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New Tariffs On RPGs Printed In China
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<blockquote data-quote="Staffan" data-source="post: 7780633" data-attributes="member: 907"><p>I posted this as a comment to the Reddit post, but I think this place could use it as well:</p><p></p><p>I don't intend to cast aspersions on the Reddit poster's expertise regarding tariffs and customs, but I think they're missing how games are priced and sold.</p><p></p><p>Let's say I pay $60 for a board game at my FLGS. And again, let's say that that game is manufactured in China at a cost to the publisher of $8, including shipping. So a 25% tariff should increase the cost to the publisher by $2, so my cost should go up to $62 assuming the cost is passed on, right?</p><p></p><p>Wrong. Because games generally aren't priced based on all the stuff that happens along the way to the customer - that's all simplified to a general markup at each step along the way. The distributor sells the games to the retailer at a discount based on MSRP, and buys from the publisher at a steeper discount. So the distributor might buy that game from the publisher for $15 or so.*</p><p></p><p>If the publisher sells the game for $15, and it costs $8 to have it made and shipped from China, that leaves $7 for the publisher's own costs - R&D, customer service, marketing, and a bit of profit. Assuming that the publisher decides to pass on that cost because they still want the same profit, that means that they will have to raise the price the distributor pays to $17. And the distributor and the retailer are going to keep the same markup, so the price for the consumer will be $68. Or probably $70, because nothing's priced $68.</p><p></p><p>So yeah, that 25% tariff doesn't turn into a 25% price increase for the consumer. It'll probably be more like 15%.</p><p></p><p></p><p></p><p>\* I don't know the exact ratio - the 25% figure comes from an article about pen-and-paper RPG pricing that's about 20 years old, so it might be different for a board game made today. But the point stands regardless of the ratio - a cost for the publisher of $X is multiplied by some factor by the time it gets to the customer.</p></blockquote><p></p>
[QUOTE="Staffan, post: 7780633, member: 907"] I posted this as a comment to the Reddit post, but I think this place could use it as well: I don't intend to cast aspersions on the Reddit poster's expertise regarding tariffs and customs, but I think they're missing how games are priced and sold. Let's say I pay $60 for a board game at my FLGS. And again, let's say that that game is manufactured in China at a cost to the publisher of $8, including shipping. So a 25% tariff should increase the cost to the publisher by $2, so my cost should go up to $62 assuming the cost is passed on, right? Wrong. Because games generally aren't priced based on all the stuff that happens along the way to the customer - that's all simplified to a general markup at each step along the way. The distributor sells the games to the retailer at a discount based on MSRP, and buys from the publisher at a steeper discount. So the distributor might buy that game from the publisher for $15 or so.* If the publisher sells the game for $15, and it costs $8 to have it made and shipped from China, that leaves $7 for the publisher's own costs - R&D, customer service, marketing, and a bit of profit. Assuming that the publisher decides to pass on that cost because they still want the same profit, that means that they will have to raise the price the distributor pays to $17. And the distributor and the retailer are going to keep the same markup, so the price for the consumer will be $68. Or probably $70, because nothing's priced $68. So yeah, that 25% tariff doesn't turn into a 25% price increase for the consumer. It'll probably be more like 15%. \* I don't know the exact ratio - the 25% figure comes from an article about pen-and-paper RPG pricing that's about 20 years old, so it might be different for a board game made today. But the point stands regardless of the ratio - a cost for the publisher of $X is multiplied by some factor by the time it gets to the customer. [/QUOTE]
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