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Subject: Board Games and markup rss

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Mark Iradian
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I've been working at a board game store for two years now and an assistant manager, I can safely say that I've seen some odd markups in our company.

Recently our disturber raised the price on some of the popular board games like Ticket to Ride and Talisman revised edition. Even the newly released Cosmic Encounter has been somewhat higher then normal new releases.

These games cost around 40 to 50 dollars. Our company tends to double the markup, so our Cosmic Encounter is 99.99.

I know the retail price is around 69.99 (we are talking about Canadian currency here), yet I've seen some online stores that sell the game much cheaper then that, some just a few dollars above the cost price.

My question is, how does the Brick and Mortar stores survive when the cost price is so high yet the retail price is barely making "safe" profit margins, yet the online stores charge so little for quite possibly the same disturber?
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J.L. Robert
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According to some, the answer is that a B&M store must offer MORE incentives (pre-order discounts, frequent buyer discounts, superior product knowledge, etc.) in order to "earn" their business. As if those additional incentives don't cost the store anything.

The real trick is to draw your customer base from board gamers who AREN'T BGG members. They tend to not be as price-conscious, are willing to buy at retail price, and still feel that they are getting value for money.

As for your distributor hiking up his end...I can't help you there. Maybe you can shop around for another distributor that can allow you to have more competetive price points.
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Mark Iradian
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The real trick is to draw your customer base from board gamers who AREN'T BGG members. They tend to not be as price-conscious, are willing to buy at retail price, and still feel that they are getting value for money.


Yes, true, but sometimes these retail prices are still at unsafe profit margins. If you go higher, it scares away the potential customer, yet if I do sell it, it isn't helping all that much to the store itself.

 
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Kyle S
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If you're only competing on price you won't survive.

You need to offer something that justifies a higher price. It's got to be something that online retailers can't deliver. I'd start with clean, safe, available gaming space.

I suppose that you'll get some foot traffic comprised of people who aren't familiar with online pricing, but I wouldn't want to depend on that business model.

In my opinion, there is room for both online retailers and FLGS in the market. However, too many FLGS think that you should support them when they only offer a dirty store and some random games thrown on a shelf.

You have to get people to want your store to be successful. That way, they won't mind paying a little extra. So think about what you can offer your customers so that they will support you. It's got to be a two way street.
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Kyle S
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MarkyX wrote:
Yes, true, but sometimes these retail prices are still at unsafe profit margins. If you go higher, it scares away the potential customer, yet if I do sell it, it isn't helping all that much to the store itself.

You aren't looking at the big picture. If you price over retail, you will royally piss off your customers.

If you price at retail, maybe you won't make much on that particular game, but you'll have a happy customer that will come back and buy other games with a higher markup.

Maybe it isn't "helping the store" much for that single transaction, but trust me - it's helping the store in the long run.

If, as a general rule, you can't afford to sell games at full retail, it's time to rethink the business model.
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Mark Iradian
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The problem is I plan on opening up in a mall and to be honest, I wouldn't have the money to support a game room. Offering weekly demos was part of my plan (e.g. Cash N Guns, Khet, Gobblet, Blockus).

I plan on making my store more like a gift shop then just games, as I noticed the novelities in my current job tend to sell very, very, very well. Puzzles tend to sell themselves. Just a few days ago I sold 500 dollars worth of puzzles from Jigsaws to small metal ones to one person.

As for price, the last thing I want my only target market to be is primary price hunters. They are never loyal to any sort of brand, but at the same time I just don't want people to view the board games as a luxury item either.

Quote:

If you price at retail, maybe you won't make much on that particular game, but you'll have a happy customer that will come back and buy other games with a higher markup.


This is true, but board games isn't exactly a repeat sale unlike clothes or makeup. Someone who buys Settlers of Catan isn't going to come in a week and buy all the expansions or Ticket to Ride. We have repeat customers come into our store but it's once every few weeks I see them.
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Jesse Hallstrom
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Differentiate yourself from the masses. Above retail pricing is not intelligent. You aren't out there to sell 2-3 Cosmic Encounters, but you have to have those selections for those that want them. You make money on the other things in the store, and use "loss leaders" or in this case "lower profit margin leaders" to bring people to the store. Then mention some other games they may like (and make sure they may like them) that have a higher profit margin.

