Greetings from Mayfair Games! Our team wishes you all well. After all, we wouldn’t be looking forward to our 27th year of publishing fine games without your strong, enduring support.

We’re writing to you to outline our retail pricing policy. Our manufacturer’s suggested retail prices ("MSRPs") reflect our firm belief in a healthy balance between “free trade” and “fair trade.” Mayfair Games embraces and supports healthy competition. We feel that in order for our market—and thus our company—to prosper now and over the long term all our partners in the distribution chain need to respect this balance.

Whenever a firm threatens healthy competition among our trade customers, and thus endangers this balance, we must act in a vigorous, even-handed fashion to police the distribution and sale of our fine products. Mayfair Games doesn’t intend to specifically dictate how its customers do business… but we will act in cases of predatory, irrational, or patently detrimental trade activity.

• Distributors should sell Mayfair Games products at no less than a 25% margin or no more than a 50% discount off MSRP.
• Retailers should sell Mayfair Games products at no more than a 20% discount off MSRP, or the appropriate ratio given exchange rates.

We’re well aware of the fact that our individual customers operate under individual circumstances. Some are more profitable than others. Some seek to establish themselves or need to acquire some critical market share. Mayfair Games understands, and sympathizes with, this reality.

At the same time, we’ve been in business long enough to know that that it’s far better for us to encourage healthy competition rather than cutthroat discounting. Ours is not a mass-market business, nor is it a business based on inter-changeable widgets. Our wares are special, unique, premium games. Savage discounting is unnecessary and counter-productive for everyone in the mid-to-long term. While some individual consumers might benefit in the short-run, rabid discounting only acts to erode the profits and incentives necessary to keep our market healthy.

As it is, consumers receive great entertainment value for full MSRP. It’s unnecessary—and even a bit insane—to subsidize folks who already enjoy a good deal. It is far healthier for us, our distributors, and our retailers to derive a healthy profit from the sale of our games than it is for us to see them dumped into the marketplace. Every viable firm in our distribution chain should collect its fair profit and have an incentive to further promote, buy, and sell our games.

Our trade customers should endeavor increase their profit margins, not their discounts. They can thus improve service, which—along with the high quality of our games—should be the principal means of growing our market.

Mayfair Games asks all its trade customers to understand that we are partners in growing a healthy games market. Again, we want free and fair trade. It’s healthy… for all of us. It’s in our best interest… and in the best interest of the entire social game industry.

That’s all for now. Take care.

For Mayfair Games,
Pete Fenlon
(CEO, Mayfair Games, Inc.)

Since my sales clerk is not as knowledgable on games as I am, I stepped out and had a good conversation with the couple, in their late 40s, who wanted to find the Cat-On Game.

I showed them the game, discussed its playability, and asked how they heard of it. It was for their son, returning from a tour in Iraq, and he wanted it. They then expressed absolute sticker shock when I showed them it was $38.00.

The father was a bit surprised that a “game” could cost $38.00. Why they had just bought a nephew a set of Monopoly for $14.99 at a TRU in Kalamazoo!! How could this (smaller) game be worth more money!?!?

I asked them how often they played their favorite game. They were a bit surprised by the question, so I asked them whether they played cards, bowled, bingo, paintball or volleyball. This confused them more. I explained that all of these were examples of “playing a game"—though the games were far different, they were all games.

I went on to explain that Monopoly and Settlers of Catan were not competing products. That Settlers of Catan was a game product that competed for their time with a video rental, or maybe playing Euchre with friends. I also said, “I am not sure I really like this game, I haven’t decided yet. I have played it only about 500 times.” They laughed, then I explained that I was not exaggerating—I had played Settlers about two or three times a week for about four years.

They asked why I wasn’t bored with the game, so I went into the replayability factor of having a randomly generated board with the tiles, and how starting positions were taken, etc. I further went on to say that if they played Catan only ten times, it would have cost them less than $2 per player, per game. I also mentioned that most people who played and enjoyed the Catan series of games played it more than ten times.

Then I closed with my best pitch: “If you buy this game and play it—and decide you don’t like it—I will take a return on it, opened and played, for a full refund.”

They bought two copies, one for their son and one for them. They are coming to our next game night to play Pillars of the Earth, too.

Nicely said.

Excellent article.

I was also wondering: which shop would want to not carry any of the Catan games? That seems like a bad idea!

Woot! Pretty much sums up my thoughts as well on the arguement.

Great article.  I guess I’ll have to re-write my own column now because three days of Mayfair handholding in a row would be a bit excessive…

Luckily, I have this Essen Fair thing to draw upon for writing inspiration!

BTW, Eric, $7.50 for ice cream!  Ye gods.  One more reason to be thankful of the Midwest - the low cost of living.  The other would be that it’s hard to be close to a Red Sox or Patriots fanatic over here.  Phew.

Your next-to-last paragraph is a beautiful encapsulation of my thoughts on the BGG whiners.  Well done.

I live in Massachusetts and most of my gaming buddies are Red Sox fans, Dale, so thanks for rubbing it in…

Thanks for the in-depth look at this issue.

Personally, I don’t think there are too many games in their catalog that are worth the extra premium price.  They really need to take a long hard look at their line if they truly want it to be considered full of “...special, unique, premium games.” At the moment, it’s more like “some special, unique, premium games, with a bunch to quite mediocre stuff.”

I think BGGs top 100 bears this out.

I also think that they feel comfortable with this move because of the Catan franchise.  It is, arguably, *the* game in their line-up they can count on to sell, both within and outside the core hobby market.  With Catan available on the Xbox, they are in a position to expand the market for this game significantly.  This might be the first step towards that goal.

