Model Railroading > The profit margin on brass.

If a model costs $1200.00,on an average, how much of that is actual profit for the importer?

Posted from Android

When I had my store, for most of my 32 years, it was 30%.  If the retail price was $1,000.00, dealer cost was $700.00.  However, in the last couple of years before I sold the business, some importers were shaving the margins to 25% and some even trying to go to 20%, as I recall.  

Hope you are all doing well,

Allen Drucker

needles_sub Wrote:
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> If a model costs $1200.00,on an average, how much
> of that is actual profit for the importer?
>
> Posted from Android

Sorry, I guess I didn't read your question properly.  For the info you are seeking, you would need an HONEST answer from an importer and regardless of how "nice" you think these guys may be, I do not believe you will ever get a straight answer on this particular point.

Maybe someone from Overland can tell you, as Overland no longer imports brass...

Victor A. Baird
http://www.erstwhilepublicatioins.com

I can think back when the PFM sound system came on shore one of the club members was employed by the government and could view the declaration paperwork. The stated price which the importer paid, PFM, was something, cant quote the exact price but well less than twenty dollars. This would have been in the late sixties. Seems the going retail was at about 100.00 plus at North End Hobbies.  Brass would have been about the same difference was mentioned by the same fellow.  This was a club that is long gone but was in a vacant commercial store in Georgetown south end of Seattle.

When I worked at a off road company, we got a shipment of off road lights. I saw the mainfest and the lights cost my company $5.00 each. Shipping was cheap also for a 40' container full of those lights.
At the company stores they sold for $150.00 a piece. Non company stores were not allowed to discount the lights.
I have always wondered what the importers profit margin was.

Posted from Android

wabash2800 Wrote:
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> Maybe someone from Overland can tell you, as
> Overland no longer imports brass...
>
> Victor A. Baird
> http://www.erstwhilepublicatioins.com

I doubt Brian Marsh will disclose that info.

Russ

Charley,
All you have to do is :
research what the market wants in brass models
than decide  what to have made
research and CAD draw the models you want
go to China  and Korea and shop around with companies that build brass model ( I would only go to the "good ones" )
Oh wait - who are the good ones ? - trial and error research ? - no, evaluate past products, oh , more research !
Once decided, post a bond, a letter of credit, or a promissory note usually over $400 k
Than work with the builders for 6 to 12 month to get etching drawings that will reflect to models you are trying to create.
Next , within a year and a half (remember your funds posted are still in bond meaning you can't touch them and thy are earning no interest !) you receive pilot model that  you review and make adjustments. Than you give the OK to go to production.
It's not over, yet.
The next phase is "decorating"
You get "pre-production" models and find the colors are not quite right, the lettering is "too this - too thick - wrong size:
You spend a lot of time reviewing and writing up the "corrections"

Now, you send those back to the builder and request production.
within 90 to 120 days, You get a notice from your overseas shipping broker that pallets are ready to be shipped to you.
You than make a determination to ship "Air" or "Sea" - "Air" id 6 times the cost of "Sea" and you have to make that call as to how soon is the market ready for your models.

Than, you contact your Stores and dealers that had "Reserved" the models and ask for payment.
Not all dealers were as "well financially backed "as Allen and if they do not have a customer for the promised reservations - they cancel or reduce the pick-up call.

Now, comes the fun part, you finally receive the pallets, inspect each and every one, label the items and "pull the orders received"
once this is done - you take an inventory of remaining merchandise.

You asked earlier about "profit margins"
If you want to remain is business, your margins have to cover all the advertising, all the promotions you make (traveling to shows across the country), paying the rent or mortgage on the warehouse you store the goods, pay the staff that assists you and the interest to the Banks for the loans you have made.

So, I say the "Profit Margin" determines exactly what it is - PROFIT to remain in business.

Fred Hill - The Coach Yard




 

One of a number of reasons being in the hobby business is not for everyone - as original detailed and he isn't the first one to give a glimpse into that world.  It isn't for the feint of heart.  WIth risk comes reward however, hopefully.  Some begrudge that "reward".  It's been pointed out by others that these "profits" get plowed back into future project to keep the production train rolling along.
 

I really can't think of anyone who got "wealthy" importing brass models.

PHall Wrote:
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> I really can't think of anyone who got "wealthy"
> importing brass models.

If you want to make a small fortune at producing brass trains, you have to start with a large one...

bigmc83 Wrote:
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> PHall Wrote:
> --------------------------------------------------
> -----
> > I really can't think of anyone who got
> "wealthy"
> > importing brass models.
>
> If you want to make a small fortune at producing
> brass trains, you have to start with a large
> one...

Old joke.

Posted from Android

PHall Wrote:
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> I really can't think of anyone who got "wealthy"
> importing brass models.

You don't have to be "wealthy", just make a living. I doubt Coach Yard, DP, and others are losing money importing models.

Posted from Android

needles_sub Wrote:
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> PHall Wrote:
> --------------------------------------------------
> -----
> > I really can't think of anyone who got
> "wealthy"
> > importing brass models.
>
> You don't have to be "wealthy", just make a
> living. I doubt Coach Yard, DP, and others are
> losing money importing models.
>
> Posted from Android

And most likely not their primary source of income either.

It's funny how people get so heated about the cost of certain models and the profits people make on them.  It's simple, if you are willing to pay for it, buy it.  If you are not, admire it but take a pass due to cost.  No-one is entitled to get the model of their choice.  We are in a free market system.  If the importer is charging too much for their product then they will lose sales.  If priced right then people will buy.  Experience defines what the market will bear. 

I don't begruge any importer their profits.  People have to make a living or at least get some return on thir investment.  By the same token, over the 50 years that I have been a modeler I would have liked to own a lot of models but did not have the available funds to buy them.  It didn't kill me not to own the model.  It just gave me reasons to save up and buy the few that were truely special to me.