us would break down when something we really wanted came out, so no.

As to something "everyone" wants, I am sure all mfgs would love it if we converted to the ATSF as our home road, and they could make one road name in locomotives. Of course, that is exactly counter both the market and the mfgs need to keep making something new. The variety of road names and loco and car types is simply amazing, and yet we mostly complain about what we don't have. Most of my model railroad career I have had that unfulfilled wish list. Dreaming is part of the hobby....and its free!

Not sure pre-ordering affects affordability. In theory, it should save a bit of money, by saving over production, stocking cost, lost opportunity cost, etc., all of which would raise prices. And, as far as those who can't afford to buy, presumably that would figure about equally into nearly any sales model. They either don't order, or later, they don't buy, but in the end, the sales would be the exact same because of the wealth spread and interest differences among modelers.

 

George mentioned sound. Sound is the "latest and greatest" Gee Whiz. Unfortunately, much of today's disposable income is spent on the "Latest and Greatest". I give you the iPhone6, or the Apple Wrist Phone. Nobody needs them, but because they are On Sale, and "Everyone Has One", "I Gotta Have One". Sadly, the media creates this market madness mentality, and the MRR industry is swept up into it for the most part, giving us DCC, Sound, and DCC Ready, instead of simple detailed well crafted models that operate as expected. Fortunately, there are folks like Puddington who see beyond the glitz and glamor. Unfortunately, there are many folks who disagree with Rapido's conservative business approach, as posts to this thread have shown.

 

If a manufacturer does not receive sufficient pre-orders for a newly announced model, how do they determine if the reason is that there is genuinely insufficient interest in that prototype, or if the issue is that the price may be too high, or not enough potential buyers want either a base model or one that is fully equipped (depending in what configuration(s) the model will be offered) or whether there is a general lack of confidence in the ability of that manufacturer to produce a decent quality item sight unseen?

 

Comments section on their website...if they have one ?
Comments on their facebook page...if they have one ?
Comments in the forums...if they bother to read them ?
Comments in emails to them ?
Comments by phone ?

'Preorder' numbers give a false reading of modelers wants and needs. Hence the "preorder system is flawed" comments above.

 

Would a customer who bought, for example, a TurboTrain (from a certain manufacturer) and is waiting for a replacement gearbox - whose current status is "out of stock for the foreseeable future" - be more or less likely to pre-order another product from that same manufacturer? Is it a reasonable expectation to risk buying sight unseen another potential mistake/accident/issue/error with the hope that the manufacturer will respond "as best they can" and that their best efforts to "make the situation right" will be satisfactory? If not, does that customer still have the option to get a refund, and from whom?

 

I don't think it matters. They've already speced out the manufacturing costs, determined how much it will cost to ship & market, and how much they can afford to ask as a price. If there aren't enough preorders they simply don't make it. I don't believe they lose any sleep over "Why?", because it isn't going to make any difference.

 

Well; it's not a exact science, that's for sure.... with regard to the "insufficient interest in the prototype" that one is a bit of gut feel (what you've been asked for, heard from people at shows..) and a bit of fact (what similar products (ie: a similar switcher) have been produced in the market and how did they do, what products have we produced that should appeal to the same modellers) There isn't a hard and fast way to gauge this.

Cost... well that one's simple; we know our cost; know what margin we need to make and can see what that results in as an MSRP. You then look at like products and where they are positioned and you get a good feel for the market acceptability of your price. If you can't bring it in in "the range" you never go forward with the project.

Base model vs fully equipped - not something we look at; our mission is the make high end models, we offer "basic" locomotives (DC silent) but the details are all identical.

Lack of confidence: Well; we've been late on stuff; some modellers hate us; want to see us curl up and die.... ok; that's unfortunate but they are few and far between... In over two years of answering the customer calls I can't recall someone saying that they won't buy from us because they have no confidence in us.... I'm sure there are a few out there (or right here for that matter) and that's their right..... We've had our share of boo boo's and success stories.... guess the vast majority of modellers are satisfied.

It's a bit of science and a bit of "gut".....

 

I don't know what you use for comparison or consider a "like" product when you're determining if the selling price of a new product might be in "the range."
For me, the benchmark is a Kato EMD F-unit, which is readily available for about $60.
If some other manufacturer announces a new EMD F-unit with a price that will be twice as much, then there's a disconnect that's difficult for me to rationalize.
Maybe it has a decoder included (which I don't need), but that still doesn't account for the doubling of the price.
Where's the rest of the money going, one might wonder, when trying to make the decision whether or not to pre-order?

 

Maybe this point has already been made and I missed it, but if a manufacturer decides not to make a model because of lack of interest, they would probably move on to the next model on their list. It's not like not releasing a specific model means there will never be another, different model released. Businesses want to use their capital to generate more income. Sitting on assets because the last announcement generated insufficient interest makes no sense.

 

We need to have polls. Some input. Shine a direct light on what we want to have built. Like forum surveys, Facebook surveys. Cause Im probably not alone in wishing BLI picked the K4 instead of the M1 for their first N steam. More preorders would have been generated if that bulky pacific was the product announced.

 

It is going into added detail and added electronics.

The MSRP of a Kato F7A is currently $90 (from their website), so you would really need use that price to compare against another manufacturer's MSRP and you need to take into account that there is minimal added detail (horns only, rather than horns, grabs, grills, etc.) on a Kato F-unit, so the production cost is lower. If you are thinking of similar, but more highly detailed F-Units (Intermountain F7A, Rapido FL9) then you are looking at a different price point. The pricing on the Intermountain and Rapido products is broadly similar. From their websites, the MSRPs are: IM F7 $130(DC)/$180(DCC)/$240(Sound), Rapido FL9 $170(DCC)/$280(Sound).

