Perspective on prices

Thanks for the perspective, Rod.

I think it's tough for old guys to grasp current prices (increasing daily with some worrisome inflation).  I've been able to buy from Lionel's last many catalogs just because I put my money into two main things:  Travel and Trains.

Remembering my dream cars of yesteryear, I know that I could have bought a Porsche 912 Targa in 1969 for less than $5,000 (around $37,000 today).  A 911 would have been around $7000 or less.  Can you touch any Porsche today for $37k?  Oh, no.  The 2021 911 begins at $99,000+.

Porsches are premium products - as Lionel has been since the Pre-War period.  I don't LIKE to pay more for anything ... but for some things, I have to get beyond my 1969 (or 1999 or even 2009) cost mindset, suck it up and pay the tariff.

It's my hobby so I'm motivated to understand why it's costing me. 

A couple of points.

In 1987, Lionel had no real competition for its high-end product line, and many hobbyists found those prices unrealistic.

But Lionel was producing that product in the U.S., and the pricing was justifiable from an ownership standpoint because of the production costs and the market segment Lionel was trying to reach.

Today’s pricing also faces resistance from longtime buyers who can no longer afford the high-end products post-retirement.

It’s also worth noting that the sharp upward price curve has largely come in the past 15 years.

But, despite what I said, I think the pricing for today’s line is defensible. Rising production costs in China, enhanced functions on locomotives and the need to maintain a reasonable profit margin for the investment group all are legitimate factors.

As for me, I couldn’t afford the $1,000 locomotive in 1987 and I can’t afford a $2,400 locomotive in 2021. But I still find ample room within the hobby for enjoyment for less.

There's so much available on the secondary market that just about anyone can enjoy the hobby.

I don't like higher prices but I also don't see where any manufacturer or importer is making big bucks in profits on model railroad products, especially O scale.  The way things went when Weaver and MTH wanted to exit the business bear this out.  Nobody would buy the businesses in whole.

Better to have products even if they're priced higher than they used to be than to have fewer products or no products at all.

@rthomps posted:

Remembering my dream cars of yesteryear, I know that I could have bought a Porsche 912 Targa in 1969 for less than $5,000 (around $37,000 today).  A 911 would have been around $7000 or less.  Can you touch any Porsche today for $37k?  Oh, no.  The 2021 911 begins at $99,000+.

Porsches are premium products - as Lionel has been since the Pre-War period.  I don't LIKE to pay more for anything ... but for some things, I have to get beyond my 1969 (or 1999 or even 2009) cost mindset, suck it up and pay the tariff.

New Porsche's (911s) are really expensive so I'll just get a used one. That won't work either unfortunately, especially the air cooled ones. I would love to have a Cayman GTS 4.0 before everything turns over to EV but they aren't cheap either.

Perspective, an interesting topic.   There is the old adage,  "price is whatever the market will bare".  I know that I belong to the crowd of $100 for a boxcar and $2000 for a locomotive is in the sticker shock zone.

However, when JLC was just starting let's say around 1920, parents were buying trains for their children.   What percent of a parent's weekly salary did it cost to buy a high end set for their child in 1920 ?  I think the answer is a lot.    Fast forward to 2021, as a comparison, what does a high end starter set cost today.  I think the answer is not that much compared to 1920.    I think the manufacturers have done pretty good at keeping the prices down on starter sets.

In 1920, model trains were largely not adult toys but in 2021 the market is largely adults.  So, what percent of weekly 2021 salary is an adult willing to pay for their toy ?  From that perspective a $100 boxcar or $2000 locomotive is not that over the top.

Inflation is not linear.  Some commodities/products rise in price more rapidly than others.  All Inflation Indicies are simply aggregate indicators of averages.  Direct comparisons between 1987 prices and 2020 prices aren't possible in that way.  An engine of the same capabilities as the 783 would cost less than $1000 today (if any company were savvy enough to make one), and the boxcar would not have/has not doubled in price.