Of course, I must acknowledge, I have no retail experience.

They can do whatever they wish.  I’ll still buy their games if I really want them, but I’ll be less inclined to buy the ones I’m on the fence about.

I think the “only $7.50” example you give is a bit misleading because it only addresses the impact of the increase of a single game from a single company.  Expand that example to Rio Grande, FFG, Z-man, Days of Wonder, etc and you get a lot closer to why people are afraid of this trend.  Spending an extra $7.50 on a single game is not a big issue.  Spending an extra $187.50 on 25 games over the course of the year is a little sharper.  And this doesn’t even take into account the reduced spending power of the dollar against the Euro.

Anyway, there are so many points of view on this.. I agree that the sky isn’t falling, boycotts are not necessary, etc etc… but I am certainly curious as to how this will play out.

==Your next-to-last paragraph is a beautiful encapsulation of my thoughts on the BGG whiners.  Well done.==

[sarcasm] Yeah, it’s great that were so much better than the unwashed masses over there!  [/sarcasm]

C’mon, knock off the BGG-bashing.  It’s just plain inappropriate.

Well Done Eric. Thanks for the article.

Peace

Kevin Wood wrote: Spending an extra $7.50 on a single game is not a big issue. Spending an extra $187.50 on 25 games over the course of the year is a little sharper. And this doesn’t even take into account the reduced spending power of the dollar against the Euro.

Too true—but knock three to five “maybe I’ll try these” games out of your orders, and you’ll spend the same amount. Lower sales on iffy games will inspire companies to publish better games, cause companies to go out of business, or lead to endless Tangathons in which everyone buys tons of “ennh” games on the cheap.

While I agree that Mayfair should be able to set whatever retail pricing it wants, I also don’t think that this change is going to have much impact and it might only be negative.  The online buyer will either boycott Mayfair or continue to buy online at a 20% discount.  I don’t see the online buyer shifting to the B&M retailer while there is still a 20% savings to be had.

Also, does this prevent a store from clearing out old inventory at clearance prices?

The only way Mayfair can make this good is to use this as an opportunity to reconnect with the B&M retailers and manage their sales channel directly.  Listen to this podcast with a Games Workshop sales rep to see what could be accomplished: http://www.2d6feet.com/?p=39

Well I cannot speak for the rest of the world of gaming, I can only tell my own personal reaction. Being that games are becoming higher priced and me being on a somewhat static gaming budget. I will have to be more selective in my future purchases. If prices rise higher than what they are today(even if it’s just the MSRP they are still going to be higher), indeed I will probably be buying less games and only be buying the creme of the crop as a result.

I am just one consumer(-1).  Am I a unique consumer?

"Personally, I don’t think there are too many games in their catalog that are worth the extra premium price.  “

It’s precisely this entitlement mentality - that an extra few percentage points above wholesale amounts to “premium” pricing - that is the problem. 

All boardgame product has come to be viewed this way by the core gaming public, such that no game company’s product is deemed worth it’s asking price. 

It reflects poorly on the core gamers and, even worse, it reflects poorly on the games and the publishers.

"Businesses can’t make decisions based on the whims of this unreliable group. From Mayfair’s point of view, these people make up a small percentage of BGG visitors, who are themselves a speck among the number of people who play games worldwide. When you’re hunting for elephants, you can’t let yourself be bothered by the swarming of gnats…”

Just remember BGN is about .1% the purchasing power base than BGG.. 

What BGG and BGN is, is a sampling of the industry, and should be taken lightly at it’s own peril.

"Too true—but knock three to five “maybe I’ll try these” games out of your orders, and you’ll spend the same amount. Lower sales on iffy games will inspire companies to publish better games, cause companies to go out of business, or lead to endless Tangathons in which everyone buys tons of “ennh” games on the cheap.”

This is also the crux of the court ruling that allows such a policy - it relieves part of the burden of competition from the retailers who, by selling identical product, are forced to compete through pricing and shifts it to the publishers who will need to compete with better product.  By removing pricing considerations from the retailers, they are free to use the additional income generated to provide better service to customers (and will need to to keep a loyal customer base).  It’s a win-win situation.  Better products and better services.  Let’s hope more publishers adopt this policy.

"What BGG and BGN is, is a sampling of the industry, and should be taken lightly at it’s own peril.”

And they should take themselves too seriously at their own peril…

I too see that quite some people seem to think that no game is worth the MSRP, and that’s not right, and not good for the industry.

So, I’m hearing that the main fall-out from this decision is that buyers will become more selective?  Drat!  That pretty much destroys any hope of getting some of my more mediocre designs published!  Guess I’ll have to self-publish, and let Internet retailers discount them so that someone will buy them :-)

Seriously, if it keeps companies from moving mediocre product, and thus, looking for better designs (and designers), isn’t that what we all want?  Wouldn’t you rather spend $50 on the next Puerto Rico than on 5 discounted but average and unoriginal games?  (Yeah, I know, you’d rather spend $50 on 5 Alea titles, but this is real life)

"Seriously, if it keeps companies from moving mediocre product,”

Agreed! So what does this mean for Mayfair. ;)

Jeff Allers wrote:
(Yeah, I know, you’d rather spend $50 on 5 Alea titles, but this is real life)

Well, Jeff, if i look thru my game closet, I do have extra copies of Eiszeit, Fifth Avenue, Rum and Pirates, Notre Dame and Palazzo.  Where should I send them?!  ;)

Dale

Dale Yu wrote: “...it’s hard to be close to a Red Sox or Patriots fanatic over here.  Phew.”

Yeah, but you’ve got all those Buckeye fanatics over there.  Of course, I can’t even escape THEM waaaay over here.  Of course, another colleague of mine here is from Florida…

=="Personally, I don’t think there are too many games in their catalog that are worth the extra premium price.”

