Price Increase for LNER Coronation Coaches

[DarkRedCape]

I know this is a very marmite kind of subject, but I’m genuinely curious about this one.

The LNER Coronation coaches, from R40223 to R40227 were £108.99 when first announced, with the observation car being close to £66. The price of the coaches is now £139.99 with the observation car being £74.99.

We’ve all seen prices of locos go up a little here and there, but this is a massive price jump, it’s almost a 28.5% price increase. It is most likely related that these have moved from a 2023 autumn release to a 2024 summer release.

I pre-ordered the whole rake when they were first announced and have the coach sets at £98.09, with the observation car at £60.29.

What could have happened that these coaches jump almost 30% in price and get delayed for almost a year? Delays are inevitable with Hornby, but this is possibly the biggest price increase I’ve seen so far.

[ColinB]

I know, we have discussed it many times. I really do wonder how long it is before Hornby stop honoring pre order prices but then I suppose they would be shooting off their own foot. I too pre ordered them, I didn't realise that they were were now due for release in 2024 that has got to be at least two years late. As to the price rise, well with the retirement of SK I just get the opinion Hornby are in turmoil.

[AndyMac1707817969]

I don't think its rocket science to understand that cash flow in a business requires that the stock you currently have you money invested in needs to sell to bring in money to allow production of your next planned products to proceed. Clearly with just about everyone offering sales left right and centre turnover is probably poor and thus future products have to be delayed until the money is available to start the manufacturing process. Hornby is hardly a cash rich business, the first rule of any business, it does not matter what orders you have, what stock you hold, if you run out of cash that is the end of the business. You have to look at these things from the point of view of a business not that of a customer.

As to price, you might have noticed that the cost of everything is increasing, it might be popular with the public that those out on picket lines should get the wage increases they are asking for while at the same time appearing to be complexly devoid of any ability to link what someone is paid to the cost of the item or service they provide. For most business the largest day to day costs by far are wages. Considering other factors like exchange rates and shipping costs along with workers in China inconveniently no longer working for the peanuts they used to.

I guess Hornby will continue to honour pre-order prices as long as they are still making more money than they would selling it at trade prices to dealers. They probably take this into account when setting the pre-order price. Pre-order has lots of advantages for a business like gauging actual demand and production runs where people at least make some commitment to purchasing the item. A lot more accurate than the alterative ‘Yes I would buy one and so would my wife’ market research.

[ColinB]

Actually AndyMac I do look at it as a business, surprisingly I know a reasonable amount about it having worked for a small firm for a little while. As I said in my previous response we have been through this before. I just take the view Hornby can increase their prices as much as they want, that does not mean I am going to buy their product. I tend to look at the other manufacturers products for value and how much they charge, which gives a reasonable idea if a product is overpriced, so by comparison Hornby are generally about 10% more expensive than the rest. Bachmann charges amazing amounts for their coaches especially the DCC fitted ones but I also notice that these are the first things discounted in sales. Either whatever my views are it makes no difference to how Hornby runs so I will leave it at that. Funny I was looking at my pre orders with Hornby the other day, the list was quite large, it really did make me wonder if I would ever see any of them.

[wairoalbany]

That is an impressive rise in price. I must admit I am a little worried about the future of Hornby which is why I ordered a Hornby Class 91 and DVT from Hattons the other day.

[What About The Bee]

A recent train of thought (heh) has occurred to me.

Its mid-September, and the range launch is coming. The Marketing team decides that a fancy Era 1 carriage should be in the range launch. Fortunately, a certain Queen's Saloon is at the museum. Its marvelous. R40357 will be in range!!

So with some preliminary sketches, a render is made. And come range launch, the announcement as well. With a price.

Now mind, there are no detailed drawings yet. Since there are no detailed drawings, there can be no detailed prices. There may be a tricky bit of assembly, or a low yield part that is tricky to make. Those decorative flourishes on the front of Adelaide's Saloon are quite detailed and it should be a veritable nightmare to make tooling.

But a price must be set, and so it is.

Later, after range launch, Hornby's Engineers specify each bit, each bob. Hornby then negotiates with the manufacturer over cost. Perhaps those special decorative flourishes require a special process. I think that in the real article, they are gold foiled. To be an effective detail, the paint must reproduce that, requiring that special process. Perhaps Hornby properly estimated these decorative flourishes, perhaps not. In any event, it is only at this moment that Hornby shall understand actual unit cost, not estimated unit cost guesstimated at range launch.

The cost of doing business is added on. The business loan interest. The accounting staff, etc. Overhead. It is surprising how much overhead there is.

It is only then that Hornby can add in their profit margin. And viola! The new price is presented to the public.

These price increases are simply a function of the way they do business. Would it be better to do all the development and pricing of actual components, the overhead and profit FIRST and then launch? Sure. And what if Hornby does all that, and nobody wants it because the Marketing team chose poorly. Tremendous sunk cost.

Range Launch is a marvelous tool for the Marketing team to judge their decisions about what is to be in range. A fantastic tool for the Production team to decide quantities. Will it be 500 or 50,000? Or for the Management team to kill the item, because there were 16 pre-orders.

So Hornby raised the price, to account for all the additional costs to Hornby that were missed in the excitement of range launch.

Bee

[ColinB]

I hear what you are saying but it appears most other products do a market survey send it to a department that does all the cost estimation before they do the detailed design. Model railways seem to be unique in this concept. In Hornby's case if it costs too much to produce they just delay it and delay it. You can justify their methods until the cows come home, the end result is if you don't produce a product quickly enough you eventually go bust as you have nothing to sell and the public get fed up waiting.