I'm probably one of the very few that has never purchased a board game online. My FLGS has great service, and every game I could ever imagine. I go there because I can look at every box of basically every game and browse for a good hour until I make up my decision. I like choices, and if my FLGS only stocked games that had a good profit margin, I would probably never shop there again.
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J S
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You can't have it all, do you want more customers or not? The fact you are charging almost 50% over retail is ridiculous, I surely would never shop at your store again if I found out after the fact.

You want loyal customers, those same customers you are gouging? Seems awfully one-sided to me.
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Mark Iradian
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opks22 wrote:
You can't have it all, do you want more customers or not? The fact you are charging almost 50% over retail is ridiculous, I surely would never shop at your store again if I found out after the fact.

You want loyal customers, those same customers you are gouging? Seems awfully one-sided to me.


Okay, let me be clear.

Right now I'm working at a game store and this is what they are doing to some of the recent games, mainly because the disturber increased the price. I've even mentioned to the owners that it would be very hard to move the product.

However, in the future, I plan on opening a game store and I'm just interested in opinions about this situation, since I'll probably end up talking to some of these suppliers as well. They might lower in the future, or might increase it, but I just want to hear opinions and thoughts if I ever have to come across this scenario.
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Kyle S
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MarkyX wrote:
This is true, but board games isn't exactly a repeat sale unlike clothes or makeup. Someone who buys Settlers of Catan isn't going to come in a week and buy all the expansions or Ticket to Ride. We have repeat customers come into our store but it's once every few weeks I see them.
Are you kidding me? Name me a boardgamer that could stop at just one game?

Maybe you need to think about why you never get repeat customers. I guarantee you that they haven't stopped purchasing games.
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Kyle S
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MarkyX wrote:
The problem is I plan on opening up in a mall and to be honest, I wouldn't have the money to support a game room. Offering weekly demos was part of my plan (e.g. Cash N Guns, Khet, Gobblet, Blockus).
Malls have amongst the highest rent out there. This is both good and bad. The rent is high because you get a ton of foot traffic - that's good. It's bad because you have to sell a lot of product to pay the rent.

I'm not convinced that a mall location makes a lot of sense. During the weekdays, it's a lot of older people. On evenings and weekends, it's a lot of tweens and teenagers. None of those demographics are great for you - yet you're paying for them to walk by your storefront.

And because of your high rent, you're already telling us that you can't provide any gaming space. This isn't the end of the world, but you've got to provide something that an online retailer doesn't provide.

The reason I suggest gaming space is because I've seen it work. I know of a store that more or less doubled their sales this year. The only change they made was providing a gorgeous space to play games.

As for demos, I'm not sure how interested mall traffic will be in standing around watching a demo. The very atmosphere of a mall lends itself to wandering. Just outside of your door are scores of other stores to be seen.

I do think that there is a market you could tap into. Namely, parents that want their kids to get into a good college. This is why Baby Einstein sells so well. It feeds off of parents' insecurities. You could position your product as something that kids will enjoy, and also learn from. Maybe the kids won't buy from you, but parents would likely prefer this to video games. I'd focus on games that can be played by 10-18 year olds. That's where most of the educational products tend to fall off. (Leap Frog, etc.) During the weekdays, there are bound to be homemakers in the mall. You've shouldn't pass them up.

Still... I'd seriously reconsider a mall location.
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Barak Engel
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kilarney wrote:
If you're only competing on price you won't survive.


General business truth until scale comes into play, of course (read Wal-Mart).

kilarney wrote:
I suppose that you'll get some foot traffic comprised of people who aren't familiar with online pricing, but I wouldn't want to depend on that business model.


Indeed.

I have written about the topic several times in the past, but a working FLGS model will HAVE to cater to both the casual gamer and hobbyist gamer. This holds true for more than just boardgames.

