Market Dynamics at Work: Consumer vs. Supplier

Guess I should have taken more business classes for my electives way back. Maybe I would understand better how Lionel determines their price point for a set like that. I imagine the very high MSRP gives dealers more latitude in what they charge but it presumes an awful lot about what people may be willing to spend. I am a huge fan of Lionel's top of the line products detail, quality and performance. But I just could not justify that kind of expenditure for an engine and 4 car set. Right now I'm fussing about whether I should spend $399 (OBO + free shipping) for a new MTH PS2 starter set because I want the SW 1500 switcher that comes with it. And that gets me the engine, cars, track and a power supply! Or there's a MTH Premier version of that 0-8-0 switcher that I found for $489 shipped and I know the overall detail and quality will be at least as good as the Lionel engine.

Can I afford that Lionel set? Yes. Can I justify that price? No way. Would I buy it if it popped up later on at $850 or so. Not sure. I'm just glad for the enormous price flexibility in this hobby that results in new and excellent quality used products popping up for sale at much less than the original MSRP.

IDK re the MSRP. For those PAx sets of the Broadway Ltd. and the AFT, I am on the fence. We are talking LONG 21" pax cars that limits the layouts they can go on plus will the window configurations be correct. I asked the Lionel Sales rep at Amherst show regarding them. His sttement is with the plastic they have enormous felxibility to customize the cars . I took that to meant they are not doing  old school "Cookie Cutter" windows on these expensive passenger cars anymore.

BTW, they had the NYC Empire State Express cars there as well as the PRR Pa-1 A-B-A and they looked sharp!

I was thinking about ordering the New Allegheny but the price is way to high in my opinion. I will wait for the secondary market or buy the MTH version.

prrhorseshoecurve posted:

IDK re the MSRP. For those PAx sets of the Broadway Ltd. and the AFT, I am on the fence. We are talking LONG 21" pax cars that limits the layouts they can go on ...

Aside from the fact that Lionel has switched materials from aluminum to ABS (with associated re-tooling costs), the price points for the passenger cars have remained somewhat steady.  Also keep in mind all the cars based on baggage car tooling (i.e., most of the AFT cars, UP Excursion flag and power cars) will be 18" in length.

Friendly tip... I would definitely pre-order the UP flag car 2-pk (or the whole train) if you're interested.  'Cause those are sure to sell quickly, and they're not BTO.  So order early!!!

David

My personal interpretation of Lionel's current....and absurd....pricing philosophy:

It's literally....and simply...."how much can we keep raising our already high price points...and still sell our products?" and "How far can we go until we have no loyal customers left?"

Remember, Lionel is currently owned by a Private Equity Firm.  This is very important to bear in mind.  The General Partner or Managing Member of a PE Firm gets paid a management fee to generate as great of a rate of return as possible for its limited partners or members.  BTO is really an attempt to make as few of the BTO products as possible (reduce total variable costs) while the current prices are an attempt to generate as large of a profit margin as possible.  THIS IS NO ACCIDENT!!!  The goal of the current pricing model is to generate as large of an ROI (return on investment) as possible......which is in stark contrast to simply "generate as much money as possible".  (The latter would involve making more units of a product to reduce the per product cost and then selling as many as possible....enjoying additional economies of scale that would drive the cost of individual items down.)  The latter is what I feel many of us would much prefer.

IMHO, this is a BIG, BIG mistake (are you listening, Mike Reagan?) that will only work in the short term.  In the long term, Lionel's current pricing model is toxic....unless they continue to innovate in a way that drastically differentiates their product from the competition.....and maintain/use those innovations.  Whistle steam alone won't cut it.  (BTW:  Selling products at a significant premium typically assumes the products arrive in tact, fully functional....and with repair parts readily available.)

Put in street terms, here is where Lionel is at:  On the price front, there is no reason why Lionel's products should cost so much more than MTHs equivalent product....whistle steam be ****ed.  As of right now, Lionel's prices are so high that they are not in the same zip code as MTH.  (It will be "nice" to be an MTH Dealer over the next few years.  Not so much so for the Lionel ones......IMHO.)

