It seems that the old saying “Life imitates art” may just be true. As the Clone Wars reach our shores so may the Trade Federation. What in the blue milk am I talking about?
In a capital not so far away there has been a trade dispute occurring with another land. The dispute has led to increased tariffs on goods from this land by 25%. Now for the most part this has not included goods such as board games and has been more focused on electronics, batteries, auto parts etc. But there has been a list prepared by the US Trade Reps that includes board games as a potential product to incur the 25% tariff.
Harmonized Tariff Code(HTC) – 9504.90.60 Chess, checkers, backgammon, darts and o/table and parlor games played on boards of a special design and parts thereof; poker chips and dice
According to CNBC Website CNBC Make it-
“Tariffs are taxes paid by American businesses and consumers – not China,” Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation, told CNBC Make It.
So how does this actually work and how will it affect Star Wars Legion Price?
Fees, Fees and more Fees
First you need to know how margins and product costs work. So if I am a designer like FFG I have several costing structures I need to look at before pricing my game for retail:
- Actual cost to produce all the components of the game(plastic parts, cards, cardboard, etc.)
- They generally have a one time cost for Dies and Tooling for the figures, cardboard chits and dice that they spread across the product
- Then there is a per unit cost so $X for each game created and packaged
- Shipping from Manufacturer Origin (China) – Paying for space on the boat, shipping charges etc.
- Dock and Customs clearance
- ISF Filing Fee
- ISF Bond Fee
- Customs Clearance Fee
- Tariff Duties: are per the Harmonized Tariff Code(HTC) noted on the commercial invoice, subject to final approval by US Customs.
- Taxes: Harbor Maintenance Fee
- Merchandise Processing Fee
- Single Entry Bond Fee
- Multiple Line Entries, the first 5 lines are included, every line entry extra cost per line. This is for commercial invoices that noted multiple tariff numbers and commodities.
- Multiple invoices cost, 2 commercial invoices are included in the cost of the entry, and an additional cost per invoice will be billed with the clearance cost.
- OGA (Other Government Agency) Fee
- Shipping to the warehouse(s) – Transportation cost of getting the merchandise from the port to the warehouse for distribution
- Warehouse Storage and Handling Fees
Show me the money!
Once this is all added up this is what we call the fully landed cost. This cost is what the company now bases their selling cost off of. Here is what goes into that number:
- Selling Cost – Sales, Processing, etc.
- Marketing Costs – Promotion, Articles, Trade Shows, Giveaways
- General & Administrative Costs – Overhead cost for operation of the business
- Research & Development Costs – To continue making the game and add-ons I need to have money
Now to cover all these internal overhead costs, companies will usually put a margin of 30%-40% on a product. I believe though that the margin is much higher on board games and is in the 60% area. Generally when a designer manufacturer sells a game wholesale they reduce the retail price by 20% So here are some estimated sale numbers based on this:
Clone Wars Set Retail Price – $99.99
FFG Fully Landed cost at 40% margin – $60
FFG Wholesale Price – $75
FFG Fully landed cost at 60% – $40
FFG Wholesale Price – $65
Ok, so I didn’t read any of that… Why will Star Wars Legion Price Increase?
If the 25% tariff goes through for board games it will increase FFG’s total costs before they even add up their internal overhead costs. This will increase the product retail cost by more than 25%, it will be more like 30%-40%. So The Clone Wars box set that is clocking in now at $99.99 will increase to $120-$130. This will also include all the other add-ons and sets. This is not including the potential increase of moving to hard plastics just the increase in tariffs.
This will not affect anything that has hit the docks now or in the next months or so but could potentially have a large impact once this list is accepted by the US government and put into action.
Now this may never come to pass and maybe FFG has the game listed in another HTC but I think that we may end up seeing a price increase as early as Q1 2020.