Budget Stark - Why do Hot Toys figures cost more now, than 5 years ago.

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Budget Stark

Budget Stark

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Hi Guys

I see this topic coming up all the time in forums and facebook, so I thought I would do a short video from a business aspect on this topic.

Thanks for watching.

 
People need to understand EVERYTHING GOES UP ON PRICE, cost of living is relevant to time, my maintainence fees go up, food prices, gas prices and none of those things necessarily go up in quality or get better over time, so how do they expect these price to stay the same over time is unrealistic
 
Nice vid! Prices may be higher but then so is the figure quality, case in point...

image.jpg
 
Just throwing some numbers around, I bought a War Machine Mk I around 4 years ago for £140. Now if you bought the latest Iron Man which would be the 43, those are selling for around £250 so that's an increase of around 78% over 4 years. Food for thought.

Of course there's things like inflation, cost of more expensive materials like diecast and therefore more R&D, increase costs for licensing etc.
 
Dave_W said:
Just throwing some numbers around, I bought a War Machine Mk I around 4 years ago for £140. Now if you bought the latest Iron Man which would be the 43, those are selling for around £250 so that's an increase of around 78% over 4 years. Food for thought.

Of course there's things like inflation, cost of more expensive materials like diecast and therefore more R&D, increase costs for licensing etc.
Click to expand...

Hi Dave

This is a perfect example of territory variations. The MK43 in HK will be around GBP 185 direct from Secret Base Hot Toys, if you tried to buy a WM 1.0 now, it is around GBP 330.

Geographical variance places a big part, as certains lines in HK get no love eg Predator and Star Wars in particular!
 
Dave_W said:
Just throwing some numbers around, I bought a War Machine Mk I around 4 years ago for £140. Now if you bought the latest Iron Man which would be the 43, those are selling for around £250 so that's an increase of around 78% over 4 years. Food for thought.

Of course there's things like inflation, cost of more expensive materials like diecast and therefore more R&D, increase costs for licensing etc.
Click to expand...

So Dave you can sell your WM 1.0 to fund your MK43 with change to spare!
 
Dave_W said:
Just throwing some numbers around, I bought a War Machine Mk I around 4 years ago for £140. Now if you bought the latest Iron Man which would be the 43, those are selling for around £250 so that's an increase of around 78% over 4 years. Food for thought.

Of course there's things like inflation, cost of more expensive materials like diecast and therefore more R&D, increase costs for licensing etc.
Click to expand...

I dunno definetly there is the price increase but on some items its much more then others. I paid $170 for the borg lost predator seven years ago and recently paid $259 for the terminator t800 battle damaged figure. Other figures theres quite a price jump like the original bank robber joker I paid $139 in 2008 now the 2.0 is retailing at $249. In General though the figures have leapt up in price for about $100 in the last six to seven years.

I suppose the more licences HT gets the more it needs to increase prices to justify the cost of figure licenses which don't do so well so that too could explain the price rise.
 
Nice video, had no idea RDJ's demands could have been that high just for a likeness of him.
 
I've been saying this stuff for awhile now. Great vid. Not everything was spot on but pretty close. And don't forget that some figures require additional licensing fees..like xmen. Not only the actors and marvel, but the movie studio as well. Though not every actor or film has the actor likeness fees paid by hot toys. The majority of the time the actor negotiates with the movie studio at the time they agree to be in the film for likeness rights regarding that film and character(so say RDJ would get paid by marvel for rights related to iron man 1 when he got paid for the film..and then again on IM2, ect) and then the studio or licensing holder would take that into account when negotiating the rights for a company like Hot Toys. Certain actors can negotiate or do negotiate that any likeness would need further fees or approval (usually it's approval more then money so they don't end up on a sex toy or something crazy). But generally for likeness rights it's just the studio.