Lionel's pricing is starting to approach that of Sunset/3rd Rail....yet the detail and quality of Lionel is nowhere near what Sunset/3rd Rail currently offers.  Granted, Lionel owns the "operating system".

Lionel is literally in an untenable position:  roughly the same quality as MTH at significantly higher price points......and priced near Sunset Models but without the quality, detail, and accuracy expected at those price points.

If Lionel wants to rapidly lose market share and price themselves out of the hobby, they are well on their way......IMHO.

Their ROI will remain high...but their bottom line will begin to shrink.  And shrink.  And shrink.

p.s. - As the Economy ebbs and flows, BTO and Lionel's current pricing will be hit remarkably hard when the next Recession hits.   Bank on it.

Boy this doesn't sound good at all.  I am beginning to get a little concerned cause it sounds like Lionel will be out of business next year for sure.  Personally, I hope they have produced plenty of that elusive tubular track before they close their doors.  I am thinking about expanding my layout and don't want to get stuck without a source for tubular track, new or used.  I wonder what kind of musings were offered back in the late 60's and late 80's when Lionel was in dire straits financially or had a poor product portfolio and changed owners?

aussteve posted:

Boy this doesn't sound good at all.  I am beginning to get a little concerned cause it sounds like Lionel will be out of business next year for sure.

It won't be that fast.

Nor is it impossible for them to change in the meantime.  But before one can change, one most first WANT to change.

At those prices, nothing there I can't do without, or will wait for the secondary market.

Interesting points guys. What gets me is the fact that the pricing is essentially "all over the place" as it creeps up.

The MR S3  a few years ago was an absolute steal. $900, Completely new tooling, new smoke features , and the new to Lionel kinemetic drawbar.

The recent NKP and PM berks with whistle steam sold for exactly the same price as I paid for my 2010 version with the rebate, and NO whistle steam.

Asking price for the smaller K Line tooled A1 berks, the same or more than the larger Lionel berks  and no whistle steam. I think there are still some of these $800 locos sitting on shelves with $1099 pice tags

The recent seperate sale ESE hudson had a preorder price $100 LESS than the VL hudson. Granted The VL hudson has a swinging bell but the tooling is horrible along with the gross errors like the squared valve guides. IMO the ESE hudsonis a much better detailed loco and the differnt wheel/tender offerings is a plus.

Going further back the whistle steam mallets were actually $100-$150 cheaper than their early 2000 TMCC versions.

I agree with David, that 0-8-0 set is a joke, I'd be suprised to see it get made.  Maybe its intended to make the ESE set look like a better deal.

 Price wise Lionel seems to just throw whatever %^&* at the wall and see if anything sticks. I think the folks that shelled out $2000 for those bigboys started this ball rolling.

The VL GG1's are rediculous as well, hardly worth the VL title IMO, but folks are gonna buy them. Is rivet detail really worth the extra $300? Oh yeah, they have stereo sound, but how effective will that be when the speakers are 4" apart

I'm being very selective about what I buy, based on how much a particular items price has been inflated.Fortunately I'm at the end of my "big ticket" wants/needs.

Berkshire President posted:

My personal interpretation of Lionel's current....and absurd....pricing philosophy:

It's literally....and simply...."how much can we keep raising our already high price points...and still sell our products?" and "How far can we go until we have no loyal customers left?"

Remember, Lionel is currently owned by a Private Equity Firm.  This is very important to bear in mind.  The General Partner or Managing Member of a PE Firm gets paid a management fee to generate as great of a rate of return as possible for its limited partners or members.  BTO is really an attempt to make as few of the BTO products as possible (reduce total variable costs) while the current prices are an attempt to generate as large of a profit margin as possible.  THIS IS NO ACCIDENT!!!  The goal of the current pricing model is to generate as large of an ROI (return on investment) as possible......which is in stark contrast to simply "generate as much money as possible".  (The latter would involve making more units of a product to reduce the per product cost and then selling as many as possible....enjoying additional economies of scale that would drive the cost of individual items down.)  The latter is what I feel many of us would much prefer.