The one thing that FLGS consistently fail to do is create such a model. They treat all customers the same. Retailers are generally able to drive more sales, by selling the same product to different people at differing prices. They achieve this using price discrimination techniques, some of which can be easily applied to the FLGS model.

Here are a few, there are more. You cannot unfortunately discriminate on the product itself (by selling the same stuff under different brands, for example, like Gap does with Old Navy and Banana Republic), but there is sufficient room to maneuver:

1) Offer a loyalty program to heavy volume buyers. The more you buy, the larger your discount. By the time you get to the true hobbyist - the person that spends X dollars every year (the X depends on many factors but can is easily determined) - their pricing will be very close to pricing they can easily find elsewhere (such as online). Hobbyists WILL pay a loyalty premium - to support the store. They will also pay an interaction premium - to be able to fondle the games at the store, be part of the "in crowd" and a friend of the manager's, and so on. But those premiums won't be high; figure on 10% or so over online pricing. And the higher the sales tax, the less that premium can be.

2) Offer pre-order discounts. A new hot release is coming out? promote the hell out of it in the store AND give people who pre-order it (by putting down a deposit) a 20% discount. This will allow the store to capitalize on the hot new release in the best possible way, AND support better inventory management (the pre-order/post-release ratio is a powerful way to judge how to handle future releases).

3) Offer a friend-bring-a-friend program. You bring someone to the store, you get a 20% off coupon for your next purchase, AND give the person who was brought in a 10% discount for THEIR purchase. Over time, this will drive additional sales, increase stickiness, and not hurt the walk-in traffic.

4) Have game events, especially around new releases. Host a few tables, charge $1 or $2 to participate, give a free copy to the winner, and give an immediate 20% discount to all players in the sponsored game. You can most likely have a joint marketing fund here with the manufacturer for these.

The goal here is to create multiple pricing tiers based on different and non-overlapping scenarios so that you can capture the largest number of profitable sales across the entire positive margin spectrum.

Like I said, there are more ideas, and I will repeat the offer I made several times before: I'm happy to work with any FLGS owner who is interested in these ideas and how to implement them well, especially if they are in the SF bay area. Yes yes, I've been flamed before about this, go ahead, get it out of your system.

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Kyle S
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lightnng wrote:
2) Offer pre-order discounts. A new hot release is coming out? promote the hell out of it in the store AND give people who pre-order it (by putting down a deposit) a 20% discount. This will allow the store to capitalize on the hot new release in the best possible way, AND support better inventory management (the pre-order/post-release ratio is a powerful way to judge how to handle future releases).
I really like this idea. There are a lot of games that people are interested in, but might not buy after the "newness" has worn off. Tapping into the initial excitement before it dies down is very smart from a sales perspective.
 
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Randall Rasmussen
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FLGSs are missing a golden opportunity, but maybe no one has thought of it but me.

The population is aging. The baby boomers are desperate to maintain their mental capabilities. They are buying Brain Age and Nintendo DSs for that reason.

Tap into that market by demoing games that keep your brain active. Isn't that almost EVERY game? Except maybe Loopin' Louie.
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Grace Whelan
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My fiance runs a game and comic store and we have seen distributors and even some manufacturers raise the base price of board games in the last year. I don't think you can create customer loyalty by raising prices above MSRP. So we price everything at MSRP. But...like another poster pointed out, you have to offer incentives for customers to maintain loyalty. I will say we make more $$ on the comic books than on the games and its a constant struggle to make the games balance.

Incentives we offer:
- Preorder discounts. We offer this on comic subscriptions and on pre-order games etc. We ask for payment up front on large orders or for new customers, but once you've established as a regular, you can pre-order without pre-payment. THis sometimes bites us in the end and it can be hard paying for everything up front, but our customers appreciate it.

- Holiday gift certificates at 10% off. We sell these so loved ones and spouses can buy a gift certificate for their gamer and get it at a discount. Essentially it then makes the final purchase 10% off.