Sometimes though an entire film has no actor likeness rights secured, for a variety of reasons. Sometimes it's that they never thought they would be used (older movies or smaller budgets) and sometimes they have expired or been sold off or a ton of other stuff. But for marvel collectors the deal between Fox and marvel has been such a hot point that fox has started not securing or paying likeness fees on purpose to the actors because they get so little in return(plus to push back) thus meaning the likeness rights for the xflicks are they most complicated in the genre at this time. And it's not even close. Anyone that wants to make a product needs licensing rights from fox for the movie names and characters and what not, from marvel for overall character likeness and trademark (fox owns the movie name and script details and costume rights where marvel owns the characters and overall rights) and then each individual actor has likeness rights to deal with. And given that fox wrote into the contracts they where not compensating the movie actors for merch rights that means the actors would be required if they signed the rights over to also compensate their own camps depending on contract wording (agents and or management companies). Where as if those fees where written into the movie compensation packages and they only had approval as is the case with most actors and films, then no fees to the actor and his management.

And Budget Stark didn't even touch on a cost that is often as much or equal to licensing on some figures...tooling. The more complicated and more pieces a figure has...including the base, and accessories and weapons..the higher the tooling cost. Outside of licensing its the largest cost for a figure. And for something like the Hulkbuster it will be higher then the licensing. For a six inch figure it can cost over 100k for tooling. Just as an example.
 
I'm a collector in HK as well. Nice video and most points are quite valid. However rent has not gone up by 40% in Sino, I rent commercial space in the same area so I know. That said, a few years ago HT used Toy Hunters to distribute their figures and they likely didn't have to pay as much rent since they were likely just paying a fee or rent sharing with Toy Hunters. So the increase in rent expenditure is indeed valid but how much so is arguable.

The biggest factor IMHO is that manufacturing in costs in China have really gone up in the past few years. Everything has spiked with the manufacturing process in particular the wages paid to workers in China. Minimum wages as well as work benefits have really increased in the last few years. Cost of raw materials has also increased as has rent.

The budget they spend for shows has also increased, HT derives much of its marketing and exposure from shows and displays. I can count no fewer than 4 convention and mall displays this past year in HK alone.

But the obvious reasons can not be discounted as well. HT is a business. Business is all about supply and demand. Demand for HT has really taken off in the last couple years since the big blockbusters have come out. HT has gone from a niche business to mainstream now. Most of my friends own, has heard of, or knows someone who owns a HT. This wasn't the case some years back. When figures are a hit and flying off shelves then its only smart business to increase prices a bit. Its just common sense.

While its nice to logically deduce and discuss, at the end of the day only the owner knows what the numbers are...everything else is pure speculation. I for one will continue to buy HT for the time being, I don't think the increase in costs is unreasonable. After all, value is relative to the individual.
 
Motuxmen said:
I've been saying this stuff for awhile now. Great vid. Not everything was spot on but pretty close. And don't forget that some figures require additional licensing fees..like xmen. Not only the actors and marvel, but the movie studio as well. Though not every actor or film has the actor likeness fees paid by hot toys. The majority of the time the actor negotiates with the movie studio at the time they agree to be in the film for likeness rights regarding that film and character(so say RDJ would get paid by marvel for rights related to iron man 1 when he got paid for the film..and then again on IM2, ect) and then the studio or licensing holder would take that into account when negotiating the rights for a company like Hot Toys. Certain actors can negotiate or do negotiate that any likeness would need further fees or approval (usually it's approval more then money so they don't end up on a sex toy or something crazy). But generally for likeness rights it's just the studio.