IMHO, this is a BIG, BIG mistake (are you listening, Mike Reagan?) that will only work in the short term.  In the long term, Lionel's current pricing model is toxic....unless they continue to innovate in a way that drastically differentiates their product from the competition.....and maintain/use those innovations.  Whistle steam alone won't cut it.  (BTW:  Selling products at a significant premium typically assumes the products arrive in tact, fully functional....and with repair parts readily available.)

Put in street terms, here is where Lionel is at:  On the price front, there is no reason why Lionel's products should cost so much more than MTHs equivalent product....whistle steam be ****ed.  As of right now, Lionel's prices are so high that they are not in the same zip code as MTH.  (It will be "nice" to be an MTH Dealer over the next few years.  Not so much so for the Lionel ones......IMHO.)

Lionel's pricing is starting to approach that of Sunset/3rd Rail....yet the detail and quality of Lionel is nowhere near what Sunset/3rd Rail currently offers.  Granted, Lionel owns the "operating system".

Lionel is literally in an untenable position:  roughly the same quality as MTH at significantly higher price points......and priced near Sunset Models but without the quality, detail, and accuracy expected at those price points.

If Lionel wants to rapidly lose market share and price themselves out of the hobby, they are well on their way......IMHO.

Their ROI will remain high...but their bottom line will begin to shrink.  And shrink.  And shrink.

p.s. - As the Economy ebbs and flows, BTO and Lionel's current pricing will be hit remarkably hard when the next Recession hits.   Bank on it.

My thoughts exactly.  It's not a good long-term strategy.

To RickO's point:  I thought the MR 261 and siblings were fairly priced, as well as the Sante Fe 3751/3759s from a few years ago.  Nor did I have a problem with the $1,029 or so that RO was going to charge me for NKP #765 version 2.0 as recently as last year.

But how are some diesel units 150-200 bucks more now then 12-18 months ago?

I LOVE my Lionel 844 from 2008 and was going to get the 838 when the new FEFs came out....until I saw the $1,450-1,500 street price.  (FWIW:  You can now buy an FEF from MTH....with four passenger cars.....for less than Lionel is attempting to sell their FEFs.)

The new SP 4449 might be fantastic....but how is it priced the same as what a Vision Line Challenger was a few years ago?

I can tolerate/handle/justify $350-$450 diesels and $800-$1,000 large scale steam.  But Lionel has jumped the shark on their current offerings....IMHO.

Berkshire President posted:

To RickO's point:  I thought the MR 261 and siblings were fairly priced, as well as the Sante Fe 3751/3759s from a few years ago.  Nor did I have a problem with the $1,029 or so that RO was going to charge me for NKP #765 version 2.0 as recently as last year.

But how are some diesel units 150-200 bucks more now then 12-18 months ago?

I LOVE my Lionel 844 from 2008 and was going to get the 838 when the new FEFs came out....until I saw the $1,450-1,500 street price.  (FWIW:  You can now buy an FEF from MTH....with four passenger cars.....for less than Lionel is attempting to sell their FEFs.)

I was VERY interested in the UP FEF #838 since, according to the catalog description, it will have the correct Sellers Feedwater System. But the price?  Maybe I would pay that much for a brass model.

The new SP 4449 might be fantastic....but how is it priced the same as what a Vision Line Challenger was a few years ago?

Plus, unless Lionel corrects the running gear, which is actually from the GS-2 model, those GS-4 models are not correct, especially with the location of the train number indicator vs. the large "billboard" lettering on the tender. 

Yes, do have the Legacy version of the GS-4, and inspit of the "GS-2 running gear", it is a fantastic running model.

I can tolerate/handle/justify $350-$450 diesels and $800-$1,000 large scale steam.  But Lionel has jumped the shark on their current offerings....IMHO.

There's nothing in the current Lionel catalog that makes me want to spend that kind of money. The Milwaukee Road Heavy Mikado was my last pre-order (most recent and, quite likely, last ever), and I got it only because I wanted it badly, since that locomotive was the mainstay of Milwaukee Road heavy freight operations in the 20's and 30's. I have been wanting one for years and would have bought it no matter who built it. I am having a hard time imagining anything else Lionel is likely to make that I would have anywhere near that level of motivation to buy. 

