Thursday, March 27, 2014
The Road to the 1000 Dollar Tactical Squad
So I was thinking about GW new limited edition resin Void Shield Generator trying to understand what the reasoning for the release was. They sold them out very fast so clearly a larger run would have been better for them but that would have made them less "Limited". I have discussed in the past that GW is selling more and more expensive products to fewer and fewer customers and how that has an adverse affect on the 40k gaming community. The joke was that they were working themselves to a 1000 dollar tactical squad. The Void Shield Generator seems totally down this path to me so I started to think like GW to see why they would release the product this way. Remember that this is not like an alternative sculpt or similar collector style version of something. It is the only one released currently so if you are a purist or non-scratch builder this is the only "legal" model for this terrain piece which I here is a pretty useful addition for some armies.
The first thing I noted was that the price was 100 dollars which is not bad for a large resin model I guess but when I look at it and other plastic terrain pieces of similar size which are usually priced about 40 dollars it seems pretty high. Now plastic limited edition pieces make no sense because you want to use that expensive mold as much as possible. Resin molds are much cheaper and only last a relatively few number of uses compared to the molds for the plastic so limited edition=resin is a pretty reasonable alignment.
The next thing to noted is that by making it a limited edition they essentially force people to get them through GW directly. You cannot count on getting any from your FLGS so instead of capturing 60% of MSRP for the product they are getting it all.
Lastly the limited edition forces people to buy it now if they want it so it accelerates your sell through allowing all the income to come quickly. The sales are all booked right now instead of the dragging out over months into the next fiscal year. Customers also tend to forget spending money a little while later so they will not be weighting purchasing a Void Shield Generator vs that brand new kit when they are in the stores in May, the generator is already on the table being used.
Looking at the numbers, the release will yield GW ~100,000 dollars for putting out 1000 units. Given that their active purchasing player base is probably in the 300,000 level (Revenue divided by 500 dollars per player yearly spending), 1000 units are no where near the actual demand for the kit so they can release a "normal" 50 dollar plastic version in 6 months to pick up the rest of the market. The 1000 units already sold are worth 4000 of the plastic ones to them in terms of revenue but will not be enough to influence the profitability of the plastic ones since it represents probably less than 10% total of the plastic kits to be sold. The limited release also allows them to gauge interest level to see if they want to produce a plastic version.
Ofcourse, they are left is sort of a bind, if they do not produce a plastic version they will certainly be leaving money on the table which I would guess would be in 300,000-600,000 dollars range but if they produce the model in a non limited but different version I would guess this would upset the people who spent 100 dollars on something that is now 50. I guess GW could release a different version at the same price in the future as the non-limited one but it seems like this object is not sized for optimal production in resin and would definitely be a good thing to due in plastic as it is not limited to a single army and has broad appeal to all Imperial players which pretty much means everyone.
So what do you think was on GW's mind other the obvious get money from customers.