The price increase will take place on March the 6th, with Plastic miniatures, Forge World and Citadel resin miniatures, Standard and Artificer Citadel brushes, and Spray paints going up and Starter sets, Paint sets, Paint pots, Citadel Tools, Codexes, rulebooks/ battletomes and Synthetic STC brushes staying the same.
Our contention is this; with the increase in the price of electricity, fuel, food and gas around the world, Games Workshop can afford to take a hit for their consumers. Currently, in the homeland of Games Workshop - the United Kingdom - people are having huge increases in the basics of life, putting a pressure on families and budgets.
Now of course you may say that Games Workshop are a business and they need to make money - and you would be right, because if they didn't make money we wouldn't have our little minis. Correct! But as our hobby is a luxury compared to the essentials of living, Games Workshop not increasing the prices this year, and potentially taking a financial hit for 12 months not only serves their customer base, will mean that the new releases this year will be more likely to be successful, will keep loyalty to their brand from a happy Community, but they can afford it!
Here's an amazing statistic - in 2020, the company made sales of £361m and an operating profit margin of 43%, higher than Google owner Alphabet Group’s margin of about 25%. Now we all know the story of how 2020 was COVID lockdown and people got back into hobbies, and you could say this was a once off - but it's not, in fact both 2021 and 2022 were bigger years for their gross profit margin.
Games Workshop FY 21/22
Gross margin 66.68% / Net profit margin 28.78% / Operating margin 35.41%
So is this good?
According to Marcotrends: "Ideally companies want an operating margin of 15% or higher. 10% is considered average". This sees Games Workshop having over twice an ideal result and over three times as much as an average performer would.
Games Workshop will say that that not everything went their way in FY 21/22 so they need to recoup, well according to The Financial Times: "In 2022, cash reserves at Games Workshop Group PLC fell by 13.80m. However, the company earned 121.50m from its operations for a Cash Flow Margin of 29.29%. In addition the company used 32.10m on investing activities and also paid 103.60m in financing cash flows." So in one way yes, the cash reserves were down, but they made it back in other ways. Overall this is a profit being written off as a quasi-loss.
To be fair to Games Workshop, their statement that: "We’re sure it hasn’t escaped your notice that a lot of things are more expensive than they used to be: food, materials, transport – essentials and luxuries alike. Stuff costs more to make and more to move, and Warhammer is not immune to these changes..." is true. However, our contention is that with the very very healthy figures we have shown you above, that even if they didn't raise the prices this year to support the Community who really are going through a rough trot, they wouldn't lose. In fact the public attention for them not raising prices to help their Community may go some way to repairing the frankly awful record Games Workshop has for pricing since Age of $igmar was released. We all know about the international pricing, with New Zealand and Australia paying hefty prices compared to the US and Canada (counting the UK is unfair as their is comparatively little transport cost compared to internationally), and despite that the Community remains loyal.
Games Workshop could choose now to say "Hey Community, we know you're going through rough trot, and yes we do factor in a 6% increase to prices each year, but this year with so much uncertainty and huge rises in the essentials of life, we have decided to not implement the price increase. Will this make us tighten our belts? Yes it will, but for over 40 years, through strikes, recessions and COVID you have stood by us so we are going to stand by you. Our hobby is a luxury, so if we can help you get through the big bills and still be able to afford some hobby, then that's a small price for us to pay."
How hard is that? It's not hard at all!
Planning on a 6% increase each year if probably fair for a company, but there's the people factor they really have to be cognoscente about. Not all plans can stay on the path we want, and for a company that can afford to not put the prices up, it would be a really responsible act from them to the very loyal fanbase.
Looking at the facts and figures, should Games Workshop look outside their plan and think about the Community at large or should they raise their prices no matter what is happening to their fanbase?