With regard to Berkshire President's comments about maximizing Return on Investment: DUH! The first thing you learn in business school is that the objective of any for-profit business is to maximize ROI. High or low margin, high or low volume, all that is strategy. The objective is the same whether you are a small entrepreneur, a private equity CEO, or a railroad baron. Lionel management thinks its current strategy is the best way to that objective; BerkPres favors a lower-margin, higher-volume strategy. Now, management's time horizon affects strategic decisions - i.e. whether you are going for short-term returns or playing a longer game. And certainly private equity firms have a reputation for managing for the short term. You get to make that decision when you own the company. In any case, whatever strategy is adopted is intended to maximize ROI. 

It's nothing to me if Lionel goes bust due to a miscalculation by its private-equity owners. Somebody else will buy the smoking wreckage and revive the Lionel name. That's life. 

Southwest Hiawatha:  Care to guess how many firms or companies have attempted to operate strictly on ROI.....only to find out that an excellent ROI on a really small number doesn't really amount to much?

It's the very reason that auto makers and others worry so much about Market Share.

You rarely operate in a vacuum.

That's not a valid comparison because there is a lot more competition in the auto industry than there is in model trains so market share is of greater importance.

Lionel is clearly the market leader in model trains so without much competition they can pretty much set prices wherever they so choose.

catnap posted:

That's not a valid comparison because there is a lot more competition in the auto industry than there is in model trains so market share is of greater importance.

Lionel is clearly the market leader in model trains so without much competition they can pretty much set prices wherever they so choose.

If what you're saying is true, I believe Lionel would be in violation of a Federal Anti Trust Law or Two.....to some degree.

But what you're saying isn't true, IMHO.  Folks can debate market leader until the cows come home.  That's not my intent.  But watching Lionel and MTH "go at it" is the very essence of true competition or a free/open market.  Watching a company like Sunset/Third Rail....whose models are clearly superior....have to work around/incorporate Lionel's operating system is another interesting view on business/capitalism.

The buying pool for O Gauge Trains is only so big.  As such, market share is absolutely important.  Once you lose a costumer......especially with rival operating systems....he or she is gone....and you'll have a hard time getting them back.

So, in too many words, I think my comparison or use of market share was absolutely relevant.

This would all be true if not for the highly compartmentalized nature of the o gauge market.  And the highly compartmentalized mindset of its customers.  The big catalog, and its expensive/BTO items is a sop to the smallest niche of the customer base.  The numbers and money are in the RTR compartment.  BTO is just a way of allowing the business to concentrate on mass production of $300 (or so) train sets, with the occasional diversion to low volume prestige items only if the numbers warrant.  Annie and Clarabel are more important than a Legacy Yellowstone.

Fords SVO operation makes a few great cars, but the volume and money are in the F150s.

well played, Marty!  i'm chuckling!!

This is a interesting topic.  I think there are quite a few factors that have not really been considered here in these rising prices.  Some are in the control of Lionel, some are not.  First I think it worth mentioning that costs do tend to rise in production over time due to both inflation, and lately rising priced in Chinese production.  The end user cost hike also tends to lag behind quite a bit here, and even more so in products that are not delivered for more than a year after they are listed.  When it comes to why the price  that was $1000 is now $1300, I expect it has a lot to do with someone saying " hey, it costs us 30% more to make now, so we better raise the price 30%.  Poor business math, but that's what it looks like.  

On the subject of the entire business model and price point for the high end products, I think Lionel shares in the same model that I use in my business.  The actual cost of production and development has almost nothing to do with the sale price.  Instead prices are determined by setting the highest possible price to maximize profit.  In my case I sell an $8.00 widget.  My total cost of production including the cost of the equipment to produce the widget works out to about $0.75 per widget.  Lets say 80 cents  if we include waste product from mistakes and the like.  So how do we get to a price that is ten times cost?  Honestly, because the price has nothing at all to do with production.  My price is $8.00 per widget because that is the highest price I can charge without losing customers.  At $7.00 I sell a few more widgets, but not enough to make up for the extra dollar on all the rest.  I can put the exact same amount of money in my pocket charging $9.00 or $10.00, but sell many less widgets.  At $5.00 I'm way past market saturation.  Everyone that is interested in my product will purchase it, but even then I can't sell enough to make the same return that I do at $8.00 with a smaller number of buyers.  I see Lionel doing the same thing, selling something that costs almost nothing to make (I would be shocked if any legacy engine actually costs more than $100 to produce) at the price that makes them the most amount of money.  There are a limited number of buyers for high end product.  Of those buyers I would imagine Lionel has done their homework to find how many they lose verses how much money they make per unit when setting different price points.  Lose 10% of the customer base, but make 20% more per unit?  I'll take an extra 8% profit any day.  The price only becomes too high when that extra profit goes away, and some really smart people spend a lot of time figuring out exactly what that price point is.  

