by Asderiphel » Fri May 18, 2007 11:23 am
This is my last essay on this subject. It’s long, so forgive me.
The Classics line had a defined role (filler) and a defined budget. When the possibility of Wave 4 came up, I’m sure somebody in development said “Hey, we could do the additional seekers, a Sideswipe, and a bunch of other repaints” and somebody else, in upper management said, “We shut it down, because we’re not shipping anything new for two months prior to the movie toys. We want those shelves clear. We’re not going to compete with ourselves.”
What we can glean from Botcon is that there were 1050 boxed sets, + 400 loose, + a phantom ‘50' (50 unaccounted for sets that go to other retailers, con guests, etc) to come up with a total run of 1500. If we assume standard operating procedure for a small business venture, then we have to assume their working on a double mark-up (cost x 2). We’ll also assume that 66-70% of the boxed set price goes to administrative and con related expenses, and we come back to the loose bagged set price of $180.
$180 x 1500 sets = $270,000 divided by 2 (cost) = $135,000 divided by 5 molds = $27,000 per mold, cost or roughly $18 a figure on average. This model is based on the lowest possible profit margin, and the highest possible cost.
Now, I don’t know what Hasbro’s standard production run is, but I do know, based on store invoices (see Cujo’s Classic Devastator post waaay back), that the big retailers pay 70% of the retail cost. The standard clearance price on Target’s TF’s always come up at 30% off initially, so this theory seems to apply to all the big3 toy retailers.
The absolute lowest guess I can come up with is the rule of 2, that every major retailer gets 2 copies of a mass released figure. There are 1500 Targets, 1200 TRU’s, and over 4500 Wal-marts in the US alone. That would mean, at the least, every mass released mold has a production run of almost 15,000 (14,440) just in the United States. This example does not include K-mart, Freds, Wal-greens, etc...or any non-US market.
In the Classics example, for mass release (non-exclusives) there are 8 different characters, comprising 6 original molds, 1 repaint, and 1 retool (slightly reworked mold). Assuming the rule of 2, all of these figures were sold to mass market retailers for the sum of $806,400. If Hasbro also works on a double mark up strategy, we can assume:
$806,400 divided by 2 = $403,200 divided by 8 molds = $50,400 a piece divided by 14440 (the lowest number of figures on the market) = $3.49 apiece. This is the highest possible number Hasbro pays for a mass released TF s.
How much does a 30,000 figure run lower the cost? 50K? 100K? Based on the Botcon exclusive numbers versus the mass market assumptions, Hasbro gets nearly 10 times as many figures at roughly double the cost. I think that seems a little crazy myself, but there must be a cheap way to get these figures produced, because there are bootleggers all over China doing a good job at relatively low cost, so maybe these numbers aren’t too far off.
If we say that there are 75,000 figures pressed from any individual mold, and that Hasbro pays a flat $50,000 for 15,000 units, then they spend $250,000 per mold (x eight) for a cool 2 million. They would then pocket 2 million in profits. But this example is completely flawed, as the price that Hasbro pays for 75,000 figures should approach $125,000 (or far less, I’d guess), and give them a cost of $1.66 per figure. Add in a 25% mark-up for packaging, and Hasbro pays $2.10 per figure.
Which I still think is high. And repaints, conventional wisdom tells us, cost Hasbro less than the new molds. So are they half price? 1/4? If Bumblebee was produced at $2.85 a piece, was Cliffjumper produced at less than $1? I don’t know.
In order for Hasbro to ‘stop making profits’, they would have to press less than 5000 and sell them for less than $2.50 a piece. Hasbro earned over $640 million dollars last year, and holds the licenses on over a dozen high profile and profitable brands, including Marvel, Nerf, & My Little Pony. I’ve never seen the numbers for TF alone, but I think they made 154 million on Star Wars alone last year, but had to pay out 50+ million in licensing. We are talking about a company that, if the TF movie does well, could see sales top $800 million dollars next year. My numbers may be completely wrong, but Hasbro, rest assured, knows exactly what they are doing.
3 seekers don’t break the bank, or even cause them momentary financial concern. This decision had nothing to do with sales at the retail level. They didn’t want the hassle before the movie toys started shipping, wanted to keep their own shelf space clear at large retailers, and in the process, gave FP a great set of exclusives to drive up the interest for Botcon.
Done.
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