Trying to correlate prices is always difficult, inflation for example works for some products but not for others. TV sets if you look at both cost and what they do, are deflated compared to prior generations. You can get a huge widescreen tv at Walmart for under 400 bucks, in the early 1970's a color 19" set was running in that range. Other things have gone up a lot more than inflation. Right now there is inflation, the exact causes are complex,one of the biggest problems is there is a lot of money out there chasing limited goods bc covid both has limited production and availability at the same time that people have money they couldn't spend on other things, like travel, that they are looking to spend (and yes government stimulous also has a role to play).  Shipping has gone through the roof, anyone with an Asian supply chain knows that, among other things the cost of the containers themselves is through the roof, because basically containers were piled up and left to rust in the US and shippers on the other side have limited supply.

And the cost of labor in China has gone higher, too, it is high enough Chinese companies are farming work out to Vietnam and places in Africa (and I'll leave it at that).

Keep in mind that low quantity companies like Lionel have to charge more to make a reasonable profit then a large volume operation. People on here have often compared it to tv sets, but it is basic math, if I sell a million tv's my margin can be 1 buck a set and I have made a million bucks; if I sell 100,000, then I have to charge 10 bucks an item to make the same amount. Add to that that some owners demand a lot more profit out of a company, private equity firms are notorious for it as are hedge funds (note, I am not saying that about Lionel specifically, I don't know the company who owns them or anything about their business practices) so that could cause the price to go up, too, in some cases.

Are the prices too high? Yeah, but then again I debate buying a 200 buck Lionchief engine (mostly because I have a lot of other priorities outside trains). The point is someone is buying these, If they weren't Lionel wouldn't be making them, especially since so much of this is now BTO, not full production runs (and I will add, I am not singling out Lionel, other trains are expensive, too, least to me.

As we have said many times, Lionel trains were always a higher end good, even as big as they presumably were in the 'golden age'. You translate the cost of engines and such back in the day, and it was a significant outlay. Put it this way, how many of you knew kids growing up who had layouts like some of us do now, even my modest one that has a good number of remote control turnouts, a fair amount of expensive track, the buildings and such? I am talking 1950's into the 60's, later on when trains had really declined in popularity you could buy a huge box of trains for like 50 bucks by the late 60s, and so forth (and that is used market). And that was when these were really more seen as toys....

Of course we all would like to see the kinds of economy of scale we see with tv's and toasters, would be great to buy a big boy or whatever for a couple of hundred bucks, but it isn't going to happen. The other thing is as the market gets smaller, you will see the high end engines become even more pricey, to make up for lost volume, it is kind of a self feeding prophesy, with each price increase you lose customers, you hope that the remaining ones x the new margin will work.

To bigkids comment about containers; ocean freight from Asia to the west coast is astronomical now with freight rates for a 40 foot “can” running around $12,000. Charters of container ships have gone through the roof too with daily rates (yes - daily!) around $100,000.

This situation isn’t going away any time soon. Ocean shipping analysts are predicting it will last well into 2022.

Curt

@romiller49 posted:

In 1987 I purchased the 785 Gray Hudson  from Train99 shop for $1000.00. In 2020 or let’s just say at today’s prices that $1000.00 train would now cost $2309.00. A 50.00 boxcar in 1987 would cost 115.00 today. Yes, I did pay 50 bucks for a boxcar in 1987.
Maybe prices are not that insane after all.
Please no arguing here. Just wanted to make myself feel better.

True enough. I, too, purchased a gray 785 Hudson w/scale NYC caboose (they are on a shelf behind me right now) from Train99. But - I seem to recall paying "only" $895 for both. I win!

But, seriously, 900 bucks in the 80's (this then-new house was $70K, as I recall) was a chunk, and for a loco that had a "whistle" of sorts. Good loco, ran it often, but $900?

Now those $2000 locos in current catalogues make more sense, somehow. Enough sense? Probably not. I'm full. (But I keep hearing "4-12-2, 4-12-2, 4-12-2...." for some reason.)

Used items which work or can be fixed up os doable.

@mwb posted:

There's so much available on the secondary market that just about anyone can enjoy the hobby.

The secondary market will not be used to buy children Christmas gifts and with out new comers the hobby will die.The toy train market needs low cost good quality starter sets to entice new comers.

Lionel should put out a Holiday catalog with entry level sets  sans all the gizmos and in stock not two years away . This might just capture some new converts to the hobby.

Gunny