When it comes down to it, you will see lower prices or more features, or both, when the current price is no longer the most profitable price.  OR, when the competition offers a similar product at a lower price, AND can market it to folks that don't know it exists, or that are used to inferior products from that seller.  

JGL

_{“So you think that money is the root of all evil?  Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?" -- Francisco d’Anconia  --  AR}

When the "boomers" are gone, prices will plummet on new and old trains. It is not the same as when Lionel about went under, as someone pointed out. The boomers carried the hobby, and when they are gone.....

Oh, and where's Ralph?  Hopefully nowhere.  Who is he to tell me I can't buy a cheap, rear engine car, without a sway bar, if I want to spend MY money on it? 

JGL

I'm hoping that Lionel will decide to share what other features the Allegheny might have given the cataloged price.  If there is nothing more... it is difficult to justify that money.

My last BTO was a Camaro in 1969 and nothing since especially toy trains has induced me to repeat. I think the biggest  toy train factor is the availability of good used trains.  After the current owners of Lionel have sucked the life blood out of the brand in the present market they will sell it off. Then you, not me, will go all through this dance again.  Good luck  !!

Here's something to consider.  Lionel sells hundreds of thousands of starter sets.  Perhaps a 1,000 or fewer each of most other items, particularly high end locomotives.  Smaller profits from starter sets likely constitute the vast majority of their total profit is a reasonable guess.  The items folks are discussing here are literally handmade boutique items whose major cost components are almost certainly labor, tooling (which may not be used again ever or for many years) that needs to be amortized (perhaps the major component of their cost,  I'd guess) and shipping.   That's why their prices resemble 3rd Rail's.  3rd Rail is also boutique, also hand assembled, also large tooling costs (although probably less than diecast), and large shipping/packaging costs.  3rd Rail is a cottage operation with next to no employees, dealer network or distributors boosting the price at retail. 

At this point, no one is competing with Lionel in the starter set market.  They can get premium prices on some products because they have the brand name and dealer network.  There is little doubt that the costs of labor, materials and shipping have increased.  The fact that shipping costs remain high when fuel costs have gone south is simply a bigger profit margin for shippers, airlines, etc.  Lionel is still paying that premium, unlike you and I at the gas pump. Lionel will charge whatever prices maximize their profits and whatever they can get away with.  If you are happy with PS3 and MTH service/dealers and the product you can vote with your wallet.  How much new tooling has MTH done in the last 5-10 years?  Not much in locomotives.  Their tooling was created in a lower cost era which gives them an advantage in cost of goods sold. But their brand and dealer network are not as powerful as Lionel's.  They've pretty much stopped advertising anywhere, which doesn't suggest great success, for whatever reason.  So they may not be your answer for the long run. Personally, I'm happy with mostly rolling stock, LC+ locos, and don't care for or need to buy high end stuff, so I've no dog in this particular scramble.  But I think one needs to be realistic about what the marketplace and costs of goods sold actually may be.

I stopped by my LHS today and looking over recent-production Lionel engines on display had me shaking my head. The prices on this stuff -- especially fairly small steam locomotives -- are jolting to the eyes. And the prices on the really big engines are eye-popping.

I have abandoned these expensive items for rolling stock. I have collected plenty of both steam and diesel locos over the years, I run conventional only, and so using my money to pick up newer freight cars makes a lot of sense for me.