- We offer special discounts on event days. So if its a Warhammer event we'll offer discounts on GW merchandise and supplies. If its Magic event we'll give discounts on Magic.

- Events themselves are incentives. We always provide someprize support and customers like that.

- Customer appreciation sales. Sometimes we will have a special sale and markdown everything in the store or everything in a specific category (i.e. boardgames 15% off). Granted it means we sometimes do not make a profit on all the stuff we sell. But since we spend very little on advertising costs we justify it as an expense.

- The store also offers plenty of gaming space (probably not an option in a mall store though).

- We also sell sodas and snacks. There is like a 10cent profit on these so it doesn't make $$....but it keepspeople in the store since they don't have to leave to get snacks. People who tend to hang out all day playing games may not always spend $$ every time they come in. But they will come in and spend their $$ when they are ready to purchase because they appreciate the store.

I will also say that my fiance pretty much runs the store full time. THat means about 70-80 hours a week. He has a few friends who chip in sometimes but running a small business is alot more work than a "regular" job. So hopefully your family is understanding. If I add up the hours he works and the profits he makes, I'm sure he is waay below the minimum wage.

Lastly I will add that to make profit at a game store you have to sell CCGs and the like. Its the one thing that consistently sells and earns a profit. Even with price hikes, Games Workshop stuff still can make a decent profit, but the cost to implement is high and you have to avidly support it with weekly events to get the kids to come in, play and spend.

Good luck!
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Blake Lipman
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Quote:
You need to offer something that justifies a higher price. It's got to be something that online retailers can't deliver. I'd start with clean, safe, available gaming space.


Exactly!!!!!

You need to offer something more. Making space available to gaming is essential. Also, due to the nature of the hobby you will have to offer more than boardgames. CCGs, RPGs, and minis should be part of the mix. Sponsoring CCG tournaments creates a ton of goodwill. One of the more successful brick and mortar stores in my area does all of the above, and does it very well. I would stay away from the mall, unless you get a sweetheart deal on the rent. The rent in malls is usually much too high and the clientele in the mall is not a gamer clientele. If the economy where you are is anything like SE Michigan, you can find a spot in a strip mall or free standing building for next to nothing in rent. Landlords are really desperate nowadays. Good luck!!
 
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Bryan Maxwell
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I've been a part of these conversations on here many times (though it's usually more the FLGS vs OLGS debate.)

The incentives idea is great, and that's where my FLGS falls short and a big part of why I buy 80% of my games online. Last time I bought a game there (Dungeon Twister) I asked at the counter if they had any sort of customer loyalty program and he said that they didn't. I mentioned that I often buy my games online.

I wouldn't mind paying a little more at the FLGS, but OLGS prices are often 66% of MSRP. I'd love to see them do a frequent buyer program, or give a $5 store gift certificate when you bought a board game...something.

They have open game nights after hours, but those are usually dominated by the MtG crowd. If things were a bit different for me, I'd like to try and instill some love for our hobby there.

I realize now that I'm rambling.

Mark, good luck with your business.

Edit: Blake, you're right. I live in the thumb area and the economy here in Michigan is a turd, figuratively speaking.
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Dave Kudzma
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J.L. Robert
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The big problem with most game stores is that they have don't have the liquidity to sell and reacquire the necessary volumes if they go the discounting route. That cash shortage is worsened if rent is particularly high (say, in a major shopping mall), or if they have to pay wages for employees.

It's not that they can't make money when discounting. It's that they can't make ENOUGH money to make the venture worthwhile. I've known more than one game store owner who chose to forgo a real income during hard times, drawing only enough to cover personal expenses (like rent, utilities and food). Usually, a business owner wants to do more than subsist on his/her business.

It's really a rock-and-hardplace situation. Discounting makes them competetive with online stores, but it guts any real opportunity to make money for themselves.
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Greg Denysenko

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Our local gamestore actually provides a 20% discount off of MSRP to all members of our large local gameclub. This ensures steady sales from those of us that are game addicts- while the general public pays MSRP. I don't have to buy much on-line anymore.

