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Are we being ripped off

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Biggles' Elder Brother - Moderator23/09/2017 09:43:29
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Folks, this is not a thread about Brexit or the likely future of the pound within Brexit. It is about the pricing policy of the model trade. Please stay on topic. Any further off-topic posts will be removed.

BEB

Rich too23/09/2017 10:05:17
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I would have thought that exchange rates effect prices.

Colin Bernard23/09/2017 10:19:45
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For specialist parts there is an argument for apparent OTT pricing as development and tooling costs have to be recouped from a very small market.

However I previously discussed in a thread here that there are many examples of generic products showing incredible markups compared to the same products from the High St or online.

gangster23/09/2017 11:14:38
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I don't believe we are being ripped off. We want our goods as cheap as possible yet want the same back up I assume that to hold spares us dead money with no way of determining demand

Derek Stevenson23/09/2017 18:48:47
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We get ripped off, I'm looking a part weighting less than 100g. I've been quoted postage of £5 & £8.40 from 2 different UK retailers, I can get cheaper postage from China.

Denis Watkins23/09/2017 18:56:45
1954 forum posts
97 photos

I don't have family all over the world, but just in 3 countries, where they have business connections.

The feedback is a very positive with high regard for the UK

In that importers get "top dollar" for their goods in the UK

We are prepared to pay more

Peter Christy23/09/2017 19:35:40
778 forum posts

Its not just the model trade!

I recently needed some heavy duty velcro, and the only place that I know stocks it is Halfrauds. Whilst I was there I thought to buy a tube of contact adhesive. They wanted £8 for a small tube of EvoStick!!! Alongside was a similar tube of Bostik for £3!

Guess which I bought!

What on earth was in that tube of EvoStick? Liquid Gold???

--

Pete

Don Fry23/09/2017 19:59:59
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1738 forum posts
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No, merely fools gold, for idiots.

For years we in the U.K. accepted a business model where a dollar was worth a pound, and that was before the current straightened times. That is the price we pay for not enforcing US customer service standards on shopkeepers.

Look at the salaries of the boss in large companies. You pay ( probably) him.

Tony Kenny23/09/2017 20:53:06
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I agree with any of the arguments here. In some places we're being ripped off, in others we're not. For example, the Halfords car washing bucket, flimsy and small cost 6 times more than a good solid builders bucket from B&Q (when I last bought one anyway). In that case yes, a pure and clear rip off!

But, looking at the original post about "£1 worth of plastic" being sold for £27.48, I don't agree with.

I was reminded of this recently when pricing up some workshops we're providing to companies, charging £990 for a half day but then only paying the instructor £300. Rip off? Actually no, when we added up the cost of materials, marketing, sales commission, preparation, accounts, tax etc, we actually still don't make very much of course.

Then it comes to 'value', what's it worth to you? If that £1 of plastic saves me a few hours work, then it's 'worth' £30 or more to me! If I was retired and had lots of time, then maybe I'd buy the bit of plastic and make something...

How long is a piece of string?

Biggles' Elder Brother - Moderator23/09/2017 22:01:40
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Off topic post deleted.

BEB

Geoff Sleath23/09/2017 22:38:38
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Rolls-Royce rely on the selling the spares needed to keep their engines airworthy to make the profit that pays my pension Spares have always been relatively expensive. Try building a car yourself from spare parts - I shudder to think how expensive that might be. The cost is largely absorbed in transporting, stocking, packing and storing individual parts. Some rarely needed parts may never actually be sold - that cost has to be absorbed and paid for ultimately by the customer buying more commonly needed components.

I was brought up in an environment where things were repaired. My grandfather set up his watch and clock repair business in 1878 and my father, his youngest son, extended the business to accommodate his own interests in hifi, radio and eventually TV. We were in business both to sell and to repair and we did. Now, who repairs ordinary watches? I struggle to repair electrical and electronic kit even though it was once my trade though I sometimes succeed.

Now I repair models aeroplanes. I'm quite proud that I managed to get my Dynam Hurricane back in the air this year despite a very bent nose and a wing in 3 parts!

Geoff

Keith Lomax26/09/2017 09:48:05
107 forum posts

If your parts supplier didn't make a few quid mark-up on each item to cover their costs and generate a bit of profit, they would soon go bust, and we would lose another cog in the machinery that keeps the model trade running.

Erfolg26/09/2017 19:57:16
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You have all identified why we are a consumer society. Repairs are do not make sense. My wives Roberts radio recently broke down, she went to the repair shop, then returned with a new Roberts radio, the old one was left behind. I persuaded her to reclaim it from the shop, apparently awaiting a repair. I bought a Alexa, at less than the new radio, put the new Roberts in the bin, much to her annoyance.

The moral to me is that repairs in themselves do not make sense. Do not buy a replacement, move on with the technology.

As a side issue the Roberts was retrieved from the bin, the old one did go into the bin.

One of the surprises of UK business, is that the wrong people make the most money. Yes to the technician, the tradesman. But why should the middle managers receive far more than the doers? Why are the business rates so high, when the people paying the bills receive a very poor services, why is the money spent on those who say we deserve it, not those who earn it?

Now that should have some spluttering.laugh

Edited By Erfolg on 26/09/2017 19:57:33

Shaunie26/09/2017 23:30:04
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One of the surprises of UK business, is that the wrong people make the most money. Yes to the technician, the tradesman. But why should the middle managers receive far more than the doers? Why are the business rates so high, when the people paying the bills receive a very poor services, why is the money spent on those who say we deserve it, not those who earn it?