You are also comparing a relatively large company with economies of scale and a product whose development costs have been covered by previous production against smaller companies with new or relatively new products.

Adrian

 

I think we are also seeing a schism between established modellers and modellers newly entering the hobby or maybe just changing scales. The comments about "not needing DCC" seem appropriate for an established modeller with an existing collection of DC locos and a layout that is already wired for block control. On the other hand, if just starting to acquire locos and plan a layout, DCC makes a lot more sense than straight DC. A manufacturer needs to address both parts of the customer base. "Dual mode" decoders seem to be the attempt to do that, but that in itself adds to the cost of DC units, as I suspect even "DCC ready" does to a more minor extent.

If the hobby is going to grow rather than shrink, it needs to appeal to younger customers, most of whom grew-up with computers and remote control toys. So, block-control is probably going to turn-off most of them, and they can see those RC cars, planes and even boats in the LHSs, squeezing-out the trains sections.

So, whether it is skrinking customer base or "extra" electronic features, there seems to be only the choice of why the cost of individual items go up in REAL price. I say "real" because there is also the perception of price increases that is caused only by inflation. The older we get, the more we tend to think of a dollar still having a higher, outdated value than current international exchange rates really create.

Change makes turmoil, and change today is happening very rapidly in fields that affect our hobby. Turnoil disrupts markets, and some manufacturers will not survive the turmoil. The real question is can new ones replace them and thrive. The manufacturing technologies needed to produce up-to-date products today are not so ammenable to cottage industry application compared to the technologies used in the 1960s. Hence, most new vendors today seem to be using large factories in China rather than a few additional workers in their garage to get a new business off the ground. The owners and workers in those Chineese factories are not railroad model enthusiasts with a focus on U.S. prototypes. From here, it appears they are interested in making a profit by responding to whoever will pay for their next run of model trains OR some other product. I don't think THEY are thinking about "supporting the hobby." Perhaps this is going to drive the number of suppliers of new models to shrink to a few that have substantial clout in the market place, such as Bachmann, Atlas and Kato, with no others able to break into the business in a lasting way in the future. We have seen that in other industries, and may well see it here, at least so long as actual production of products is outsourced so completely as is happening today.

 

I think Puddington, and many other sources have pointed out that polls aren't all that accurate. Hey, we think we want Dewey and we get Truman, as a for instance.

I have seen it. Ask someone if they want to spend other peoples money, and they say sure. Its always easy to spend other peoples money. Be asked if you will spend your own and it makes a lot of folks back off completely. If I, as an mfg polled and got 50,000 requests for X, I would probably make no more than 25,000 of them sans pre-order. Its just human nature.

As to pricing, over the years, folks have made the calculations for locos, and in general, the DC locos up to 2005 or so stayed constant in inflation adjusted dollars, and quality was better. It does appear to me that sound equipped and DCC locos with premium decoders to support sound have made a price jump, on top of the price increases associated with rising wages in China. So, it seems to have been a tough few years for us cost wise, and made tough if we choose the Sound option (and for some, the DCC option, but I can't see DCC as anything but good for the hobby, even if a few of us older guys were caught in the technology crossover. I made the plunge, and it was expensive, while others haven't (I am 60 with about 150 pre DCC locos))

As long as sound is an option, we DON'T have to pay for it, I am fine with tech changes and upgrades. It is sort of the way of the world, and I can't see any business touting "Old Tech! Less Features!" as its main selling point. New and Improved sells more than just Tide.......Non DCC locos will just be considered the lower cost generics.

 

A slightly different take:
Those that pre-order will be influencing the products and road names that are released. Those that don't will be left to deal with whatever comes out.

Consider it voting. If you don't participate in the election, you have waived your right to complain after the fact.

I'll use the IM SD40-2 as a case study. They have announced a lot of roads they could make. The voters cast their votes and the roads that rank above a certain threshold move on to the next round. New products will still hit the market, there will still be some left over for the non-voters to pick up, and IM isn't sitting on piles of engines that won't sell.

If Kato used the pre-order system, there wouldn't be racks full of PanAm SD40-2s now (what were they thinking with that one?).

 

Well, that is the other side. First, we all, me included to tend to think most others think the same way. We don't. Polling needs to be pretty scientific. Most amateur polls end up having nearly as many opinions as votes, and I don't see MR being much different. You would probably find well known trends, like ATSF sells better than Frisco, etc. But as shown here, everyone would simply vote for what they wanted. Even ten comments at a train show to a rep by different folks could be way off base. The Atlas reps gave me a few examples of all the clamor here for one thing or another that ended up flopping.

Which gets me to thinking, the only real bust I can recall for Kato and their non pre-order approach is the RDC, which sat on shelves for years. Not sure about MT, but don't think there monthly release model really tells us much. Atlas has a few minor flops, IM probably many more (I still see those old time reefer car kits at many shops after what, 20 years? I think they missed on both the kit to make it cheaper and the popularity of the steam era in N, at that time) Walther's/LL, Bachmann, and a few others are known more for the pleasant surprises of the occasional top notch product.

The whole idea of pre-ordering is to eliminate big flops no matter who you are. I suspect none of us really wants that for the mfgs. Of course, no system will prevent them entirely, as noted, because desire to buy a particular thing is probably trumped by requiring quality. I know I am transferring my feelings to most of you, but doubt I am far off. No one buys what will be shelf queen, at least knowingly.