Sometimes though an entire film has no actor likeness rights secured, for a variety of reasons. Sometimes it's that they never thought they would be used (older movies or smaller budgets) and sometimes they have expired or been sold off or a ton of other stuff. But for marvel collectors the deal between Fox and marvel has been such a hot point that fox has started not securing or paying likeness fees on purpose to the actors because they get so little in return(plus to push back) thus meaning the likeness rights for the xflicks are they most complicated in the genre at this time. And it's not even close. Anyone that wants to make a product needs licensing rights from fox for the movie names and characters and what not, from marvel for overall character likeness and trademark (fox owns the movie name and script details and costume rights where marvel owns the characters and overall rights) and then each individual actor has likeness rights to deal with. And given that fox wrote into the contracts they where not compensating the movie actors for merch rights that means the actors would be required if they signed the rights over to also compensate their own camps depending on contract wording (agents and or management companies). Where as if those fees where written into the movie compensation packages and they only had approval as is the case with most actors and films, then no fees to the actor and his management.

And Budget Stark didn't even touch on a cost that is often as much or equal to licensing on some figures...tooling. The more complicated and more pieces a figure has...including the base, and accessories and weapons..the higher the tooling cost. Outside of licensing its the largest cost for a figure. And for something like the Hulkbuster it will be higher then the licensing. For a six inch figure it can cost over 100k for tooling. Just as an example.
Click to expand...

Motuxmen

Great points and it would appear you have a great knowledge of the processes and workings. I am not involved in this processes at all so the finer detail I dont have explicit knowledge of. This was just what I picked up from speaking to other collectors and my previous knowledge in certain businesses.

Thanks for your detailed info. I enjoyed learning more :)
 
justme said:
I'm a collector in HK as well. Nice video and most points are quite valid. However rent has not gone up by 40% in Sino, I rent commercial space in the same area so I know. That said, a few years ago HT used Toy Hunters to distribute their figures and they likely didn't have to pay as much rent since they were likely just paying a fee or rent sharing with Toy Hunters. So the increase in rent expenditure is indeed valid but how much so is arguable.

The biggest factor IMHO is that manufacturing in costs in China have really gone up in the past few years. Everything has spiked with the manufacturing process in particular the wages paid to workers in China. Minimum wages as well as work benefits have really increased in the last few years. Cost of raw materials has also increased as has rent.

The budget they spend for shows has also increased, HT derives much of its marketing and exposure from shows and displays. I can count no fewer than 4 convention and mall displays this past year in HK alone.

But the obvious reasons can not be discounted as well. HT is a business. Business is all about supply and demand. Demand for HT has really taken off in the last couple years since the big blockbusters have come out. HT has gone from a niche business to mainstream now. Most of my friends own, has heard of, or knows someone who owns a HT. This wasn't the case some years back. When figures are a hit and flying off shelves then its only smart business to increase prices a bit. Its just common sense.

While its nice to logically deduce and discuss, at the end of the day only the owner knows what the numbers are...everything else is pure speculation. I for one will continue to buy HT for the time being, I don't think the increase in costs is unreasonable. After all, value is relative to the individual.
Click to expand...

Good points you mentioned there.

I am not familiar with Sino rental costs, but as Secret Base only been there 1 year, that space alone is a large amount of new rental expense compared to a few years back. How much do you think Secret Base alone cost them monthly for about 2000 square feet?, HKD 40,000, 50,000 less/more?
How much protection money do you reckon they pay to the locals? ;)

My company used to rent a commercial space on Argyle Street and our company rent on 750 square feet has risen over 35% in 4 years.
 
Costs always go up, it's just a fact of life..., greed is also a factor though, there's always the desire to increase profits, no company in business ever wants to make less than they did the previous year so putting prices up ensures that won't happen..., share holders can tend to want to see a return in their investments (& rightly so) & if it's not a share holder company then the board want to see results, either way there's always someone looking to increase profits. It's never just about things costing more!
 
Video could've used some visuals and examples but nonetheless a good launching point for this ongoing debate.