Now that should have some spluttering.laugh

Edited By Erfolg on 26/09/2017 19:57:33

Never a truer word spoken, that's because those who get the most are the same guys who decide who gets what!

With respect to spares prices, there is a difference between making a living from slow moving parts and holding customers over a barrel because you know the part cannot be obtained elsewhere. This is common with electronic spares for cars (my trade), I'm fed up with explaining this to my customers as they think I'm part of the profit loop, I get 4.5% on Ford electrical parts for instance, yet someone is making a lot of money for an engine ECU on a Fiesta Diesel at £1400 retail! Same as the cowl, just that the scale is bigger. You would expect smaller items to be worse relatively speaking, as the admin time is the same regardless of the value of the item but that seems not to be the case.

Shaunie

Jon Laughton27/09/2017 10:40:15
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I cannot comment specifically on the pricing associated with spares that started this thread but it seems there are some misunderstandings generally as to why spare parts are relatively expensive so perhaps I can help: having worked at senior levels in industry (particularly aerospace) for nearly 40 years I can testify to the enormous sums of money that are required as the initial investment (at risk) to design, tool up, develop & launch new products, In the automotive and aerospace sectors these sums run into billions for one new programme. There is a significant cost to this investment. The size of this investment dictates that life cycles of commercial aircraft in particular are getting longer and customer airlines demand, quite reasonably, better reliability from products which adds to this longer lifecycle. The margins made on the demand for fewer spares over the long lifecycle of the programmes help to recover the initial very high initial and continuing investment costs and are a vital part of any business investment plan for such programmes - without these they would not get launched as they would be unaffordable.

Secondly we as consumers forever want better value (cheap flight tickets for instance or better car deals) - this exerts enormous downward pressures on the price of products sold and reduces the cash inflows to the manufacturer during the life of the product. In relative terms the price of an airliner is now much cheaper than it used to be - as a consequence the time frame for recovering the enormous up front costs (investment in new products) gets longer and the premiums charged on spares becomes ever more important. Of course industry is forever trying to reduce costs / improve productivity to offset this commercial reality.

It is possible that the manufacturers of Rc models face the same issues although the relative scale of the initial investment/development costs and lifecycles would be much lower.... but then again so too are the volumes of products sold....

Rob Ashley27/09/2017 10:45:10
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Not being a businessman I am not really qualified to comment on profit margins of model companies. However, I do often CNC kits for clubmates (and me of course) from plans. This means I trace all formers & ribs etc and machine them into a kit - for no profit.

I recently kitted a glider for a mate that took me 12:30 of CAD work and a further 2hrs to cut out. Thinking labour costs alone at min wage of £7.50 (for the over 25's) would be £108.75. Add on the cost of the wood in this case £30, Postage and packing and you are looking at £150 - without adding any profit margin.

Simpler kits take much less time to draw, so cut down on the labour costs, but when you consider the time involved for what is really a prototype then I think the CNC'd kits you can buy are of great value.

So production runs of the same product really make the money - in my example if I were to cut the same kit again it would take approx 2 hrs (as all the cutting files and tooling is ready to go) and I would therefore start to make money as I produced more kits. The problem then is if there is no demand for the product then the R&D (CAD time in this case) costs are wasted. Undoubtedly there are middle men who just sell on for profit and I agree that the majority of the value of the item should go to the manufacturer - after all they do most of the work.

Shame I don't know how to make my own spinners....

Wow my longest post yet.....

Phil 927/09/2017 11:35:19
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4102 forum posts
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from another thread disscussing the new Hanger 9 10cc valiant arf I noticed a large price difference.

US price $250 about 187 pounds

UK price £299

so nearly 300 pound for a high wing 60 size sport model make me think building your own is now potentaly a cheaper option

Edited By Phil 9 on 27/09/2017 11:35:39

Nigel R27/09/2017 13:05:42
527 forum posts
131 photos

"so nearly 300 pound for a high wing 60 size sport model make me think building your own is now potentaly a cheaper option"

As ever, its a 'how much is your time worth' question.

I doubt I could source materials for a scratch build on a 60 size, for much less than £150.

Bob Cotsford27/09/2017 13:15:42
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Posted by Nigel R on 27/09/2017 13:05:42:

"so nearly 300 pound for a high wing 60 size sport model make me think building your own is now potentaly a cheaper option"

As ever, its a 'how much is your time worth' question.

I doubt I could source materials for a scratch build on a 60 size, for much less than £150.

and so to the question of whether you are making an item as a hobby/pastime or as a way of supporting your family. If you regard the build as an enjoyable way to pass your leisure time then you are quids in compared to the cinema, football or going to a Formula 1 race, if you are making a model to sell in order to feed the kids then you need 10 year old Orientals doing the labour.

Don Fry27/09/2017 13:26:09
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1738 forum posts
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Jon L, thank you for your post of 10.40 today where we are informed as to the realities of our misunderstanding of the charity otherwise known as the aerospace industry. Out of interest I Googled Rolls Royce, the first company I thought of.

The CEO IN 2014, retiring, swept up £6.4 million for the year. The current CEO, critisized by the Institute of directors no less, for getting a bonus a few quid short of a million quid, on the back of profit falls of 50%.

We pay these bills. For little return.

Is it not so that industry standard practice to to sell new stuff as cheap as you dare, known as predatory pricing, to eliminate the opposition if possible. Then take a steady profit line into the far future on the sale of the spares.

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