Any chances of seeing 12" Marvel retro figures?

[MIB41]

Thanks Zach. That last response really nailed the essence of what I was looking for in my inquiry. I appreciate you giving the time to respond to each of my questions and understand where I was coming from. We're all good.

[DSTZach]

The reason we have a license requirement and no one else does, is because we are the only company with this license. Figures has an 8" license with DC, we have an 8" license with Marvel. The two companies do things differently -- DC has an in-house toy company, plus a line with Square and line with Figures. But besides Hasbro, the master toy licensee, I don't know of any company currently licensed to make Marvel action figures under 12 inches and $100 besides possibly Figma, and I don't know what their deal is. It's probably only because we've been making Marvel Select figures since 2002 that the conversation even happened.

I apologize for misunderstanding your point. If your point was just that the suggested retail price is not mandated by the manufacturer, and only "suggested," then you must be right, based on what we've seen. But how much we sell it for, which as you've seen can vary slightly -- probably based on order size (also common) -- has a strong bearing on the retail price. And you are right, I am not entirely sure if the restriction is on how much we can sell it for wholesale or how much our suggested, non-mandatory retail price is. But as I said before, one is a simple mathematical function of the other, so the point is moot. Either way, we are definitely limited by the restriction, even if retailers have some wiggle room with how much they charge.

Apologies if I have offended you -- I am not personally offended, aside from the suggestion that we are charging/suggesting/artificially manufacturing this price to somehow cheat money out of Mego collectors. We're trying to make a product collectors will want, the best way we can within the terms of the deal, which only we seem able to get. Feel free to write in to Ask DST, where the president of DST will be happy to share whatever details he thinks he can share. http://www.artasylum.com

[MIB41]

MIB, I appreciate your passion to prove me wrong! But if you know what a profit margin is, then you know that higher price point items have a higher profit margin, because a store has to make bigger investments to reap those profits. Profits are based on dollar amounts, not units. How much does a dealership make on a car vs. how much they spend to get it on the lot? A lot. Do they make the same on every model? Of course not. Do some dealerships have crazy sales? Yes.

If you know how much we're paying in licensing, AND you know how much we pay EMCE to develop each set, AND you know how much it takes to manufacture the set we're offering, AND you know how much it takes to run a brick-and-mortar store, then MAYBE you could figure out how much profit we make, how much EMCE makes and how much the store makes, but I assure you it is not some giant bag of money with a dollar sign on it.

If we sell all 3,000 of each set, and a store sells every set they order in, it will all add up, but that's true with any item. That's true with a $4 Lego figure. And we are hoping we sell out, and pre-orders are healthy, but it's not like we pre-sold out the run instantaneously, as far as I know. If you're suggesting that the $80 price point is imaginary, then feel free to believe whatever you like, but I don't think I've said anything that suggests that. There is no price fix in place. Like I said, these wholesale discounts are pretty standard. We knew how much we had to charge a retailer based on the licensor's restrictions, we figured out how much we were able to spend in order to charge that, and we put in as much stuff as we could at that price point.

And you still haven't said WHERE you got your wholesale info from, so I have to take it with a grain of salt. You can only order these figures through a retailer, or someone with a retailer account. THEY can only order them through a Diamond Comic Distributors, or a subdistributor. And Diamond can only get them from DST. So the pricing before the SRP going to be the same, for the most part. Maybe Diamond offered a case discount at some point, I have no idea. (They are sold individually, as well as by the case.) If a retailer wants to make less or no profit on an item (which is what you're doing when you sell a $40 wholesale item for $45), that is their prerogative, it doesn't change what our license allows us to do. If someone wants to cancel their order with DST and get it from EE, or BBTS, I give them my blessing, but we will not undercut the SRP on our site.

Does Figures talk about how much it costs to make their figures, and how much they sell them for? I'm fairly certain you'll see a similar pattern.