A few things from me:
- Excellent point on licensing, and the RDJ fee explains why HT is making a boatload of IM/Stark figures. Not sure if licensing costs as a whole are going up dramatically though, could've used some numbers or examples to illustrate that. From the little exposure I have to the licensing world, I haven't seen dramatic increases in licensing fees over the last 5 years, but maybe for Marvel specifically there's been a huge jump, perhaps after Disney took over (more negotiating power).
- Motuxmen touched on tooling, further expanding that point, tooling costs are per figure line, and we've seen a pretty large increase in HT's assortment over the last 5 years (not counting the IM3 variants). Price increases help to reduce the break-even unit sales per figure line.
- Cost of living increases typically average 2-4% a year, a very minor increase factor; would be better to look at cost of raw materials for HT over this period, I'm not a manufacturing or plastics expert but just looking at all hardline toys across the industry, I don't see a massive spike in toy prices across all manufacturers, so I presume it hasn't been dramatically more expensive for toy makers since 5 years ago.
- I think Anthony was using HK rent as an example but rent increases are not a valid reason - as consumers we can live with price increases as a result of COGS increases (i.e. raw materials, tooling, licensing) but passing through fixed expense increases is not a particularly acceptable practice from our POV; afterall, HT has the option of relocating to get away from high rent or downsizing their Secret Base showroom.
- Anybody who believes that HT's operating income margins as a % of revenue hasn't increased in the last 5 years needs to put the pipe down. Some of this price increase is cost pass-through sure, but HT is most certainly extracting more $s from consumers. I have no problem with this, companies need to show growth, and as long as consumers continue to pay whatever prices HT is charging, they have every right to keep jacking up the price until consumers start saying no with their wallets. If anything I think the issue was that HT's MMS prices were too low 5 years ago, and they've since been playing catchup.
 
third3ye said:
Video could've used some visuals and examples but nonetheless a good launching point for this ongoing debate.

A few things from me:
- Excellent point on licensing, and the RDJ fee explains why HT is making a boatload of IM/Stark figures. Not sure if licensing costs as a whole are going up dramatically though, could've used some numbers or examples to illustrate that. From the little exposure I have to the licensing world, I haven't seen dramatic increases in licensing fees over the last 5 years, but maybe for Marvel specifically there's been a huge jump, perhaps after Disney took over (more negotiating power).
- Motuxmen touched on tooling, further expanding that point, tooling costs are per figure line, and we've seen a pretty large increase in HT's assortment over the last 5 years (not counting the IM3 variants). Price increases help to reduce the break-even unit sales per figure line.
- Cost of living increases typically average 2-4% a year, a very minor increase factor; would be better to look at cost of raw materials for HT over this period, I'm not a manufacturing or plastics expert but just looking at all hardline toys across the industry, I don't see a massive spike in toy prices across all manufacturers, so I presume it hasn't been dramatically more expensive for toy makers since 5 years ago.
- I think Anthony was using HK rent as an example but rent increases are not a valid reason - as consumers we can live with price increases as a result of COGS increases (i.e. raw materials, tooling, licensing) but passing through fixed expense increases is not a particularly acceptable practice from our POV; afterall, HT has the option of relocating to get away from high rent or downsizing their Secret Toys showroom.
- Anybody who believes that HT's operating income margins as a % of revenue hasn't increased in the last 5 years needs to put the pipe down. Some of this price increase is cost pass-through sure, but HT is most certainly extracting more $s from consumers. I have no problem with this, companies need to show growth, and as long as consumers continue to pay whatever prices HT is charging, they have every right to keep jacking up the price until consumers start saying no with their wallets.
Click to expand...

These two items are absolute drivers. Licensing is the most costly expense for HT outside payroll. The price of resins, oil and heat has raised considerably. Go to Target and check Star Wars 3 3/4 figure prices. The have probablly raised 30-40 % in the last 5 years.

Rent is a real cost. Not accountable to channel margin, however for EBITA it is a real expense and a component in calculating pricing. Most profitability systems will analyze PPE and account for allocations when calculating go to market prices.
 
I'm just bored with the whole price debate in every HT thread. I'll break out the old cliche that I myself hate so much but which undeniably has a bearing here with regard to the price issue - don't like it, don't buy it. Cut back, stop trying to collect everything, stop being a completist.
 

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