The High Cost Of Games Workshop's Plastic: A Mark-Up Analysis

Games Workshop Group (GAW) has been criticised for its pricing strategy, with some sources claiming that the company is taking advantage of the weak GBP versus the USD to maintain its current sales figures. The company has also been accused of charging exorbitant currency arbitrage rates, particularly in the US market, which accounts for over 50% of its sales volume. In addition to its pricing strategy, Games Workshop has also been criticised for its overhead costs, with consumers bearing the brunt of the company's refusal to streamline its infrastructure. Despite these concerns, Games Workshop has achieved impressive long-term financial results and continues to grow its global reputation, with increasing royalties from the sale of its intellectual property.

Currency arbitrage rates

Games Workshop has been criticised for charging high currency arbitrage rates, which has led to higher prices for consumers. Currency arbitrage is the practice of buying and selling the same foreign currency pairs instantaneously to profit from minor differences in pricing among brokers. This strategy exploits a pricing discrepancy between two currencies, such as the US dollar and the euro.

For example, Bank A sets the rate at 3/2 dollars per euro, and Bank B sets its rate at 4/3 dollars per euro. In currency arbitrage, the trader would take one euro and convert it into dollars with Bank A and then back into euros with Bank B. The result is that the trader who started with one euro now has 9/8 euros. The trader has made a 1/8 euro profit if no trading fees are taken into account. Currency arbitrage is considered to be risk-free if the two trades occur simultaneously, as there is no possibility of the prices changing.

Currency arbitrage ensures that the rates cohere with the rates of all possible combinations of every currency. Economic factors determine the foreign exchange rates of each currency pair. The greater the demand relative to supply, the greater the value, and vice versa, even when no foreign exchange is involved. For instance, if a country never expands its money supply, then the available money becomes more valuable as the economy expands. Thus, the price of individual items decreases: deflation. When the money supply expands faster than the economy, then money becomes less valuable.

Games Workshop has been accused of using the weak GBP versus the USD to its advantage to maintain its current quarter sales. This has resulted in higher prices for consumers, who are stuck with the bill for Games Workshop's overhead costs.

Sales volume

Games Workshop's sales volume has been increasing, with the company reporting impressive long-term financial results and cash returns to shareholders. The company's strategy of increasing product innovation, customer engagement, and geographic coverage has been successful, with the US market accounting for over 50% of its sales volume. Games Workshop is also exploiting its 'library' of intellectual property, with royalties from IP sales increasing by 26% in one year.

The company's current business strategy focuses on maintaining sales above all else, taking advantage of the weak GBP versus the USD to charge higher prices to consumers. This has led to criticism from some customers who feel that Games Workshop's product pricing is too high. Despite this, the company's sales volume remains strong, indicating that consumers are willing to pay the higher prices.

Games Workshop's sales volume is also supported by its global reputation, which is paying rich dividends in the form of royalties from the sale of its intellectual property. The company's Warhammer product line is particularly popular, with some customers expressing shock at the high markup on Warhammer product pricing.

Overall, Games Workshop's sales volume appears to be healthy, with the company reporting strong financial results and increasing royalties from IP sales. The company's focus on product innovation, customer engagement, and geographic coverage, as well as its exploitation of its intellectual property, has contributed to its success. However, some customers are critical of the company's high prices, particularly in the US market, which accounts for over 50% of sales volume.

Overhead costs

Games Workshop's plastic models are marked up to cover the company's overhead costs. These costs include maintaining the company's infrastructure, which Games Workshop has been criticised for refusing to streamline. In addition, Games Workshop has been accused of taking advantage of the weak pound sterling to maintain its sales figures. The company has also been criticised for its currency arbitrage rates, which are said to be propping up its financial numbers. Games Workshop's overhead costs also include royalties, with the company making £7.5 million in 2017 from the sale of its intellectual property, a 26% increase on the previous year.

Business strategy

Games Workshop has a business strategy of increasing product innovation, customer engagement and geographic coverage. This has produced impressive long-term financial results and cash returns to shareholders. The company has also been able to exploit its 'library' of IP in a structural growth market.

Games Workshop has been able to take advantage of the weak GBP versus the USD to maintain its current quarter sales. This has resulted in higher prices for consumers, who are stuck paying for Games Workshop's bloated overhead costs.

The company's global reputation is also paying off in the form of royalties, with Games Workshop making £7.5m last year from the sale of its intellectual property. This marked a 26% increase on the prior year.

Games Workshop's Warhammer product pricing for customers has also been criticised as having a high markup. The company's US market is over 50% of its sales volume, which has helped to prop up its financial numbers.

Customer pricing

Games Workshop has been criticised for its pricing strategy, with some arguing that the company is taking advantage of the weak pound to maintain sales and cover its bloated overhead costs. This has resulted in higher prices for consumers. The company has also been accused of propping up its financial numbers by charging high currency arbitrage rates, with the US market accounting for over 50% of its sales volume.

While the exact amount of the markup on plastic products is not publicly available, it is clear that Games Workshop's pricing strategy has been a source of contention for some customers. The company's focus on maintaining sales and covering costs has led to higher prices, particularly for those purchasing in GBP.

It is worth noting that Games Workshop's pricing strategy is not unique in the industry, and other companies may employ similar tactics to maintain profitability. However, the impact on consumers, especially those in the UK, has been significant.

As a result of these pricing strategies, some customers may choose to seek alternative products or wait for sales or promotions to purchase Games Workshop products.

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