Stuart Pearce
Now you're Talking
Soapbox
From time to time this section will present thought-provoking ideas on modeling/AMA issues. Timeliness and available space are factors which may affect publication. The opinions expressed are those of the author(s) and should not be construed as being those of AMA Headquarters staff or the AMA officers.
I don't know for what reason Lance Novak vented his opinion and anger on the small local hobby shops of North America, or whether Model Aviation agrees or disagrees with his statement. However, he did make some very disparaging remarks and I humbly request that you give us hobby dealers a chance to reply.
My letter is in response to Lance Novak's letter in the June issue of Model Aviation, complaining about the cost of RC hobby products at his local store.
Well, Mr. Novak, you have no apparent knowledge of retail sales, what it costs to operate a store, or what it costs us to buy our product. All businesses charge based on what it costs to do business, and none of them should have to justify those costs to you.
I'll let you into a secret, Mr. Novak, and maybe you won't be so quick to come out with words like "gouging" and "ripoff prices" when talking about local hobby shops.
I buy my products from a distributor, as do most hobby shops, who also operate a mail-order store. They offer you two servos for $19.99, which is one cent more than they charge me. Would you be prepared to sell someone a product such as two servos for only a cent of profit? Just what do you feel would be a fair profit on two servos?
A radio is offered for ten bucks more to you than me, and they have the nerve to add 2% to my bill because I pay up front by MasterCard; no surcharge charged to mail-order customers, of course. That $10 represents a 5% return before the cost of doing business.
If we had a 15% return over cost it would mean that our store would have to generate more than $400,000 in sales to draw even. It would take one heck of a big RC club to spend that kind of cash. Maybe Mr. Novak thinks we should lower prices so the railroad guys or the kite fliers could enjoy a low-price sport.
"It is only at the club or local store level that anyone can give you the time and information to become a successful modeler."
Now, Mr. Novak, try this scenario: someone walks into "Lance's Super Hobbies Ltd." and asks, "I want a radio; what should I get?" Just how long does it take you to show Mr. Consumer the three major brands of radios you're carrying?
Should he have four channels, or go for six or more?
After you listen to all his questions and have given him fair and honest answers, you've spent at least half an hour or more of your time. Now he's not sure, or he's confused with the answers, and needs more time to think. So you pack away the radios and get back to other customers after he's left.
The next day, he calls and asks a few more questions; time, five minutes. Next day, another inspection; 15 minutes. Finally he buys; total time, an hour and a half. How much do you earn for that amount of time, Mr. Novak? After the store has paid what it costs to operate for that length of time, with only ten bucks profit we're already in the hole.
You mention that a $250 kit sells for $250 plus sales tax at the local level. Just where do you think that sales tax goes? It goes to you and everybody else in your state via services, infrastructure, police, education, and so on.
The dealer does not get the $100 you may think he gets. He's also had to pay for shipping. He has store rent, advertising, insurance, phone, heat or air-conditioning, staff wages, business taxes (at a commercial level, not industrial), depreciation, not to mention the cost of debt on $70,000-$100,000 worth of stock.
These costs have to be found, whether you sell one airplane or 50. If the store could sell more because the price was less, they would, believe me, but they won't sell any more; there are only so many local customers.
The local store would not be able to justify a national ad campaign. It doesn't make sense for a thousand stores to be selling the same thing in the same medium.
If the manufacturer sets the price, which they do, why is it wrong to charge that price? Any company charges for labor based on what it has cost to produce the required result. You pay more for a skilled job than one that requires only a day's training with repetitious tasks. If your boss says you can get workers for $2 an hour, does that mean you're gouging him because of what it costs? Of course not.
If a hamburger costs $2.50, and that's what is a fair market price set by the cost of the people who sell buns and burger meat, then are hamburger chains gouging you because some burger stand in Wisconsin sells a bigger burger for $1.75? Of course not.
Have you invested more than $50,000 in your business, Mr. Novak? Have you spent a month decorating a store for no pay prior to opening the doors? Do you have people coming to your place of business and telling you what they are prepared to pay for your services?
The old saying—judge a man only after you've walked many moons in his moccasins—applies here. You just don't know.
Of course you're welcome to buy my store (and a few others I'm sure), and make yourself rich. After all, you're such an expert.
One last lesson in economics, Mr. Novak, and I'll keep it simple. If a man needs $1,000 a year to live, produces 2,000 cabbages at a cost of 50 cents each, he can sell each cabbage for a buck to make a wage; a neighbor needs the same wage, rent, land, fertilizer costs, which means he has to charge $1.25. The big farm 500 miles away can sell for 60 cents because of volume and lower costs. If people don't like cabbages, go eat squash. Stop encouraging other cabbage lovers with uninformed opinions standing on the fence shouting abuse.
You'll state that the small hobby shop is dead, and that we're greedy price-gougers. If that is true, then the whole sport is dead. No mail-order house has stirred a person to become a modeler. No mail-order house that I know of sells Model Aviation or other magazines. No mail-order house promotes AMA or MAAC (in Canada). No mail-order house sells your used equipment. No mail-order house that I know of has gone to City Hall to seek a flying site for you.
It is only at the club or local store level that anyone can give you the time and information to become a successful modeler. I've seen an active club of 60+ members drop to four when our local store closed. He didn't close because he was a so-called price-gouger; he retired, and when his son took over the business, he decided he wanted a fair day's wages for his time, just as you would expect for your day's labor, Mr. Novak.
You say that the savvy RC buyer only goes to the store for the $2 part that costs 75 cents by mail-order because of shipping costs ($5). How do you think the dealer got it to his store in the first place? Do you think the manufacturer delivered it free?
I admit that it was not right for hobby shop owners to be rude to you, but so many times in all walks of life, at work or just plain driving down the highway, people annoy the heck out of you. I have never been rude to a customer, but I've had dozens be rude to me and my staff because I couldn't build something for them or provide goods that aren't made. Some customers feel that because we're in retail sales that we're fair game for nasty remarks. It could be that you made some condescending remark to the fact that you were giving them a few bucks to keep them in business, despite their "ripoff prices."
It is wrong to treat customers poorly—something we try our best never to do—but after reading your letter I can understand why you get the treatment you do. While you say that you look forward to the day they are closed down, I'll warrant that there's a thousand stores in North America that look forward to the day you take up golf.
Stuart Pearce Hobby Place Barrie, Canada Spirit of Yesteryear Model Aircraft Company
Transcribed from original scans by AI. Minor OCR errors may remain.