It’s precisely this entitlement mentality - that an extra few percentage points above wholesale amounts to “premium” pricing - that is the problem.  ==

It has NOTHING to do with a sense of entitlement.  And I have to admit I really find this word being (over)used to paint people who have different opinions as silly and “not to be taken seriously.”

It does have everything to do with whether or not I think a game is worth it’s MSRP.  And frankly, there are a whole lot of games out there that are NOT worth their MSRP.  Just because Mayfair thinks Quo Vadis is worth $35 doesn’t mean I’m willing pay that much for it. 

Yes, the designer gaming market does not operate on huge quantities of scale.... so it is to be expected that a copy of Bang isn’t going to cost the same as UNO. 

However, that fact doesn’t isolate it from the market and price comparisons with their mass-market brethren.  $50 dollars is a LOT of money to pay for a game, even if it you take “hours of enjoyment” into consideration.

Eric, I have no problem if Mayfair wants to establish themselves as a boutique product, although that simply makes it less likely I’ll buy their games.  Actually, I have no real problem with the whole new policy.  I do find their veiled threats toward the online retailers a bit alarming and somewhat representative of the head-in-the-sand attitude that Mayfair has shown throughout much of its turbulent history.

E-tailers are here to stay, barring dramatic changes in the current retail environment.  If practices were established that forced them to disband, I think the hobby would suffer just as much as if all B&M stores vanished tomorrow.  A balance needs to be established so that both types of businesses can survive, with the best of each allowed to flourish.

That being said, I just don’t see the long-term effect of this policy being that dramatic.  For real change to occur, other publishers will have to follow suit.  I agree with you that successful companies know their business better than outsiders and should therefore be given the benefit of the doubt.  But Mayfair has made sufficient blunders over the years to inspire a healthy skepticism, so we’ll have to wait to see how this plays out.

As for how meaningful an $8 increase is, it absolutely makes a difference.  Of course if the game was a must-have, it would have no effect at all, but for me, as for Mike Chapel, those designs are few and far between.  More often, I’m debating between two or three options, as not only gaming budget, but storage is a genuine concern for me.  If I’m undecided between the Mayfair game and an equivalent Rio Grande title (which usually have a lower MSRP to begin with), a difference of $8 or so makes my choice much easier.  Like Mike, I don’t think this is an isolated opinion.

Mayfair is free to raise their prices and I am free to buy Rio Grande games, which offer higher quality at a lower price.

Obviously, I’ve said elsewhere that I personally believe that this is a good-faith effort by Mayfair to help rationalize how games are sold. I think that they are trying to doing the right thing, and clearly not trying to price-gouge. It may end up being that the real winners here are the online retailers, who won’t lose much business but who will get higher margins.

But Eric, at some point your logic has to be backed up by data. Your arguments are completely reasonable, but in reality, we have no idea how many people are sold a copy of Settlers of Catan because they ran across one in a hobby shop, and how many people buy Settlers of Catan through word of mouth, exposure on the internet, or whatever. We don’t have data to back up the instinct that retail stores provide valuable service. Personally, I’d bet that in the internet age, the random walk-up Settlers purchases are minimal compared to word spreading from friends and on the internet. The internet is where people, especially the young people who dominate gaming, are these days, and where they find information. What’s probably the biggest new exposure of people to Settlers of Catan? Xbox live. If I play and enjoy the game on Xbox live, am I the sort of person who is likely to think, upon wondering if I could get a physical copy to play with my friends, “oh, I know, I’ll grab my copy of the Yellow Pages and look under Games and Hobbies for a retail shop”? No. I’m going to use Google or Yahoo! to look up “Settlers of Catan” and find FunAgain or Boards and Bits. Or I’ll go straight to Amazon, who - at last check - does sell the game, and who I already trust.

At some level, Mayfair’s press release is contradictory. They say they have a boutique, niche product. Which they do. But then they say they need a strong retail presence so that random people can buy it. Which, near as I can tell, they aren’t going to, at least not in the US, not yet.

I actually do buy to some degree that Mayfair doesn’t want to see deeply discounted games giving the impression that their games are of lower quality (even if by far the two most outstanding games in their line - Settlers and Modern Art - are the cheapest, which admittedly does sort of cast doubt on the whole concept). But if that’s their goal, I’d rather seem them jack up prices across the board and let their vendors have the price flexibility to compete on price and service rather than straight-jacketing everyone by dictating prices. Unlike Apple iPods, service does really matter in the games industry, something too many retailers don’t get (I’ve shopped at retail shops that I consider pretty good, yet never seen even one that provides every service you mention).

The bottom line is, it seems to me that what Mayfair really wants is to have retailers who give good service. This, sadly, they cannot dictate. In fact, dictating prices this way may in fact be counterproductive, as they are relieving competitive pressure on B&M shops and so (perhaps) allowing them to slack off on service because they are now price-competitive. Who knows?

Given that no hard data has been provided, personally the best thing seems to me to be to just let the market sort it out. Jack up their prices and let everyone compete on price and service on a level playing field. Or turn the screws on B&M retailers, who to me are the ones who usually fail to deliver on the service end, rather than effectively subsidising them because they think they need them for some reason.

