Shouldn't there be a glut of cartridges?

[Paul120]

Clearly there is a competition problem in the cartridge market as when input prices go down (like lead) - you would think that one of the manufacturers would bring prices down and others would follow.  Nope.

The reason one doesn't put the price down is simply because it's not a natural thing to want to do.  To put the price down will initially get more sales. The others have no option to follow and potentially will undercut.   Basically it upset's the market equilibrium where a price war might break out. The end result is that one or more companies may not survive. Without full knowledge of the business model or have the clout of a big chain supermarket (which is why they are heavily regulated)  it might be the.company that kicks it off goes bust. 

Obviously it's a bit more complicated but based around the Prisoners dilemma. 

 

[Lloyd]

@Cosmicblue 

I wish you would talk to my employer. I’ve been trying really hard for the past 18 months to get the execs to understand that price and value are not the same thing. 

Pricing fear and irrational discounts coupled with a lack of understanding of customer acquisition costs  has resulted in unsustainable losses. 
With. VC fund to lean on, the notion of “proving sales” was considered more important than proving profitable sales.

Thankfully they’re turning a corner and starting to realise that wonderful enabling technology won’t enable anyone if it so ceases to be by add because the company goes under.

Similarly  with cartridge manufacturing. Frankly, I don’t think I’d want to get out of bed for what they have to do. For sure, the big names generate more revenue than the corner shop,  But Gamebore  if I recollect correctly generates about £9m/yr in sales and what comes out in profits at the other end isn’t an awful lot for their efforts. 

Start a price war and there really only one place the money will come from to pay for it and that’s the bottom line. 

What you’ll end up with is a Duncan Banatyne ice cream war. Last two standing work ten times as hard for 1/10 of the return. When the penultimate man falls, the one holding the monopoly can can now  charge whatever they like. Certainly they’d want all that lost profit back if nothing else.

be careful what you wish for

if I can’t afford £20 of cartridges and £30 of clays at least once a month, then it’s time to find a cheaper hobby

 

[ColinD]

Is that correct with Gamebore that they only generate 9m a year in sales ?, would have thought it would be more than that

 

[MartynB]

I’ve just had a quick look at the latest accounts for Gamebore , Hull , Eley and Express on companies house . After tax they are making 5-10% profit approx on sales turnover . Gamebore being the most successful in sales and profit 

 

[Lloyd]

Hull accounts I've been told can be a bit misleading as they also include sales of Wiehrauch accounting for approximately 1/2 their turnover 

 

[Aris]

Nope - it's all back to 'willingness to pay'.  It is the same problem for manufacturers and their distributors/retailers.  In the Just Cartridges example that's simply someone saying I can make more profit if I own more of the supply chain.

We actually see it in every aspect of our daily lives but are often unaware of it, the the buyer's perceived value of the brand that is under consideration has a considerable bearing on how much we are prepared to pay.   

Supermarket vs Shell or BP fuel  is a good example.   Jocker budget cartridges vs Gamebore  - both go bang and break targets consistently - one costs more than the other. Why?

Brand awareness has a massive effect on willingness to pay.   The most valuable company in the world today is Apple.  The products are fairly average compared with the competition however the marketing that supports the brand is simply iconic, the ability to create objects of desire is so powerful people have been known to sell bits of their bodies to be able to say "I own an iPhone".   The willingness to pay amongst the incredibly loyal customer base exceeds every other brand on the planet -  without equal.

Well, I would disagree with regard to Apple - their products are superior to anyone else.  This is part of their success.  They don't own a majority of the market either, though they do make the most profit.  They do this by making superior products and services (not all of them mind you but enough)

I get what you say about willingness to pay - but when true market forces are in play, competition in a free market should bring prices down if price is a factor in the purchasing decision.  The price of jocker and gamebore aren't that far off.  Maybe £10 per 1000 in it?  

I also question a few years ago (maybe 3) I bought some Kent cartridges which I believe are gamebore velocity in a different wrapper, for £150/1000

Has the base cost of materials gone up so much?  
 

If prices just go up and never down, and go up above inflation, you'd be wise to buy 10000 cartridges up front and sit on them until finished.

 

[hofk]

There has been a bit of a component shortage, and with the summer break in Europe that has not helped with some of the supply and manufacturer of some cartridges.