Lately, I have been accumulating the Standard O and O scale cars from Lionel since I had always held off on them and purchased traditional rolling stock in past years. I do like the look and detail offered by these new scale-sized cars, and even though prices for these have increased as well, by careful shopping you can still get some pretty fair deals on them.

If Lionel can meet its sale and profit goals with its new pricing, more power to them. I'm very glad I am out of the market for those products now.

When I was in retail, an experienced business person shared some wisdom with me. 

Out of ten customers, if no one complains about your prices, they are too low. If the majority of customers complain, your prices are too high. If only 1 or 2 complain, your prices are just about perfect!

Think about this. Lionel wants to maximize ROI, profits, whatever you want to call it. In the "old" Lionel, they had to convince the dealers to see the value and to buy the product. In the "new" Lionel, they have to convince the buyers to see the value and buy the product, which is conveniently BTO. The dealer no longer has to guess how many to order, or how popular the item will be. They just cover the pre-orders, and maybe a few extra. And if there aren't enough orders, Lionel cancels production. 

After reading this thread, I'd say Lionel's business model is in trouble. The majority of customers are complaining about their prices, and do not see the value in the product.

"The majority of customers are complaining about their prices, and do not see the value in the product."

Do we know that the dozen or so people commenting here are representative of Lionel's customers?  Usually those who are satisfied don't post their satisfaction, and those who are annoyed or worse are quite vocal.  They seem to be selling most of what they are making these days at the high end, since there isn't much "new old stock" listed by dealers like Charles Ro.  Hard to know, of course.  But production seems to be close to demand for much of what they are making to my eye.

Lionel Grandpa posted:

...

After reading this thread, I'd say Lionel's business model is in trouble. The majority of customers are complaining about their prices, and do not see the value in the product.

Lionel Grandpa, you've absolutely NAILED it!!!  It's all about VALUE.   

Now I'm not naive enough to believe that our little survey of forum respondents in this thread represents any kind of accurate statistical sampling.  But I can't help but wonder how many other folks are drawing similar conclusions while browsing the catalog(s) and are gonna stop pre-ordering stuff willy-nilly just because Lionel claims they have increased costs that need to be covered.  What costs are we expected to cover?  Howard's year-end bonus?  Sorry... Howard might be a nice guy, but his year-end bonus is of NO VALUE to me whatsoever.  Zilch... Nadda... ZERO.  (Sorry, Howard.)  And if that's indicative of what Lionel is factoring into it's most recent "expense equations", I'm saying that's worth absolutely ZERO to me as a consumer. 

Of course, I'm being somewhat facetious here... but I think folks (and Lionel) understand the point quite clearly.  Said in a more eloquent way, consumer value doesn't necessarily correlate to all of the supplier's expenses.  Naturally, I don't expect any business to operate in the red.  But just how far in the black am I willing to support by paying stratospheric prices as a consumer?   Let's just say certainly not the degree we're now seeing given the direction of prices in the past couple of catalogs.  The value just ain't there -- especially for something like the premium set I mentioned in my original post.  Not even close.   

So if Lionel is telling us they NEED to price a premium Legacy set like the Steel City Switcher  for $1299 MSRP to keep the supplier chain healthy, I'm saying... "Save yourself the trouble.  And don't even make the product at all, if that's what you feel it needs to sell for.  Because if you honestly believe that, then you and your supply chain are already operating on the cusp of an inflationary bubble that's about to burst.    But you already knew that, right?" 

David

My local LHS and I discuss business at times and he has bought some of these high priced beauties on speculation and still has some in his display case.  If you have been in business you know every product has a life span-some short, some  longer so inventory, cash flow and what new is coming down the pike all factor in to things.  From what I have seen tn stores, at shows and on line there seems to be no shortage of a lot of these items.  The market will determine the winners and losers. I must say, I think the OGR forum is a pretty good representation of the market.

I'm 100% serious when I say that David should be CEO of Lionel. His vast knowledge of their operations, financials, market place, and the hobby in general is second to none. 

I razz him often about every post morphing into a gripe about pricing and costs but I really think given his expertise and knowledge he could foreseeably take Lionel into the next decade. He always brings up some great points filled with many facts, concerns, and more importantly    Emojis to make his point. 

