Look what the creeps at UP did.

I just downloaded the UP Licensee application from the UP site. According to this ,the Royalty for Manufacturers is 3% based on the wholesale price, or 0.5% percent of Gross sales if UP items are at least 20% of total sales. I'm not sure what the their percentage of profit is but the shops discount is usually 40% + 12% on many items. That may have changed somewhat but when I had a shop that was the average profit structure. A few were only 25%-30%. Most engines and rolling stock fell in the the 40%+12% profit structure. That would put a 50.00 engine somewhere in the neighborhood of 18.00 manufacturers selling price , maybe even less.I would like to know the Mfrs profit structure.

So , a grand total of 54 cents to UP. Wonder who gets the 4.46 if some are charging 5.00. ???

Non profit organizations , model railroaders and any other hobbyists are not required a fee. If I understand it correctly , no one other than Mfrs have to pay a Royalty.

Heres the link , check it out.

lets learn some subtleties

Hey , I agree with you for the most part. I don't think it's right to charge us more on some already overpriced products.

But when I see so many negative posts accusing someone of being a cheat , or trashing a shop or someone else before getting the facts, it really gets to me. It's not going to hurt UP but remarks like that directed at individuals or shops can be damaging.

I see now that it's not 5.00 UP that is charg>Karl B>> It's corporate America at its capitalist best! . . . Any questions? >

In article , Charles snipped-for-privacy@yahoo.com by Charles Bix dropped his wrench, scratched his head and mumbled,

You're on the right track, however I think your estimates are overly optimistic. If the charge against sales is .005 times the wholesale cost then to generate $.50 per sale on 500,000 units the average selling price would be ~5 times the wholesale cost or $100.00. Looking at the "items to be licensed list" there are only a few items that would retail for $100.00 or more, model locomotives and train sets being among them. The bulk of sales would seem to be geared toward coffee mugs, water bottles and checkbook covers, etc.--all stuff in the $5-$10 range. A sales number of 500,000 units assumes that roughly one out of every 800 people in the US would buy some object with the UP logo on it. For a team that doesn't show up every Sunday, doesn't have a PR machine like the NFL, doesn't have any star players, doesn't have its own sports channel or daily newspaper section, doesn't have 150 million rabid fans; I think seeing any profit over the internal cost is highly unlikely.

Bob

Hi Ken, Would you please explain what you mean by the +12% in the discount? Lynn

Lynn, sorry I didn't explain this better. I'm bad about that :-( When a retail Hobby Shop gets their catalogs all the items are priced at retail. This way you can show the customers the catalog item and price without them knowing your cost. The items are coded so you know Hobby Shop discount amount eg: A=40% , B=35 % and so on. There is an additional discount of 12% with most distributors.

To arrive at your cost on a 100.00 item:

100.00 x .40%- = 60.00 60.00 x .12% - = 52.80 Which actually amounts to 47.2 % discount off retail price for the Hobby Shop. I don't know why they do it this way instead of quoting 47.2% discount. Maybe years ago someone starting offering additional discounts to compete with competition and it stopped at 12% ??..or maybe it was at one time an incentive to pay in 30 days or not get the discount. I don't know. This additional 12% is reflected on your invoice so it's not something you deduct if paid within 30 days. Most distributors charge you 1 1/2% - 2% if not paid within that period.

The distributors also have weekly and monthly specials with discounts of over 60% in some cases. These are the items that mail order houses discount so deeply in most cases.

I don't know what the distributors percentage of profit is. I would like to know. If we knew that then we would know the exact amount UP gets from each engine or rolling stock sale. When I said the mfrs selling price on a 50.00 would be in the neighborhood of 18.00 I was basing that on a distributor profit percentage of 30 % , which is just a guesstimate.

I closed my sh>Hi Ken,

$.02 worth.

It is about money; but not about royalties. UP and others have to protect their "deep pockets" from lawyers and lawsuits. Licensing requires manufacturers carry liability insurance.

If somebody's kid breaks a "UP" mug and gets cut, or swallows a 'PFE" 40 footer or god forbid gets a fat lip from a "Centennial" which launches offtrack in a speed trial, UP could be sued. The plaintiff probably would not win, (stranger things have happened) but they could be sued.

Licensing just gives UP some protection from those who make a living suing people, both lawyers and professional plaintiffs.

UP is not Disney, who bases their business on licensing. It costs UP more to license than they get in return. It also gives them some protection.

Sorry for them and us.

bg

Many thanks Ken.

100 times .4% is .4

.4% is .004

To calculate a 40% discount on $100.00 retail price:

$100.00 - ($100.00 x .4) = $60.00

60 time .12% is .072

.12% is .0012

To caclulate a 12% discount on $60.00 discounted price:

$60.00 - ($60.00 x .12) = $60.00 - $7.20 = $52.80

At least you got the 47.2% total discount right.

