$8.99 will certainly end buying a carded set for me... ...Why raise the price? Why ruin a good thing?
Because corporate made them raise it. This was not a Hasbro Star Wars team decision to stick it to collectors, it was a corporate strategy to cover rising costs and keep the stock price looking pretty.
During the pre-Toy Fair Investor webcast, Hasbro confirmed that they have started enacting a prike hike on ALL of their toys, not just Vintage.
"Hasbro Inc (HAS.O), the No. 2 U.S. toy company, is counting on price increases to combat rising costs of commodities, freight and labor.
The company, which hiked prices by mid-single digits this month, said it will monitor the cost environment closely to see if it has to raise prices again before fall, CFO Deborah Thomas told investors ahead of the toy fair in New York."
Mattel is doing the same thing, planning price increases on all their stuff to cover increases in oil and chinese labor costs. It sucks, but unless you have a secret strategy for allowing Hasbro to make less money and then still keep investors and Wall Street happy, that's the way it is.
Working for manufacturer myself, I can appreciate the need to increase prices as commodities increase. The price of most CPG items are on the rise these days, so an increase by itself isn't a big shocker. For me, it is the amount of increase with each wave that is disturbing. Most companies use these types of economic conditions to not only offset rising costs, but sneak a little padding into the margin. After all, it is far easier to increase your price when everything else is increasing and you have an excuse - far harder when you're the only brand out there asking for more money.
But when prices rose from $5 to $6, that was a 20% increase in price. I'm no expert in action figure cost structure, but I can all but guarantee their cost of goods didn't suffer by 20% five years ago - probably not even half that. Move up to current times and you're seeing price tags move from $8 to $9 or $10 (or more) at some chains. That's an increase of 13 to 25% over last year! I don't know of any other product that sees those kinds of heavy increases all at once (except Kubricks I suppose
). Basically we are paying for an extra figure now with every wave of 4 characters! Here's food for thought:
If Hasbro were selling $3.50 gallons of milk last year, you'd suddenly be paying $4.38/gallon in 2011. Kids, you can have water.
If Hasbro made $500 flat screen TVs last year, That TV just increased in price another $125. Guess I won't be watching TV while drinking my water.
If Hasbro sold $20,000 cars a year ago, that same car would now cost you $25,000 a year later!!! Forget 0% financing, you better start including -5% financing.
These kinds of increases are just ridiculous. Lets say action figures have an average elasticity of -1, which essentially means you're going to lose the same percentage of sales for every percentage increase in price. So, if Hasbro's cool with losing 25% of their sales, I guess they're just fine raising the prices from $8 to $10. I know I'd be much happier with one or two $.25 increases throughout the course of the year and would bet most people wouldn't even blink at it in the short run. Heck, they'd probably be past $10 per figure with a policy like that and still have less people upset about the cost.