Zach I didn't come here to "disprove" anything you said. As a matter of fact, the quote I referenced never came from you. All I did was ask some questions from which you answered them with a number of examples that were not applicable to DST's position since they are not a walk in store like Walmart with 4,800 location in the US alone. Quite a bit of purchasing power there. I always stated that I felt your price point was configured from the cost of the license and manufacturing which your replies repeatedly supported. My hypothetical was simply offered to illustrate no one was married to this much advertised cost that raised some eyebrows. That prompted me to ask you why you have a license requirement and no one else does.

Typically when you see that, it's universal, not company specific. That was the nature of my inquiry. I'm disappointed you feel so much contempt for me asking what, quite frankly, is a relevant question to a provocative price point that was anchored with this licensing explanation. Obviously those involved in the making of it, felt the price point needed explanation. I asked honest questions and to your credit, you gave your own synopsis of the structure as you are aware of it. Obviously you're not informed on all aspects as you honestly admitted. If you're suddenly waking up to a conspiracy theory, well I can't help you there. Numbers speak their own truth and I thank you for an engaging discussion.

[DSTZach]

MIB, I appreciate your passion to prove me wrong! But if you know what a profit margin is, then you know that higher price point items have a higher profit margin, because a store has to make bigger investments to reap those profits. Profits are based on dollar amounts, not units. How much does a dealership make on a car vs. how much they spend to get it on the lot? A lot. Do they make the same on every model? Of course not. Do some dealerships have crazy sales? Yes.

If you know how much we're paying in licensing, AND you know how much we pay EMCE to develop each set, AND you know how much it takes to manufacture the set we're offering, AND you know how much it takes to run a brick-and-mortar store, then MAYBE you could figure out how much profit we make, how much EMCE makes and how much the store makes, but I assure you it is not some giant bag of money with a dollar sign on it.

If we sell all 3,000 of each set, and a store sells every set they order in, it will all add up, but that's true with any item. That's true with a $4 Lego figure. And we are hoping we sell out, and pre-orders are healthy, but it's not like we pre-sold out the run instantaneously, as far as I know. If you're suggesting that the $80 price point is imaginary, then feel free to believe whatever you like, but I don't think I've said anything that suggests that. There is no price fix in place. Like I said, these wholesale discounts are pretty standard. We knew how much we had to charge a retailer based on the licensor's restrictions, we figured out how much we were able to spend in order to charge that, and we put in as much stuff as we could at that price point.

And you still haven't said WHERE you got your wholesale info from, so I have to take it with a grain of salt. You can only order these figures through a retailer, or someone with a retailer account. THEY can only order them through a Diamond Comic Distributors, or a subdistributor. And Diamond can only get them from DST. So the pricing before the SRP going to be the same, for the most part. Maybe Diamond offered a case discount at some point, I have no idea. (They are sold individually, as well as by the case.) If a retailer wants to make less or no profit on an item (which is what you're doing when you sell a $40 wholesale item for $45), that is their prerogative, it doesn't change what our license allows us to do. If someone wants to cancel their order with DST and get it from EE, or BBTS, I give them my blessing, but we will not undercut the SRP on our site.

Does Figures talk about how much it costs to make their figures, and how much they sell them for? I'm fairly certain you'll see a similar pattern.

[MIB41]

It's not that handsome of a payday if you figure in what they had to pay for the license, what they have to put back into producing more figures, paying artists and sculptors, shipping stuff and so on.

This was the statement that essentially accompanied the price tag - "The condition of the license is 1 character, 1 body, $80 retail price." That's about as black and white as you get. But after my discussion with DSTZACH, that's not what was stated at all. He took ownership to the huge markup and then went on to talk about the profit margin as it applies to costs from each merchant (very much in the same way you just did). The reason why you put a price restriction to a shared license is to not encroach on the pricing market of your competitor. But if I can take a $40 item at wholesale and mark them up to only $45 (even $50), then I'm nowhere close to the targeted price point of $80.00. Not even in the same zip code. So how can there be a license restriction on pricing if dealers are not bound to it? Pricing restrictions are very common. How DSTZach is unfamiliar with that is beyond me. So that's why I asked the question. It didn't make sense.

