Why Are Kato N Scale Locos Priced So Low?

[Ed Kapuscinski]

You all may remember that, a few years ago, $59.99 was the going price for "basic" Atlas units (GP40s, SD35s, B23s, GP9s, etc...).

Then, the factory shakeout in China caused significant price jumps for goods produced there.

However, because Kato uses their own factories in Japan, they weren't subject to the same factors.

Now, it is impressive that these are even cheaper than the equivalent units used to be (I think the Kato stuff was usually around $69.99 during that time period), but I can only guess that's because of either currency fluctuations (I don't track USD => Yen trends), or that the tooling has been amortized a while ago. The Es are some of Kato's oldest tooling (I remember them being really common in the mid to late 90s).

[loyalton]

It's not the HO vs N size/volume in shipping. For a bottle of Australian wine, the overseas container shipping cost adds like 25c to the cost per bottle (say, very roughly the size and weight of a medium HO engine) http://www.bloomberg.com/news/2013-01-30/australian-bladders-become-new-normal-for-wine-exports.html The haul from US port to Illinois probably costs more.

What I think is happening here with MBK is not their standard discount pricing but a blowout price to clear inventory. Were quantities listed down to a couple of engines? I think they're sold out now. I hope you got yours. Compare prices with the Alaska E8s, which are 1 per customer. Note in the link given for the other dealer, there's 1 item left of each.

This is roughly following the sales model very evident with books. That is, when absolutely new, the price is often discounted somewhat less than MSRP. That's going to be different depending on whether the seller is a small independent bookseller, big bookseller or whatever. Their (wholesale) costs and necessary profit margin are going to be different. When sales drop off big time, easily tracked by inventory programs, and there are still unsold books, the price is dropped big time, often to dealer cost, sometimes less. The dealer then may make no profit on them but does recover its cost/most of its cost to be able to buy the next batch of different new books. The book publisher or wholesaler might also offer a similar deal to get rid of their inventory. By extension, few companies in any business nowadays keep a deep inventory -- they can't afford to.

When everyone's (manufacturer, wholesaler, dealer) pre-order is figured closely/correctly so they have zero inventory, there's no excess anywhere, therefore no blowout prices like this.

[Kisatchie]

What I think is happening here with MBK is not their standard discount pricing but a blowout price to clear inventory. Were quantities listed down to a couple of engines? I think they're sold out now....

I'm pretty sure the E8 A and B units have just arrived at MB Klein, since there are 30 A units and 9 B units still in stock. No need to blow out inventory yet... they just arrived.


Hmm... I'm down to my
last 9 termites...

[loyalton]

Hm. Just jumped back over to MBK's site. They're not findable if I just search for N scale and Kato, but they are under their new listings. I see $95 for the non-KOBO version price there. Is Ms. Dee hacking their site? Their typo now corrected?

[Kisatchie]

Hm. Just jumped back over to MBK's site. They're not findable if I just search for N scale and Kato, but they are under their new listings. I see $95 for the non-KOBO version price there. Is Ms. Dee hacking their site? Their typo now corrected?

The $95 price is Kato's list price. For some reason (Kato doesn't want anyone thinking their products are "cheap"), Kato insists that hobby shops not advertise the selling price, so M B Klein just shows the list price. However, if you put the locos in your shopping cart, the selling price of $59.99 appears.


Hmm... Kiz wants to sell
me 3 bananas for $59.99
each...

[Ike the BN Freak]

      These locomotives might cost more if they were DCC or DCC Sound Equiped, as they are they are DCC Friendly /Ready newer mechnism then earlier runs.

Every E8/9 that Kato has ever made has been DCC ready.  Even the original runs from 1993 were DCC ready.

[loyalton]

The $95 price is Kato's list price. For some reason (Kato doesn't want anyone thinking their products are "cheap"), Kato insists that hobby shops not advertise the selling price, so M B Klein just shows the list price. However, if you put the locos in your shopping cart, the selling price of $59.99 appears.

Yah, the MAP price thing; I see that now. Well then, I'm not gonna look a near-gift iron horse in the mouth.  They're beating everyone else that's selling online by miles and not just for IC. I'm moving over to the heckifiknowwhatsgoingon side of the fence with Kisatchie. Pass the banana bread, Ms Dee, if you please.

[peteski]

Has anybody checked other retailers?  I tried to go to BLW but the firewall forbid me:
Block reason: Gateway BOTNET Filter Alert
IP address: 173.254.28.128
Connection initiated towards Botnet server.
 

I wonder what Pete's price is for those locos.

[Bendtracker1]

Not much more.
$63.98

[Kisatchie]

Has anybody checked other retailers?  I tried to go to BLW but the firewall forbid me:
Block reason: Gateway BOTNET Filter Alert
IP address: 173.254.28.128
Connection initiated towards Botnet server.
 

I wonder what Pete's price is for those locos.

I just checked and got through. Pete's price is $63.98 for the Illinois Central E8s.


Hmm... the difference
between Pete and MB Klein
is about four pounds of
termites...

[peteski]

So, that is the street price for those new locos. In my experience MBK and BLW are usually withing few dollars of each other. 

[wes_sutton]

The reason N scale locomotives cost less than the same in HO is simple.

It's not that being less detailed cost that much less or the raw material cost is less, or labor. 

Takes up less space in the container. 

Bill Kepner

But that wasn't the question.

Katos's MRP for N gauge locos is considerably cheaper than other manufacturers MRP for N gauge locos.

There are plenty of examples where the MRP for N gauge loco is similar to or even higher than that of an HO locomotive.

The same question raised by the OP could also be applied to Kato's coaching stock. As well as being cheaper than most other manufacturers it is an absolute bargain compared to UK and European N coaching stock. Happy to be corrected, but there seems to have been minimal upward movement in Kato pricing over the last decade especially in real terms.

[Albert in N]

My guess is that others have simply raised their suggested retail prices.  This has even happened on rolling stock.  Maybe that is why my last purchases over the past two years have been Kato and Micro-Trains.  I like to get the most for my buck, plus actual quality control is a big plus!  It is a real downer to pay good money for something that does not run and has to be returned, or a freight car that loses coupler pins.  So far, I have never had any problems with Kato diesel locomotives or rolling stock.   Also, I enjoy Micro-Trains rolling stock and conversion couplers.

[mcjaco]

Kleins isn't the only one doing it...and not just the E8's either.  C44-9W's, SD45's, C30-7's etc, etc, etc...wish they would come down on the SD70ACe and ES44's...

http://www.lombardhobby.com/SearchResults.asp?Search=Kato+f3

Cheers,
Brian

Lombard has the best prices around here.  It's like a stampede at Trainfest when the doors open to get there first. 

And thanks, now I may run over there during lunch..... 

[Denver Road Doug]

Wow, after 10,423 forum topics complaining about prices being too high, we now finally have one about them being too low!   

The biggest consideration here is...the Kato's being referenced are on sale. 

It is true that the MSRP's on Kato's have held fairly steady while Atlas has bumped up and the new guys like FVM and Intermountain's more modern releases have leaped pretty far ahead.  So part of it is timing I think...probably see Kato's prices impacted sooner than later.   

And finally, the reason they are on sale is that Kato really is doing reservations to "build to order" anymore...strangely enough.   So they're gonna have a few missteps with their guesses of how many to build...and thus a surplus and thus a fire sale.  (a less extreme one than the rumored thousands of GP20's that LL had sitting around.)