I've usually seen the second discount applied as a volume discount. i.e. - the more you sell the better your discount gets.

Paul

Dear folks, This has probably already been said, but the whole trouble is that people wear decorated T shirts.

See, in the old days people wore plain or patterned shirts, and advertisers paid people to carry their advertising. Science has since then found, however, that people can be induced to wear cheap undershirts printed with advertisements, and in public too. Indeed, they are willing to pay for the privilege.

Therefore, the smart salesman no longer pays to put his advertising before the viewer; he just puts it up for sale and somebody buys it. Tom Sawyer got a fence painted this way, I think.

Be cheerful, then, when you buy a radio station T shirt or a set of decals for the Oklahoma City - Ada - Atoka Railway, just as cheerful as you are when you pay for your cable TV, and rest assured that your advertising will be delivered on schedule by the Automated Rail Way!

This has been a public service announcement from Gerard Pawlowski and the Ad Council. Cordially yours, G. P.

Paul....I did make a typing error by putting a decimal where it didn't belong as in .40% , which shoud have read 40%.. Sorry about that.

The way I figured it is right , except for the decimal point for which I humbly aplogize." I no how to spel and figger but just kain't tipe", at any rate I didn't intend for that decimal to be there. I think most anyone that did it would catch that. I think maybe you overlooked the

- minus ,= equals ....keys.

Do it on your calculator and see

100 x 40%- = 60.00 x 12% - = 52.80 . Don't forget to use the % key on the calculator and the - =.

Your way is right , and there are other ways , but as much as I figure percentages this is so much quicker and easier. At least , works for me.

But , for whatever it's worth I stand corrected. LOL Hey Paul , I'm an old grey haired phart , Senior moments and all.

As far as the additional discount for buying more , it was never a factor with the distributors I dealt with in the Hobby industry, except for an occasional promotion. But it is in the other areas I deal with.

Ken Day

A token $1/year would work just as well. I'm sure - well, then again, maybe I'm not - that their underutilized legal staff could come up with an agreement to protect their trademark, and their corporate image [such as it is] from use they didn't approve of. Like, say, Larry Flynt putting a chorus line of artificially endowed young women with the UP shield spray painted on their assets on the cover of a "How To Keep It UP" issue of Hustler. To think of it, maybe they couls be dancing around a little Athearn speed demon diseasel with a UP logo on it.

Or, does it do the opposite? I would argue that licensing increases their liability in such a scenario. If the product that hurt someone has a licensed trademark on it then it makes sense damages could be argued against the UP. If, however it stayed like it is now the UP could have plausible deniability against the maker of the mug because "we did not know, nor did we authorize, our trademark on that mug, they used our logo without our permission". Wouldn't that be similar to writing "Andy Harman" on a baseball bat without his permission and breaking someones arm with it? Could anyone really expect to get anything from Andy Harman as a result of this? I know it's a weird legal time we live in but I am just glad when Arnold is governor all that will change :-)

CBix

Int he model railroad industry the discounts are figured on the discount off of the list price. Let's say it is a $100 item.

Working backwards here is the discounts along the way: $100 list price $60 is what the hobby shop buys it for (40% off). $45 is what the distributor buys it for (usually 50% + 10% off list)

So the manufacturer sells their product to the distributor for $45. There are exceptions like Kadee who does not offer distributors a

50+10 discount, their discount is less. Most manufacturers do however.

50+10 is calculated by fist multiplying your list price by .5 then taking that number and multiplying it by .9.

CBix

Hey Charles, Your discounts are not correct. When I owned a toy store, and I was selling trains online, most of my discounts from my train distributors were

40/10, basically a 46% discount. I had one distributor that sold to me for a straight 50% off, as I picked up the stuff, and paid him cash. Others varied, such as Bowser, only offered a 33% discount. I think I remember that Bev-Bel only offered a straight 40%, one of the reasons I probably didn't do any business with them.... and Bowser. I know KDs discounts weren't very good, I could buy them from my distributor for what they were selling out of the Mags for. Jeff

Not sure what is standard today but back when I had an open dealer account with Walthers the standard discount for 0 scale stuff was usually 30% and unlike the 40% given for H0 and N.

Ray H.

The model railroad industry standard discounts are 40 off to retailers and 50 + 10 off to distributors. I'm not sure what it is for the toy industry. There will of course be some distributors that offer incentives for overstocked merchandise and some manufacturers that do not discount as much.

CBix

Hi Sean nice to see you got your head out of your ass long enough to post on the topic. How about some of those facts Sean. A simple Google search reveals you offer very little to the group in the way of facts.

CBix

Bashing me here wouldn't have anything to do with our disagreement on sniping on eBay a few weeks back would it? Just because you lost that argument isn't a reason to hold a grudge. It's over, we concluded sniping on eBay was OK. Let it go already Sean.

CBix