 

[Cosmicblue]

Well, I would disagree with regard to Apple - their products are superior to anyone else.  This is part of their success.  They don't own a majority of the market either, though they do make the most profit.  They do this by making superior products and services (not all of them mind you but enough)

I get what you say about willingness to pay - but when true market forces are in play, competition in a free market should bring prices down if price is a factor in the purchasing decision.  The price of jocker and gamebore aren't that far off.  Maybe £10 per 1000 in it?  

I also question a few years ago (maybe 3) I bought some Kent cartridges which I believe are gamebore velocity in a different wrapper, for £150/1000

Has the base cost of materials gone up so much?  
 

If prices just go up and never down, and go up above inflation, you'd be wise to buy 10000 cartridges up front and sit on them until finished.

I see, I can guess that you have personally contributed to Apple's profitability then Aris??  Thanks, your contribution is appreciated.  Apple's marketing is simply amazing - when they introduced Wireless charging a couple of years back the marketing blurb suggested that Apple had invented it, claiming it as an Apple innovation, the reality was that the competition had achieved it for mass market release using the QI standard about 5 years earlier.  These days, and the real reason the hardware doesn't need to be innovative  is that Apple's locked-in eco-system of services means that it's more profitable supplying media (music, movies, games, payments etc) than relying on 'me too' hardware sales and here we are back at 'willingness to pay'  because the extremely loyal customer base will happily cough up.  It's interesting to note that Samsung has tried really hard to get a media eco-system to generate a services model to match  Apple - and failed repeatedly as the customer base is broader with a much lower willingness-to-pay.  Please don't think I'm anti-Apple, I'm not - massive respect for an utterly brilliant business model.  Please keep buying the products - my shares are performing very nicely thank you!

Back to the cartridge question and why prices never seem to go down - for that we need to look at the supply chain and how prices in manufacturing are arrived at, the truth is that raw materials are just one small piece of the puzzle:

Payroll, NI and pension, capital equipment investment, energy, transport and eco directives i.e. waste disposal all contribute to the 'cost build-up' of the final product - and that's for all suppliers.   The staff expect an annual pay review, pension payments rise accordingly and the relentless rise in energy costs all serve to ensure that the prices need to continue to increase.

Bulk buying cartridges is definitely an option - not sure where one stands with insurance though? 

 

[hofk]

Bulk buying and insurance is a good question if you insure with the NFU Mutual

NFU MUTUAL will not pay for any claim if YOUR CAR or TRAILER is being used for the transportation of high explosives such as nitroglycerine, dynamite or any other similar explosive, or more than 2,000 shotgun cartridges or bullets at any one time.

 

[Aris]

Bulk buying and insurance is a good question if you insure with the NFU Mutual

NFU MUTUAL will not pay for any claim if YOUR CAR or TRAILER is being used for the transportation of high explosives such as nitroglycerine, dynamite or any other similar explosive, or more than 2,000 shotgun cartridges or bullets at any one time.

Just cartridges will deliver free if you buy 10k.  They come on a pallet.  As for home insurance - I'm not sure if that amount of powder will be covered.

 

[Aris]

I see, I can guess that you have personally contributed to Apple's profitability then Aris??  Thanks, your contribution is appreciated.  Apple's marketing is simply amazing - when they introduced Wireless charging a couple of years back the marketing blurb suggested that Apple had invented it, claiming it as an Apple innovation, the reality was that the competition had achieved it for mass market release using the QI standard about 5 years earlier.  These days, and the real reason the hardware doesn't need to be innovative  is that Apple's locked-in eco-system of services means that it's more profitable supplying media (music, movies, games, payments etc) than relying on 'me too' hardware sales and here we are back at 'willingness to pay'  because the extremely loyal customer base will happily cough up.  It's interesting to note that Samsung has tried really hard to get a media eco-system to generate a services model to match  Apple - and failed repeatedly as the customer base is broader with a much lower willingness-to-pay.  Please don't think I'm anti-Apple, I'm not - massive respect for an utterly brilliant business model.  Please keep buying the products - my shares are performing very nicely thank you!

Back to the cartridge question and why prices never seem to go down - for that we need to look at the supply chain and how prices in manufacturing are arrived at, the truth is that raw materials are just one small piece of the puzzle:

Payroll, NI and pension, capital equipment investment, energy, transport and eco directives i.e. waste disposal all contribute to the 'cost build-up' of the final product - and that's for all suppliers.   The staff expect an annual pay review, pension payments rise accordingly and the relentless rise in energy costs all serve to ensure that the prices need to continue to increase.

At the end of the day, cartridges are practically a commodity- except one which never cycles in price based on supply and demand.  It is a bit odd.  What you say is correct, but input costs like lead are often used as a reason for price hikes, yet when lead goes down, there isn't a commensurate decrease in price.  I suppose we just need to suck it up.