The bottom line is anyone who can buy wholesale, can undercut these guys by enormous amounts, effectively eliminating the relevance of the SRP. Which means any potential buyer who thought they HAD to buy it at that high price point can just skip Diamond Select and go through any myriad of dealers who choose to undercut their pricing by significant measures. And from DST's perspective, they're getting wholesale profit anyway from the dealers who buy directly from them to sell. So the $80 SRP is essentially toothless as far as license enforcement to that price point. And anyone who signed up to prepay that high price should realize this product could be shopped and bought for much less.

[jayraytee]

It's not that handsome of a payday if you figure in what they had to pay for the license, what they have to put back into producing more figures, paying artists and sculptors, shipping stuff and so on.

My brother and I run a band's website, the band is made up of 4 to 6 guys. They put out a CD about once a year, the lowest number of CDs you can manufacture is 1,000 and depending on how many pages the book has... they might run about $1.50 each to print, and we sell them for $15.00 each. So for a $1,500 investment you make $15,000. It would seem like a handsome payday.... but if you factor in a licensing fee of $8,000 that leaves $7,000 to divide by 4 to 6 guys. And thats not counting all the overhead for the website, shipping, and paying other people involved. Its really quite bad. If they only sell 1,000 copies they make less than $1,000 each once a year. I would imagine there is a much higher licensing fee with Marvel, probably a lot more people involved to divide the 'profit' by and the manufacturing costs are probably well over that of a CD. If the market is limited, and they only produce the figures in limited quantities.... you might have to charge a lot more just to break even or make any profit at all.

[MIB41]

^^^ Thanks for getting back with me DTSZach. Regarding my wholesale quote, that price is dead on based on a three to a box offer at the wholesale level (total for three being $120.00). So the SRP markup from $40.00 is 100%. There's no getting around that. What you referenced later in your response is called a profit margin. Your examples with Walmart don't apply to this price structure since we're not talking about a brick and mortar setting, plus purchasing volume at Walmart's level would dramatically lower the wholesale cost, which in turn lowers the retail charge. DST is a distributor of both wholesale and retail products, so they already have the advantages you alluded to. And since we're on the subject of profit margins, those markups account for profiting after prices get discounted as well.

I appreciate your time though and surprising candor for sharing your perspective on the pricing strategy of this product. I think what you've said makes it crystal clear why everyone involved in this product are so enthusiastic and hungry to make more. That's a handsome payday, even if you sell only half of what you produce. And as you illustrated many times throughout our discussion, there was no one at the licensing level making you charge this price. You backed up what I originally stated which was the price came from assessing the cost of the license and the profit you wanted to make over and above that in manufacturing. Thanks again for your frank and open input on this matter.

[DSTZach]

I don't think that wholesale price is correct, it sounds a little low -- but not ridiculously low. I don't know what the wholesale/retail relationship is like in the auto industry, or the grocery business, but I'm pretty sure a 40% discount is average for most small goods, like books and toys. Now, you can call that an 80% markup if you like, but most of that price difference is needed to pay for the retailer's rent, staff, shipping costs, advertising, etc. (I don't know if all of that technically falls under "overhead," but let's say it does, for brevity's sake.)

We're not forcing the retailer to charge more than wholesale, we're giving them a wholesale discount so they can buy our toys, get them into the hands of consumers, and, by selling them, pay for their overhead. The retailer's operating costs determine how much of that discount they can pass along to the consumer without eating into their profit. If if a retailer can charge less than SRP, then maybe they have low overhead (a one-man eBay store), or have to compete by offsetting customer shipping costs (any e-retailer), or maybe they simply buy and sell at a very high volume (Walmart). If they have to charge more, they may have high overhead (mall store) or are paying international shipping and import duties from another country (non-U.S. retailers).