Regarding the “it’s only $6, what are you complaining about?” argument, sure, I’d pay an extra $6 (or $12, or $20) for Settlers or Modern Art and be happy to own them. But for Age of Discovery, Against the Wind, Dos Rios, or Leonardo DaVinci - the averagely decent games in Mayfair’s line - these differences matter. I buy retail more often than you might think because I tend to buy single games anymore, but these are all games that I would not pay retail for but was willing to wait and take advantge of lower, discounted prices to buy. Mayfair has some great games, but they have some average or worse games as well, and I predict those will suffer if prices on them goes up by 20%-ish. Phalanx and DaVinci are not as reliable partners as Kosmos. On the other hand, if this policy encourages them to solidify their line and not sell the substandard stuff they and their partners produce, that can only be a good thing.

The bottom line for everyone of us interested in fine board games is simply their existence.  Regardless of policies made by Mayfair or anyone else, missteps will be punished by the basic principles of economics.  As long as there are people interested in providing these types of games, and people interested in purchasing them, each will look after their own interests and a balance will be achieved.  Demands of ultra-low pricing by consumers or ultra-high pricing by manufacturers will be met by the same consequence--not games for anyone.

I am very surprised to see such a condescending attitude towards BGG’er’s opinions from the current and the former editor (in the comments for Scott’s column) of BGN. 

I think most of the commenters were quite aware that the price of the game to the store is ~50% and, in most cases, their posts reflected this knowledge.  There were some examples of hyberbole and some nonsensical posturing (on both sides), but in general there were many valid points made on “the thread.”

Many of us do not find the inherent value in a brick & mortar store that you seem to.  Instead of implying that we are lackwits, maybe you should acknowledge that people will value retail “services” differently and reach different conclusions.  There are a couple gamestores within 30 miles of my house.  But, I’d rather spend the hour commute playng games rather than driving to and from the store.  Online stores put the games on my front porch.  Add to that, unless I have questions about the next Magic release, I am not going to learn much from the employees of the stores nor am I interested in trying to assemble a group of gamers there.

The idea that enforcing a max 20% retail discount will move price conscious gamers’ purchases to retail stores is flawed.  If we are all such cheapskates, we’ll still prefer the 20% discount to 0% discount, right?

But, as often as it’s repeated, “It’s only $7.50!” it’s still $7.50.  Multiply that by the number of games your readers own and it’s real money that could be spent on other games. 

Do all (or any) of the fans of this move pay full MSRP for their automobiles?  If not, why not?  Surely you’ve researched your purchase, feel that it’s the best fit for your needs, think the auto is a quality product and wouldn’t begrudge the dealerthe extra 10 or 15%, right?

There are several Mayfair games that wouldn’t be in my collection even at 35% off, but when I had the 50% discount coupon from the Ribbon Chases, I grabbed them just in case I might sometime want to play them at home.

They do have some games that I enjoy very much.  In the future I will probably try most of their games, but only purchase the good ones.  And I will, most likely, make that purchase at an online store.

If an online seller has Mayfair Games at 20% off and I order enough to get free shipping why would I go to a FLGS and pay full retail plus sales tax?  Also of course you can find out if the game is even in stock with a few keystrokes. I live in Las Vegas and since the Game Keepers were closed by Hasbro it’s been pretty much a wasteland here for FLGS that have a large selection of Euros.  There is no Flags that have any amount of walk up customers like in malls or shopping centers with folks strolling by and walking in.

Mayfair might be a player if they had more games that most buyer would like to purchase.  I’m a case in point - of the games released by Mayfair so far this year I have purchased only one (Before the Wind) and might buy one release due out before year end.  Then there is Rio Grande of which I have purchased 12 of their new releases and want to add 6 more that are due out this fall.

Not sure if any Flgs will be opening soon due to this change of policy by Mayfair.

Mayfair might be a player if they had more games that most buyer would like
to purchase.

For Mayfair, you have to remember it’s all about the Settlers franchise, or so I would guess. While it’s true Rio Grande has more new games that gamers want to buy, I imagine basic Settlers alone does more volume in any given time than the top 5-10 new RGG titles combined.

The “B&M stores are essential to the survival of the hobby game market” advocates have two fundamental questions to answer to me or I will remain skeptical of that position.

1. At the same time there has been great wailing and gnashing of teeth over the epidemic of B&M demises, new game companies have been sprouting up like weeds and there are an abundance of hobby titles released. Someone is buying these games. If they can’t get it at a B&M because it is closed, where are all these sales coming from.

2. If a B&M is necessary for the hobby game niche to survive, why are their gaming groups in areas without B&M stores? How do those gamers get together and where do they play? If whatever they do works why is it impossible for the same thing to happen elsewhere, even where there are B&M outlets currently.

Now, it is possible that Mayfair’s policy may work for Mayfair because they have the Settlers franchise. They may be in a position closer to that of the CCG publishers (where I can understand how a B&M presence is vital since tournaments are so important to them) than to Rio Grande. There may be fundamental differences in markets. That’s why I would also expect FFG to be the board game publisher most likely to follow Mayfair’s lead. They definitely have more appeal to the same market as the CCG makers and could gain more from a stronger B&M presence. Rio Grande, not so much. Convincing someone in a FLGS for a CCG league/tourney to try Settlers or WoW:TBG may be an easier sell than getting them to try Arkadia.

Eric, I think you, and Mayfair, greatly over estimate the services provided by B&M stores.

Here we have exactly one mom & pop book/game store and one small HobbyTown chain store. It has been several years since the last time I actually played a game in a B&M store. Why, because the 9 member gaming group to which I belong always plays in one of our own homes. Why, because B&M store hours are not incompatible with our gaming hours and it is simply more comfortable to play at a member’s home. And I suspect that happens a lot more than you think; however, that is only an opinion, as I, like you, lack any supporting data.

