[WWI] Is the sky falling?

Chris Banyai-Riepl cbr at cbrnp.com
Tue Jan 18 12:30:47 EST 2005


> > things now?  Last I checked, around $15.00.  So, add $1.50 to each 
> > kit.  Will this prevent someone from buying it?  Economics 
> > 101 says a 
> > few will not spend the money, but the majority still will.  Even on 
> > the latest Trumpeter 1/32 F-145 ThunderMigStarJetFighter 
> > retailing for 
> > $120.00 royalties might push it to $132.00.  I ask you, do 
> > you really 
> > thing the people spending this kind of money are going to 
> > cringe and 
> > walk away over that last $12.00?

The problem here is not the final end amount added to the kit, which as you
point out is really not much.  The problem is that generally royalties and
licensing fees are due up front, before the kit is produced.  For a small
kit manufacturer who produces 2500 kits of a subject, that would be $3750 up
front and out the door to Boeing et al, with no guarantees that all 2500 of
those kits would sell.  Because of that, the kit manufacturer would have to
significantly increase their kit cost to recoup that license fee quickly,
across maybe 500 or 750 kits, so that this small kit company would not be in
the red for too long.  Sales suddenly become a VERY big issue, with a much
larger minimum required to break even.

So, extend this out.  What does it mean?  At the very basic, it means that
small manufacturers are either not going to be able to afford to produce
kits at all, or are going to have to produce kits that are going to be big
sellers, like a P-51 or Bf 109, instead of a BE2c or RE8.  The large kit
manufacturers will face similar issues, and will likely move to larger kits
of very popular subjects, where the licensing fees would be less of an
impact (witness the Tamiya 1/32 F-16: big kit, bigger price - more able to
pad out that licensing fee across a fewer number of kits).

So it really isn't just a matter of spending a buck fifty more on a kit.
That might work out that way for the big manufacturers like Hasegawa, but
small ones like Eduard, and resin kit companies (who often have their
production run in the hundreds, rather than thousands) are going to have to
dramatically increase their prices, try to skate in under the radar of
Boeing et al, or simply stop producing kits.

Chris





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