It great to have David as an asset to our community. While many may not agree with him he does bring many points to the table. i would like to thanks David and all in this post for some very insightful thoughts. It has given all of us some things to consider before we place our orders. 

MartyE

Though not in this catalog, I passed on the BTO 2-8-0 from '15 Vol II.  The $650 street price was ridiculous until I saw the 0-8-0 price in '16 Signature catalog.

Seems Lionel is pushing the edge of prices in an attempt to determine what the market will withstand.  I don't see the value in the increased prices.

I've bought my last Lionel steamer.  Though my lack of future purchases will have no impact on Lionel, I can't justify paying brass prices for die cast steamers.

Guys, remember - they're just toys.

This is one of the most interesting OGR forum threads ever.  Thank you, David, for posting this topic.  It's fascinating to read the observations of savvy and intelligent enthusiasts.  However, I feel that forum participants represent a minor percentage of all O gauge hobbyists, most of whom probably are less hardcore.

Lionel's top shelf items are intended mainly for the deep pockets big layouts crew, and their continued success will remain to be seen.  Judging from the overwhelming number of too high prices complaints in this thread I'd say it's gonna be a rough ride.

Meantime, the Lionel brain trust are no slouches.  Witness the overwhelming success of Lion Chief Plus.  It's both amusing and alarming to me that some folks are clamoring for scale size locos and more features in LC+ which would translate to higher prices and defeat the purpose of the line, which appears to be to provide a more affordable remote/conventional operated alternative to Vision/Legacy.

 I'm gonna go play with my trains now.

Pete

When I saw last years catalog I thought I would go for the Empire State Hudson or at least 2. Then after calming down I said nope, I'm not going to fall for it. Whatever we make, they'll buy. Sorry but I already have the Century Club ESE, I do need the other number but not at the new high price.  Wow an AFT and a Daylight? Choke.....they have to be hallucinating at these new high prices. I already have the last GS4 so I don't need another daylight. I went for the MTH 4014 instead of the Lionel version, strictly on price. I feel much better that I did.  I did buy a handful of PE items , 2 Disney cars and UP excursion 2 pack.  Lionel is doing a very good job of talking me out of the BTO items.

I think David as well as a few others have pointed out some interesting concepts about pushing the pricing envelope too far.

rat

MartyE posted:

I'm 100% serious when I say that David should be CEO of Lionel.

I second Marty's nomination of David for CEO, nominate myself for CFO (I am a CPA, FWIW)...and would put Marty in charge of Marketing and let him work on continued Legacy Development with a few other Forum Members.  (Marty is one of the most enthusiastic Lionel supporters I've ever met...in a good way.) 

Landsteiner posted:

Here's something to consider.  Lionel sells hundreds of thousands of starter sets.  Perhaps a 1,000 or fewer each of most other items, particularly high end locomotives. 

I agree with the overall point of the post and the second estimate, but not the first.  I highly doubt that in total even 100,000 starter sets are sold annually.  Doing so would almost assuredly require major retailer distribution, which Lionel doesn't have to any degree.  Pulling ten sets through each Wal-Mart in the US would still only get you to 100k units or so, and that type of distribution scale doesn't exist.  I wish it did.

If you put those guys in charge then it would be a JOB and not a hobby !!   Why ruin it for them ??

Berkshire President posted:

MartyE posted:

I'm 100% serious when I say that David should be CEO of Lionel.

and would put Marty in charge of Marketing and let him work on continued Legacy Development with a few other Forum Members.  (Marty is one of the most enthusiastic Lionel supporters I've ever met...in a good way.) 

I enthusiastically support all trains. Without them my life would be less exciting and fun. FWIW, Jon, Rudy, and the entire Legacy team does a fine job. I suspect they have more in the stable than they are able to release. 

With respect to all of the other great posts, Lionel Grandpa's first post makes the most sense to me. As for Lionel somehow pricing itself out of business in the future, I just don't buy it. I have no hard evidence but in general "imminent demise" predictions are almost always proven wrong. The Lionel brand has adapted and survived an awful lot in its long history. They're entitled to some pricing brain f@rts along the way.