But no matter what they charge, only a fraction of that price difference is actually "profit" to them. The rest goes to paying the bills on the place where you go to buy your toys.

Sorry, that was my layman's explanation of how wholesale/retail works.

[enyawd72]

$40 wholesale versus $80 retail?

Very interesting...

[MIB41]

We offered our 18"Deadpool a long time ago, and our contract may have changed since then. And orders on DP were low initially, maybe they'd be better now, but we also don't have any other active 18" lines any more, so...

I don't think there's any way to dictate how much a retailer sells something for, since every store has different overhead costs and discounting timelines. But whether the price requirement is on our wholesale price or our SRP, the end result is the same, since one is based on the other.

That's especially interesting because the wholesale price to dealer is only $40.00 per set. Now clearly the wholesaler has a markup to the dealer, but if we examine just the wholesale cost to dealer alone at $40.00, then compare with your SRP, that's a 100% markup from the wholesale price to retail. So I guess I remain perplexed as to why you're charging so much when there's no price fix at the wholesale level to indicate a reasonable markup would place a dealer at your SRP. Even the $69.99 price by others is a 70% markup, which explains why they had so much room to change that price point and still profit nicely. I would certainly invite you to offer a better explanation to clarify why there's such a huge discrepancy from wholesale to retail.

[DSTZach]

We offered our 18"Deadpool a long time ago, and our contract may have changed since then. And orders on DP were low initially, maybe they'd be better now, but we also don't have any other active 18" lines any more, so...

I don't think there's any way to dictate how much a retailer sells something for, since every store has different overhead costs and discounting timelines. But whether the price requirement is on our wholesale price or our SRP, the end result is the same, since one is based on the other.

[MIB41]

Our SRP is $80. It's what our distributor's discounts are based on. Retailers can charge whatever they want, so if they don't think they can sell it for $80, but want to have it in their shop, they may charge less. Many retailers regularly offer competitive pricing on their products.

I do not know if 12-inch is an option for us. I would imagine not, but perhaps. The president of DST, who signs all these deals, went after this license and loves Marvel, answers all questions submitted to Ask DST at artasylum.com. Link is at the top of the page. His columns come out weekly or biweekly.

Hmmm. What you said really only reinforces what I was thinking. Because an SRP is different from an MIR (manufacturer-imposed requirement). If the license was restricting you on what you could sell it for, then you would have to impose an MIR on the dealers to satisfy that requirement. If you're offering an SRP, with no price restriction to the dealers, then you're not bound by one price point on the license. It's open to whatever profit margin the dealer wants to make from wholesale cost. So the SRP sounds more like a calculation based off the costs associated with buying the license and making the product itself, than a restrictive clause within the license. If Hasbro was trying to keep you priced out of the market they were selling to, why offer the loophole to break the price restriction and do exactly that?

[ovenmitt]

DSTZach,

What about 1/4 18 inch Marvel cloth costumed figures like DST was once going to make?

[DSTZach]

Our SRP is $80. It's what our distributor's discounts are based on. Retailers can charge whatever they want, so if they don't think they can sell it for $80, but want to have it in their shop, they may charge less. Many retailers regularly offer competitive pricing on their products.

I do not know if 12-inch is an option for us. I would imagine not, but perhaps. The president of DST, who signs all these deals, went after this license and loves Marvel, answers all questions submitted to Ask DST at artasylum.com. Link is at the top of the page. His columns come out weekly or biweekly.

[madmarva]

I've never quite understood the explanation on the $80.00 price point being a licensed requirement since Amok has it listed for $69.99. How can you have a "sale" on a price restrictive product?

http://www.amoktime.com/ds0421001.html

The $80 price point is the suggested retail price. The lowered price at the on-line outlets is a reduction of the on-line retailer's profit. It's just like what Best Buy, Wal-Mart and Amazon do with various items such as DVDs, books, CDs and what not.

I'm guessing Hasbro set the price at a point in which it believed the product would not be in competition with its other mass-market and possibly specialty-store figures.