Alright, so what’s the impact of the Mayfair policy. Well, collectively, seven of us have documented collections of 1,145 games on BGG of which 40 are Mayfair (22 titles w/duplicates) or 3.49%. So, probably no impact; we just don’t by that many Mayfair games. Maybe though, when we do, only one person in the group will get a copy of a Mayfair game, instead of several. Will we now wend our way to the B&M store to buy those that we do purchase. No. Why, well in addition to the 20%, we pay no sales tax, another 8%+, and since we buy as a group, we pay no shipping. Instead, we will continue to purchase from to online retailers, whom, I’m, sure, will find other means to incentivise our continured shopping with them. Again, I think there is much more of this kind of activity going on than you think, but that is still just my opinion.

So, even if all game publishers went to the Mayfair policy, it still wouldn’t be worth our financial interest to go to the B&M store. Based on just the five online orders I have handled for the gaming group, which totaled 39 games (7.69% Mayfair) for $1,160, would now cost approximately $1,450. So, we would either pony up the extra $290 or buy $290 less games (not necessarily a good thing for game publishers). So, I’m guessing, that the policy will not have the desired effect. Thx.

After a little more contemplation, I think that in the end this may be a tempest in a teapot.

If the 20% discount were to become an industry standard, then online stores could offer free shipping from the first dollar and also generous rebates or point systems. The bottom line would be the same, the numbers would just go in different columns.

Good point, Paul.

I like Paul’s point as well.  The online stores just have too many potential ways to achieve the same purpose.  Maximum discounting *does* seem to be a self-defeating practice, assuming that the goal is to prop up the B&M stores.

Re: offering other discounts like free shipping on Mayfair games, I assume this could be as easily flagged as violations of the 20% rule. While there certainly ways to push the numbers around, if a company ThoughtHammer or Boards & Bits started offering Mayfair-specific shipping discounts or incentive programs, that would be pretty obvious and Mayfair could flag them.

If Mayfair’s policy became an industry-wide policy, then the online folks could easily break any 20% rule by fiddling the shipping numbers or having incentive programs (I sort of assume that’s what Amazon’s Super Saver shipping is for?). Even if just a majority of publishers went that way, I think online vendors could jigger the numbers to make them work out how they wanted.

Another thing that I think bears mentioning is that from everything I’ve heard, board games are not a major chunk of your average hobby shop’s profitability. They make money on miniatures and CCGs. Boardgames are a bonus. As long as the minis and CCGs are primarily where the money is, no amount of price control will make their staff more knowledgeable.

Chris,

If the policy doesn’t go beyond Mayfair, then the OLGSs don’t really have to do anything. If they sell 50% fewer Mayfair games they will make the same gross profit with a 20% discount as they did at 35% of, with less costs. If some of the potential Mayfair purchases that are lost turn into purchases from other manufacturers then the OLGS is well ahead. My thouroughly speculative guess is that the OLGSs will lose less than 50% of their Mayfair sales, since they still have the price, and in many cases. convenience advantages over the FLGS.

They only have to start getting creative with the avoidance if and when price floors become the norm.

David said: “Based on just the five online orders I have handled for the gaming group, which totaled 39 games (7.69% Mayfair) for $1,160, would now cost approximately $1,450. So, we would either pony up the extra $290 or buy $290 less games (not necessarily a good thing for game publishers).”

I understand your point, and I do not mean to nitpik, but the difference in cost is only $20.58 for your total order. I base that on 7.69% of $1,160 and the discount going from 35% to 20%.

I agree with Paul, this whole thing is a tempest in a teapot. It does make for some interesting discussion though.

Peace

"I understand your point, and I do not mean to nitpik, but the difference in cost is only $20.58 for your total order. I base that on 7.69% of $1,160 and the discount going from 35% to 20%.”

It is a relatively small amount in the big picture, .However I think the crux of the argument isn’t what Mayfair is doing today, but who will follow tomorrow, RGG, FFG, etc. Then it’ll “really” add up.

Having owned and operated an independent pharmacy competing against CVS, Wal-Mart, Costco, Walgreens ... so yes I am qualified to discuss retail strategies, B&M stores can control their own destiny! I was not the cheapest or the fastest pharmacy in town but I was THE BEST bar none at customer service. Service = loyalty! Mayfair can not make B&M or online retailers have good or great customer service by controlling what they can price a game. What Mayfair is attempting to do is “push” business to a segment of the market that may not exist to many people. There pricing strategy does nothing to their bottom line as defined by their announcement since they are still selling to the wholesaler/distributor at approximately 50% of MSRP. This model has been in existence for as long as I have been in the gaming hobby dating back to the 1980’s.  I have a collection of many thousand games which includes about 30 Mayfair titles. I also have many Kosmos titles as well that Mayfair imported into the USA later. What this announcement tells me is that in Mayfair’s business plan B&M stores are given more importance than the online retailers. How or why this importance is weighed I guess only Mayfair could answer? I wish them well but I will as always remain loyal to the companies that give the best service! Service for me is Games Surplus and Boulder Games as there are not any B&M stores locally that do provide any service. I will also be more likely to pick up a Kosmos version while traveling in Germany vs. a Mayfair version because I do not believe that manufacturer/producer should be dictating prices in a free market! Maybe Mayfair can setup a cartel ala OPEC ... lets see ... OGPC (that would be the Organization of Game Pricing Companies). What do you think? Kinda catchy! Eh?

"Another thing that I think bears mentioning is that from everything I’ve heard, board games are not a major chunk of your average hobby shop’s profitability. They make money on miniatures and CCGs. Boardgames are a bonus.”

Largely because carrying boardgames is wasted space.  Why buy boardgames in the store when you can get them online for 35% off?  Miniatures and CCGs are much more profitable for the space they take up. Boardgames will never be as profitable, per square inch of shelf space, but making them somewhat more appealing financially will certainly help get them in the door.