[dh2807]

I too am glad I pre-ordered a set of Coronation Coaches now that prices have risen so sharply. I have said before on this forum that I wish Hornby would consider a scheme similar to Accurascale whereby on pre-orders you can pre-pay monthly over 6-7 months. This benefits the buyer by easing the costs instead of a large payment and benefits the manufacturer as they have a guaranteed sale plus the money upfront. Accurascale allow cancellation and full refund. I have 3 locos on order at Accurascale using this payment scheme.

[DarkRedCape]

@bee - if it worked the way you described this level of price rise would be a more common occurrence. If Hornby miscalculated by almost 30%, there are serious issues internally within the company.

Hornby have been doing this a long time, I don’t buy that they miscalculated because of the excitement of a product launch.

[ColinB]

We know they designed this product ages ago it was on their Yesterday program, so they pretty well knew the cost ages ago.

[Bulleidboy]

It goes to show that it is worth pre-ordering the moment a loco etc., is announced - you can always cancel at a later date. Although it may appear expensive at the time of the pre-order, after a possible two year wait, the price will have changed dramatically.

[What About The Bee]

Hi DRC

I say it is possible for mistakes to happen.

There are a very large number of items in every range release. How much time is devoted to each model in regards cost rollups? That is one very busy department!

Production was outsourced to China. Hornby doesn't own the production facilities, Hornby buys finished models from a vendor. They get to set the price to Hornby, not Hornby dictating price to the vendor. It is possible there is a disagreement, followed by negotiation. The vendor is not going to produce at a loss if they can help it. That increase will be passed along.

So is it possible to make a mistake? Sure. On every model? Of course not. The models I have pre-ordered have not experienced any price rise. 0%. I realize this is anecdotal and I have not surveyed the entire product line.

The alternative is to say mistakes never happen. I'll leave it there

Bee

[ColinB]

Of course Bee you have never noticed any price increase you pre order as I do because currently it fixes the price. As a company though it is not good practice to keep increasing prices without good reason, there becomes a point where you price yourself out of the market. I suspect there are a lot of companies that have jumped on the bandwagon by increasing prices above their increase in costs. Unless the product is absolutely necessary you find the public either doesn't buy it or switches to a cheaper brand. Big problem for Hornby is they are selling to a limited market who probably have previous versions of a particular loco. If they come out with a highly priced replacement for say a Flying Scotsman, even though it may have better detail a lot of people will stick with their old one or buy the previous version second hand. These Coronation Coaches are the exception they didn't exist before, so I suppose Hornby thinks captive audience, milk it for what it is worth. It didn't work so well with the APT, I got mine with £200 off.

[LTSR_NSE]

Since this price talk is mostly speculation, I’ll simply add that prices could need to change without any foolish mistake being made. If the production quantity has to be reduced, (either forced by vendor due to availability of production capacity/slot, or due to smaller customer interest than market research suggested) then production cost has to be shared between smaller quantity, increasing individual item cost.

The only way to avoid this would be to change to the pre-order before production model used by some smaller competitors.

[What About The Bee]

Hello ColinB

[Joke] I have CDO. That's the same as OCD, except all the letters are arranged properly.

So I do check the models I have on pre-order on a regular, regimented basis. I note each change in artwork, capturing it for study. I note each change in due date and price, recording this aling with the date of change. These are accurate facts describing my behavior. The only thing I have not disclosed is the frequency of my checks, because it is ridiculously, embarrassingly high 😁

Of course I pre-order. That is where the smart money is. Price rises do not affect us, but we must be patient.

As to the Coronation Coaches? They caught my eye! Gorgeous! I look forward to seeing them, but only on someone else's layout as they are decidedly not my focus. To your point, these aren't something produced before, thereby elevating the risk of a mistake. Smokey Joe cost rollup is probably known to 3 decimal places, possibly 4. Coronation Coaches not so much.

For those who pre-ordered, be happy that you should get them and be happy of your price. For the fence sitters, this is the conundrum. Your price just went up and maybe they will sell out.

As to clients in general? Its a tough business. Heavens above we are a terrible bunch to sell to. Every detail dissected. The prices criticized. The schedule criticized. youTube reviewers can make life miserable¹. Misinformation, handed wildly about.

The business model could stand improvement but it isn't as dire as it is made out to be. There is nothing nefarious going on here. Its just business. You charge what the market will bear. You attempt to recover cost and make a profit. If that doesn't meet the client demands, the public will go elsewhere.

Bee

¹example R60164. They are most clearly utility wagons, used extensively by all early railways. They are depicted in period drawings everywhere and Stephenson himself approved of the artwork of the Rainhill Trials, in which the wagons feature prominently. YouTube reviewers have called them "Rocket Tender Knockoffs", a disingenuously smarmy statement. They were used at the Trials specifically because they were available. They were NOT custom built for the occasion.

 

[LTSR_NSE]

@bee I completely agree with you regarding R60164 - it is highly likely (possibly even documented?) that Rocket’s tender for the trials was a modified wagon, so almost certainly they should be very similar (and therefore some YouTube criticism will be due to lack of knowledge). Additionally some criticism will be the result of production/tooling compromises - design choices/preferences are extremely subjective & YouTube is not always the most objective place!

Fortunately by doing some research (& watching a number of different personalities) it is usually possible to get a more reasoned picture of a model’s pros & cons - although how many are willing to do this Vs how many simply take their favourite’s review as gospel? Who’d want to be a manufacturer! 🤦‍♂️