Opening the box £26
I’ve been quite lucky that, in the last month or so, some particularly thought-provoking e-mails have landed in the Model Rail inbox. It certainly makes writing an editorial easier when someone else gives you the inspiration!
This month’s ‘Opening the Box’ was inspired by an e-mail from reader David Phillips and his view on the increasing use of ‘pre-ordering’ as a way of selling model trains. He’s in the financial position where he can’t pre-order a model and finds that, by the time he’s saved up enough for what he wants, such as Hornby’s Peckett 0‑4‑0ST (below), the initial run has sold out and is no longer available.
David’s situation is not an unfamiliar one. As we’ve said before, railway modelling is an expensive hobby. We all have wish lists of what we want to build or buy if money were no object. Unfortunately, it is.
Even the wealthiest modeller is limited by what he or she can afford to spend on a model railway. And, of course, it is a hobby. First, we have to put food on the table, pay utility bills and so forth. Buying a model locomotive is a luxury that we can’t all afford, especially as prices are on the increase.
The profit margins in manufacturing and selling model trains are not huge. Models are expensive to develop and expensive to make, and a manufacturer will look to maximise the return on investment in new tooling.
Model shops are also a key link in the chain. Whether a large, online ‘box shifter’ or a little shop on your local high street, they will need to take a cut of the RRP on the box. Both manufacturer and retailer play small but important roles in their local economies, as they employ people and use services. Neither manufacturer nor retailer can afford to have products sat on shelves.
Model manufacturers are caught in a Catch-22 situation. So what do they do? Do they produce a limited number that sells out and leaves some modellers, like David, disappointed? Or do they produce more and hope that they will all eventually be sold?
It’s a tricky one. When you produce a model, you have an idea that demand is there but you don’t know for definite. There’s no way to test whether a model will sell or not - you have to go with gut feeling.
With international markets in such turmoil and with a customer base that’s not growing, I’m of the opinion that you’re better off producing a small number in the knowledge that you’re going to sell them all. If demand is still there, you can then produce another batch, knowing that you’ve already covered your production costs with the first run. If it takes longer to sell out the second batch, you should, at least, be making some profit.
Please keep your correspondence coming, as it’s great to hear your news, views and updates on your projects. We do read every letter and e-mail that we receive in the office with great interest and strive to, wherever possible, respond to all of them. I look forward to hearing from you!