Michael/Brent,

Sorry, I was using the 20% policy as an industry standard, not just Mayfair games. The Mayfair precentage was simply to illustrate that we don’t buy or own very many Mayfair games. And, of course, the data set is incomplete because several of our group members have not posted their entire collections on BGG.

Paul - “They only have to start getting creative with the avoidance if and when price floors become the norm.”

I don’t think they’ll even need to do that.  Across the board floors can only be good for the online discounters.  Some/many/most customers will buy fewer games each year, but our addiction is such that we will continue to buy many games.  Assuming the 50% MSRP discount mentioned in the release, they could sell 50% fewer games over all and still break even on their current profit margins.

$50 MSRP game

Mayfair sells to Distro for $12.50 (25% MSRP)
Distro sells to Retail for $25 (50% MSRP)
Retail sells to Customer for $32.50 (35% MSRP) earning $7.50
Retail sells to Cutomer for $40 (20% MSRP) earning $15 or double their profit. 

Will you cut your game buying in half?

Retail sells to Customer for $32.50 (35% MSRP) earning $7.50
Retail sells to Cutomer for $40 (20% MSRP) earning $15 or double their profit. 

That’s 35% off MSRP or 65% MSRP and 20% off MSRP or 80% MSRP.

Brett,

If the OLGSs could collude and sell at a higher price, of course that would be good for them. However, it would be illegal.

Universal price floors would just put us in the same situation we are in now. Discounts did not start out at 35-40%. Many OLGSs seek to distinguish themselves via price and there is no reason to think they would not do so if there were price floors. They will just do it in different ways.

If there is a maximum 20% discount, then someone will offer 20% off with free shipping. Someone will match that and use a Funagain-type point system, but one that will translate into a higher effective discount than Funagain currently has. Or they will come up with some other system that will not cut the stated sale price, but reduce the amunt of money a customer has to shell out.

The end result will be that the customer will end up paying about 60-65% of MSRP.

Paul, your scenario was that 20% was the norm. 

As has been frequently demonstrated on BGG, most of the online stores have a core following who shop pretty exclusively, despite the trivial $1-2 differences in price from one to another.

Also, a significant percentage of BGG-centric purchasers utilize the free shipping thresholds already (which is yet another gouge in the pocketbook for retailers) - how many “Help me fill my order so I can get free shipping” Geeklists are there?

Since most online stores are following basically the same pricing scheme already, save a few extreme cases, there’s no reason to believe that when the prices go up, there will be much difference in their approach or customer base - “rock bottom” just won’t be as low. 

Besides, I think once they get a taste of not having to scrounge for nickels under the couch cushions to make ends meet (yes, and exaggeration), they will find the situation to their liking.  They’re really not going to lose any customers, and they’ll make more with less work.  How terrible could that be?

Brett,

The cash discount will be 20%. However, the spiffs that will be added (free shipping, some sort of future discount system) will make the effective discount go to the same 35-40% as we have now.

There is no reason to think that there will not be someone who breaks ranks and starts adding extras above and beyond the 20% cash they are allowed to put in the price. Once that happens then competitive pressures will push other online retailers to match, just as is happening now. (Note the recent move in some vendors to increase the RGG discount from 35% to 40%.)

The same OLGSs who are aggresively discounting now in order to achieve a perceived competitive advantage will figure out ways to do it in ways that do not technically violate the cash discount floors.

To my earlier arguments, I think the increase in prices will be a good thing.  Especially if it becomes a trend.  A healthier bottom line for well-run companies means financially viable & stable game companies.

Here’s the bottom line:  People will always pay for the top quality games. 

And if there is less money to spread around for game buying overall, which companies will suffer most overall?  If you said those companies that produce the poorer quality games, congrats.  You get a gold star.

So the only ones that really get affected by all of this are all those companies which produce a glut of games with sub-standard themes and quality.  And the BGG masses keep gobbling it up… because they can afford to.

No longer.  : )

This goes way back, but:

“C’mon, knock off the BGG-bashing.”

I wasn’t bashing BGG, just the people there who are interpreting Mayfair’s business decision as a personal attack.  There are quite a few of them.  There are also quite a few loyal BGG users whose reactions to this news are far more level-headed, a group in which I include myself.

These are words that I do not type often, but I am with Larry on this one.  The reason that several online retailers have flourished is because they are the ones with superior service in the first place.  You have infinitely better selection; 24 hour shopping, reviews at your finger tips, suggestions for other items of interest and frequentl,y free shipping.  Even if MSRP discounts were totally eliminated, these advantages would still push me towards online retailers. 

What exactly do B&M stores offer in exchange?  Playing space??  Occasionally.  But not too meaningfully.

I really was once a great defender of the B&M store, but I must say, that by-in-large they are not inviting places for newbies to join the hobby.  Its rare to find even a “games” only store that caters to CCGs, Minis and Board Games.  They are usually Comic and RPG places too.  So, if they can tell you something about boardgames, that’s a rare plus. 

That’s not to say dream stores don’t exist.  They obviously do.  I just don’t think that’s the typical experience of entering a game store. 

So, I’ve got no problem with Mayfair’s decision, but I can’t imagine this saving B&M stores if that is the objective.  If they are intent on hiking prices, I’d prefer that it somehow ensure the financial health of Mayfair, than a particular segment of the retail system.

Jason,

Do you know what percentage of the sales of Twilight Struggle were at B&M and what was online?

That might not be a good representative for comparison, but also might give a rough idea of the impact of each segment.

Nice to see the industry policing itself, rather than the government/state stepping in and forcing “fair trade”. 

Although I feel this might lead to protectionism - New online game companies rely on cheaper products and smaller margins in order to enter the marketplace and compete.