As for Apple - they make a superior product that is consistent and 'just works' that's why people buy into the ecosystem.  I wouldn't wipe my arse with any google product.  Admittedly I use a small number of them, but with a long tether.  The superior product isn't the hardware - that is much of a muchness these days.  All the top end stuff is good.  Long term support OS is another issue though.    It's funny though - people say that Apple don't innovate - yet the smartphone as we know it is an Apple innovation.  Android was originally an OS for digital cameras.  I'm really not sure how much further phone hardware needs to innovate.  People just want a phone which just works - and getting 5 years of OS support is a nice bonus.  

If the best one can come up with is their failed attempt to innovate on wireless charging - they must be doing ok I believe the iPhone 12 will have some innovations in that respect.  Not that I care - never use wireless charging myself.  

I've been an Apple user since the early 80's.  Oh and an investor too (not since the 80's).

 

[Cosmicblue]

As for Apple - they make a superior product that is consistent and 'just works' that's why people buy into the ecosystem.  I wouldn't wipe my arse with any google product.  Admittedly I use a small number of them, but with a long tether.  The superior product isn't the hardware - that is much of a muchness these days.  All the top end stuff is good.  Long term support OS is another issue though.    It's funny though - people say that Apple don't innovate - yet the smartphone as we know it is an Apple innovation.  Android was originally an OS for digital cameras.  I'm really not sure how much further phone hardware needs to innovate.  People just want a phone which just works - and getting 5 years of OS support is a nice bonus.  

If the best one can come up with is their failed attempt to innovate on wireless charging - they must be doing ok I believe the iPhone 12 will have some innovations in that respect.  Not that I care - never use wireless charging myself.  

I've been an Apple user since the early 80's.  Oh and an investor too (not since the 80's).

Thanks Aris.  It would be a sad world if we all liked the same things.   

 

[Aris]

Thanks Aris.  It would be a sad world if we all liked the same things.   

Indeed.  Once upon a time I like fiddling and hacking my tech.  Now, in my old age, I have come to appreciate the high tech soft touch way.  There are other manufacturers who have a similar mantra - like Sonos (though not quite to Apple standards - 90% there)

 

[tiptop]

It's a cartel, end of.......

 

[hofk]

So if you buy 10k from Just Cartridges whats the saving.

 

[Aris]

So if you buy 10k from Just Cartridges whats the saving.

Go to their website and enter the quantity for the cartridges  you want and it will quote you on screen.

I had a look, and they don't give any price breaks over 1000 but do offer free delivery for 10000

 

[tiptop]

So if you buy 10k from Just Cartridges whats the saving.

Nothing on the price of cartridges, you just get free delivery.

 

[Aris]

Nothing on the price of cartridges, you just get free delivery.

You do get 2% off and free delivery if you buy 20,000

 

[Lloyd]

It's a cartel, end of.......

Even tacit that would be illegal of course. 
that said, there is really very little price difference between cartridge manufacturers. So there is parity which could look like a cartel to an outsider. They all have their budget to premium range. That just makes good business sense. The company I worked for was a one trick pony. Couldn’t see the benefits of having a similar product with a technical differential that basically did the same job at various price points. TheY (the board and the VC) thought they had to cove multiple application spaces.  Took me a good year to get the message across. 
shot gun cartridges... they all do the same job. A product for every pocket and a technical difference that can be marketed to justify the price difference. 
mans the bottom end, I’d guess there really isn’t a lot of profit, but the volume helps and having that volume in the market helps raise brand awareness. Including our paying for a world champions cartridges. 
yeah, I think we can, we have and we will continue to suck it up. 
god forbid these guys who at one time probably put their house up as collateral and are responsible for the livelihood of many employees who in turn pay tax and spend money in shops.

never quite sure why folks are so objectionable to folks making money   If it we’re easy we’d all be doing it

back to the original point. I find it fascinating that the big four all stick together in their BASC lead free response... 

gamebore since brought out their we can’t do this in such a short space of time quad seal dark storm cartridges

a cartel never works because bits greed that started them and greed that finished them off. 
 

OPEC, Kuwait and Iraq springs to mind

 

[HedgerowPete]

being a complete ignorant dinosaur on anything business, would it not be that two separate manufactures buy the exact same stuff roughly at the same sort of market value prices and produce similar products would have similar prices? put two firms in different countries and i would expect to see differences but two in the uk would be equally priced.