If I ran a FLGS this is what I would do- you'll move stock more quickly, compete with the on line stores, and build a good relationship with your customer.

You do need some gaming space however- I pick up lots during our gaming meets,
 
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Mark Iradian
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Quote:
Are you kidding me? Name me a boardgamer that could stop at just one game?


That's not the argument I'm trying to make.

Let me ask you this: How many successful boardgame-only stores exist in your local area? I'm talking about a store that doesn't carry CCGs, RPGs, figures, hobby models, etc? Strictly board games?

Chances you aren't going to find many, if any. Many FLGS have to carry other things besides BGs because they wouldn't survive. It's not a great repeat purchase, unlike a box of Pokemon cards or Warhammer figures.

Quote:

I'm not convinced that a mall location makes a lot of sense. During the weekdays, it's a lot of older people. On evenings and weekends, it's a lot of tweens and teenagers. None of those demographics are great for you - yet you're paying for them to walk by your storefront.


See, I find this somewhat inaccurate. I've worked in this store in the mall for two years and I've seen merchandise fly despite having a Walmart in the same mall. Most of this time was during Christmas, but the point still stands.

For example, we sold 50 copies of Abalone in one Christmas. A year before that, we had trouble stocking Puerto Rico, World of Warcraft, and Ticket to Ride since so many people were asking for them. Jungle Speed and Gobblet were great sellers at one point as well. This year the hot items are Scene It! Seinfeld, Monopoly World Edition, and the Axis and Allies Anniversary Edition.

Heck, if you think my board game store in a mall is a bad idea, there is a fellow in the same mall who has a comic shop for over a decade and he seems to be doing pretty well.

I understand what you're saying though, as during some of the months the place is completely dead and yes, old people are there in the mornings. It's just that I see a lot of parents and people enjoy the place since there is nothing like it in the area. Strangely enough, we do have competition, although the staff there are just as informed as Walmart employees about board games.

There is also another company I know which survives pretty well and have three locations in the province, all of them inside a mall. They survive by selling board games, puzzles, and game tables.
 
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tim Tim TIm TIM TIMMY!!
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I say go for it, open that bad boy up.

Get some loser friends with no jobs who love to play games, get them good at 20-25 games each , they have resume made of what game they are really good at and they charge $10/hour to play you at the store ( you split the $ with your bro's and everyone is happy )??????

Would this work?

Offer the first game for free, they are hanging out at your shop all day anyways. So people can tell if it is worth hiring them for a serious game of their favorite boardgame, or something they want to learn and get better at ( thinking of it as a teaching session ).

If I could play a heroscaper where it was all set up I would go for it once in a while. With Board games it is a little different then Hreoscape since it is not so much to set up.
 
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tim
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Hendal wrote:
they charge $10/hour to play you at the store
I can pay someone to play me or I can buy the game? Hmmmm, I don't think this one would fly. Around here it's hard enough to get someone to pay $5 towards hall rental to play for 12 hours, no one I know is going to play $10 an hour.
 
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Terry D
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Pay someone to play games with you? That just sounds very sad to me.
 
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It all depends on the store's chosen business model, that's an executive decision, it's also outlined in the agreement between the supplier and the brick and mortar store. Ticket-to-Ride is 40 bucks in U.S.A. wall-marts. So it sells less in the store than what the distributor is selling it to your store for. Any discrepancy in the price is strictly the store owners decision.

It sounds like the model is to sell less and make more. If your store was able to get the Ticket to ride game for around 30ish and then mark it up to 45is they would make around 12ish off of one game. But by selling it for 100 they make 50 off one game.

Many times what the distributor sells it for is based on what the retailer is going to carry it for.

So your retailer has decided to sell one game at the profits of selling four at a lower price. It's that simple.

The conversation about whether this is a good business model or not is a whole other debate.

It's really a rather lazy way of doing business. The owners aren't concerned about long-term health and sustainability of the business. In the end, you have to have a good hard look at the B2B model and how it affects the B2C model. A free market economy allows one business to charge exuberant rates and someone else to move in aross the street and sell those same games for less.
 
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