I’ll investigate the sales divide in B&M and online stores later; for now I can only offer (yet another) anecdotal experience of how good B&M retail stores can make a difference. I’ve added a single retailer’s note about one sale to the end of my column. It’s only one sale, but probably the first of many to come…

I just came across this post on BGG this morning and it is a GREAT quote from Tom at Boards and Bits:

--------
“From where I’m sitting, there is really only 1 downside, and it’s short-term.

It will be harder for Mayfair to sell *bad* games!

Good games will sell, no matter what the price. I’ve sold at least 3 crappy games that probably would not have sold were it not for the discount.

That’s not to say there won’t still be crappy games, because there is always a fool that thinks his game will win Spiel des Jahres and puts his money where his foot..uh, mouth is. But it will mean that you may be able to have more faith in larger publishers such as Mayfair that must make sure their products are worth the price.

Look at Days of Wonder. They produce relatively few titles, but most of them are very good. When they announce a new title, everyone is fairly confident that it will do well for them.

And this to me seems like a good thing for gamers, as well. If you have a limited budget and shelf space (90% of us do), then buying fewer good games instead of more bad ones can only help.

Raise your hand if you wouldn’t have bought Puerto Rico for $31.96 if you had never had the option to buy it for $23.97.

Tom
Boards & Bits”

--------
This is someone who is in the industry everyday and for whom the game business is much more than a hobby. 

So why all this fretting over Mayfair’s position?

Scott Russell wrote: Do all (or any) of the fans of this move pay full MSRP for their automobiles?  If not, why not?  Surely you’ve researched your purchase, feel that it’s the best fit for your needs, think the auto is a quality product and wouldn’t begrudge the dealerthe extra 10 or 15%, right?

Everyone always has the option of paying the sticker price on a car. Saturn has turned this possibility into part of its personality. I have no idea where Saturn stands in the auto industry, but I know that my parents have bought Saturn vehicles for the past three car purchases because they prefer the upfront “no dealing” attitude.

Nice anecdote added to the article. Happens more often than you think. This is actually the reason that Go!Games hasn’t bothered to come back to the mall that my store is in for the last 2 years for Xmas. Basically, we wiped the floor with them 3 years ago because each employee of mine is a rabid gamer with social skills and all they had was a register jockey who had never heard of “Puerto Rico? Is that like Monopoly with spanish names?” or “Settlers of Catan? Is that based off of the video game The Settlers?”

It is odd so many people here and on BGG say that they hate the LGS. Here in St.L, there is a good handful of places that are completely competent, clean, and such. Yeah, we have our smarmy places as well… but those places tend to cater to the quick-buck CCG singles market rather than board games. I take pride that even other game stores will send people my way because I stock “those wierd games” (ie. Games other than Munchkin, Killer Bunnies, Carcassonne or Catan). I send it back when people are looking for stuff I don’t carry like 40k minis. Though, I know how effective price is which is why there are several discount programs in place. Nothing to take it down to the 35% level, but 20% happens quite regularly.

I tell you though, we had a store open up in the area catering to miniatures that stuck the business practice right. First, he was selling online only and got a big stock going. Then he opened a physical store riding on that wave and offered those same deep discount prices. (I’m guessing here, but I believe that his distributor probably had rules about needing to have 50% of his sales from a physical location as all of mine require.) It is still new so the full effect hasn’t shown yet, but I’m guessing sales are going to get black holed into his place on price alone in the same way that OGS have. If I ever had that amount of cash to get stock, I would have gone the same way, so call me jealous.

Tom spake:
Raise your hand if you wouldn’t have bought Puerto Rico for $31.96 if you had never had the option to buy it for $23.97.

Jonathan spake:
Raise your hand if the following price changes would have caused you to not buy a game that you otherwise did:

From To
Before the Wind $19.50 $24.00
Bison: Thunder on the.. $19.50 $24.00
Go West $19.50 $24.00
Leonardo da Vinci $29.25 $36.00
Elasund $31.85 $39.20
Pillars of the Earth $31.85 $39.20

I did think of one odd little train of thought on the subject. Mayfair really does owe its current existence to online game dealers.

Train of thought (without elaborate examples) is:

Mayfair was losing money.

The Settlers franchise allowed Settlers to make enough money to continue business during / after the restructuring. (This could be the flawed part.)

The Settlers franchise (and Eurogames in general) owe their popularity to Funagain and Boulder. (I could get Settler for $65 before these two began importing it. 2 people asked me for copies, and I could only get then 2 or 3 at a time. Once it hit $40 and you could web order it, pretty soon EVERYBODY had a copy.)

Mayfair’s initial efforts at importing games were the $65 Die Hanse, and the $50 and $60 Flying Turtle games. Very few people bought them.

Would I be here (at this site) now if not for brick and mortar? No. The hobby needs them, and always will, if it is to survive.

Great article. I like Mayfair, and I think their perspective is the correct one. We are not the same animal as car sales, clothing, or fast food.

When I purchase a game, the company behind it matters little unless the track record with me is a bad one. The game, it’s theme and mechanics, it’s word of mouth, and it’s designer are what strike me first.

And extra kudos to Marcus King. I have seen him speak at seminars and the guy really is a sharp mind in the industry and business in general.

First, I would like to comment on Paul Sauberer’s point: After a little more contemplation, I think that in the end this may be a tempest in a teapot.

If the 20% discount were to become an industry standard, then online stores could offer free shipping from the first dollar and also generous rebates or point systems. The bottom line would be the same, the numbers would just go in different columns.

Such a practice would appear on face to violate the same principle that the “rail rate rebate” violated in the 19th century.  A practice that is considered a violation of anti-trust laws.  Munn v. Illinois doesn’t just apply to the government’s ability to regulate how prices are set, it also be read to include a manufacturer’s ability to set pricing and any “shipping rate rebates” might be read as a violation of contract.

Which brings me to the most ironic part of the issue.  People are mad at Mayfair, but according to their proposal they wouldn’t benefit financially from the increased sale price by the retailers.  Mayfair will still sell items to distributors at 40%, thus only making more money if they can sell more product.  Their belief, and obviously Days of Wonder’s as well, is that by limiting deep discounts they will sell more product by establishing a quality branding.

Their hope, one would imagine, would be that the moderate increase in pricing over the whole industry will lead to more selective buying which they think they will earn a majority, or substantial share, of those purchasers.  I buy a lot of games a year and an increase in my costs will certainly affect the number of games I buy, but how many of the games I buy do I play more than once or twice?  There are a lot of games in my closet just taking up space, Catan isn’t one of them—neither is DC Heroes for that matter. 

If costs go up, I’ll be a little more selective and I might even want to “sample” before I buy.  That is something that will most certainly lead me to the FLGS, rather than online, and while I’m there I might as well pay the extra 20% or so just for the security of knowing that I’ll enjoy the game I just demoed.

Christian,

The railroad rate rebates were legislated against because they discriminated against particular classes of customers. I don’t see how an across the board “free shipping” policy would be analogous.

I also think that it would be very difficult that Mayfair or any other company could impose a condition of “no free shipping policies” on online vendors without running fart afoul of anti-competitive practices. Of course, IANAL, so I may be way off base in that thinking.

In any event, I think that those running online would be creative enough to find a way around the limitations imposed, if all companies were to adopt similar policies. If not all companies do follow, then the point is largely moot, as it will have little impact on them.

I could, however, see a situation if Mayfair and perhaps FFG are the only comapnies that go this route. In that case, online vendors could lose 50% of their sales from those companies and still break even from a gross profit perspective. If they lose less than 50% of their sales, they are ahead. What will they do with this windfall? It’s possible that they will use it to subsidize even greater discounts on non-price floor publishers in order to capture a larger share of sales of those companies. In a ddition, it will make them an even more attractive option to FLGS customers who want games from more than one company.

What was the “particular class of customers” in Munn v. Illinois?  It was customers who were not using grain storage bins owned by the railroads themselves. In other words, people who used “locally owned” storage facilities rather than “interstate owned” storage facilities.  It really is a very good analogy.

In this case a person purchasing from a “warehouse” distributor who “rebates” postage is using an internet equivalent service, as opposed to the local customer who receives no such rebate.  My statement was merely to support that Mayfair would be within their rights to include “shipping discounts” into their restricted margins.  They don’t appear to be doing that, thus internet retailers would be free to find these creative ways around the issue.  But I would posit that there is no real market interest for them to do so.  If they can sell a similar, or greater, number of games at the altered price then there is greater profit for them in the long run.  What internet retailers will have to do in order to retain profit, lost from the “I want 40% off or nothing” customers, then they will have to advertise both themselves and THE PRODUCTS THEY ARE SELLING.  Currently, they rely on two things for marketing.  First, that the cottage industry they participate in has “highly knowledgeable customers” who need zero education on what product is available.  Second, that the only marketing tool the retailer needs is cost reduction.

This is a fine model under the prior economic environment.  It won’t work under a new environment where multiple producers have minimum price requirements.  That will require the online stores to promote both themselves and the product, as well as the 20% discount they offer.  This has the possible benefit of expanding the hobby, increasing their profit, and increasing the profit of the manufacturers.

Remember, the manufacturer receives no additional profit unless sales increase.  Manufacturers only set minimum prices when they believe that current practices are shrinking/stagnating rather than growing the marketplace.  If they wanted to, they could always have stated that they will decrease the percentage from MSRP they will charge distributors from 60% to 40% (or any other figure) if they wanted to hurt the industry.  Instead, a STORE that currently gives a 40% discount will be forced to give a 20% discount with no increase in their own investment costs.

Certainly, they will lose some “price sensitive” customers, but goods of lower quality/demand should see decreased sales and thus end up with a lower MSRP which might eventually sell at that price.  That’s how market prices work.  There is also, as I have mentioned before, the possibility of expanding the audience rather than relying on a small but price sensitive population.

I interviewed Jay from RGG a couple of years ago for a column about the business of boardgames I was doing for Comics & Game Retailer and he said that he sold 75% of his games through B&M stores and 25% through online shops. I bet the numbers for Mayfair would be similar, maybe even more for B&M stores as the Catan games are gateway games and most of the gamers who want them have them.

I think Mayfair is doing this to strengthen the position of B&M stores and to make boardgames a better line for these shops to carry. CCGs and the Clix games aren’t subject to the same pressure from online discounters as boardgames, and the fact that many boardgamers won’t pay list discourages shops from carrying them. Why devote space an effort to a line that has to be discounted when you can sell something else, Ugly Dolls or whatever, that you can get full price for?

I’m not sure how enforcable the policy is, but I do see Mayfair’s motivation in implementing it.

This is a GREAT article, Eric!
This reminds me an interesting conversation I’ve had with Domenico Di Giorgio and Roberto Corbelli here in daVinci: you do not REALLY need to buy tons of games, and maybe the extra discount prices of some online shops are one of the causes of the dozens of unplayed games I own.
Now I’ve started chosing more wisely, and in the end my budget can certainly afford to pay for all the games I really NEED every year.

And, sadly, the only B&M boardgame shop in my town is not doing very well, because everybody else is shopping from the ‘net.