Has The HasLab Black Series Rancor Been Doomed By Unrealistic Expectations?

I need to start of this article with several disclaimers. First and foremost, I did not speak to anyone at Hasbro for this article. The numbers I present below are strictly for demonstration purposes only, and loosely based on various industry videos that are publicly available. Second, I am not an accountant,nor do I work in finance. I'm a software developer by trade, and if you know anything about software developers it's that we don't know everything. We just think we do. I'm sure many of our readers will be more well-versed on this subject than I, and can provide additional details in the comments. Lastly, many of you already know what I'm going to write. Sometimes stating the obvious is an implicit insult, thus the sarcastic "No [stuff], Sherlock" expression. The intent of this is not to insult the intelligence of our readers at all. This is just meant to address the lofty expectations some seem to have with HasLab projects with respect to adding newly tooled figures as stretch goals.

First, let's talk about the price of the Rancor. The price is the price. If you say it's not worth it, you don't want to pay what it costs. The pricing is basically formulaic, and the initial price and backer level only cover the item being offered. There are no other items being baked in to that price. We'll cover where the stretch goals come in later. The price is basically Hasbro's price, plus their minimum required profit. I know. I know. Boo hiss. Companies like to make profit. Furthermore, they have to make an acceptable profit margin. It would be irresponsible if they are not getting acceptable return on investment. The shareholders would be up in arms if Hasbro sunk sizable resources into a passion project instead of dedicating those same resources to something that makes better profit, like Mission Fleet for example.

Okay, so now we have to get even drier on the subject matter, and again, I know many of you already know this. Manufacturing costs are typically broken down into two categories: fixed costs and variable costs. Fixed costs do not change with the size of the production run. Whether or not the company makes 1 of an item or 1 million, these costs do not change. In the case of the HasLab Rancor these would be the fully loaded costs of the designers and sculptors to come up with the design of the product, plus the steel tooling to actually produce the product at the factory. Fully loaded cost for an employee is beyond just salary. It includes benefits and that employee's proportional amount of company overhead, which can be staggering. All of these costs have to be assumed whether or not Hasbro makes 1 Rancor or 20,000 Rancors. For the purposes of this exercise, let us say these costs are $1,000,000. Variable costs have to be assumed for each unit produced. Those cost go up linearly with the production. These would be the materials used to make each Rancor, plus the shipping. As a truly wild [butt] guess, I'm going to say that these costs are $111 per unit (you'll see why in a moment). With these in mind, we can determine what Hasbro's cost is at 9000 backers.

It's a very basic formula. Hasbro's unit cost = (Fixed costs / # of units) + variable cost. So, at the 9000 unit minimum this is Hasbro's cost:

($1,000,000 / 9,000) + $111 = $111 + $111 = $222

Got it? At 9,000 units those costs (which are merely speculative) would translate to a price that yields Hasbro's required profit.

Because those fixed costs get divided across the production run, as volume goes up, Hasbro's cost per unit go down. Let's see what happens when it reaches 11,000 backers:

($1,000,000 / 11,000) + $111 = $90 + $111 = $201

Hasbro's cost per unit has gone down $21 in this scenario. They are now making more than their required profit. This is how they can add in reasonable stretch goals.

So now let's look at what happens if Hasbro had added a newly tooled Malakili as a stretch goal. It's that same cost per unit principal with the fixed costs. For the purpose of this exercise we'll say that those fixed costs are $600,000, or 60% of the Rancor. I know that a basic figure is much smaller than the Rancor, but it still takes significant design effort plus making smaller steel tools isn't proportionally less expensive than making larger steel tools. As an example, Hasbro has said the tooling cost for a TVC figure and the larger TBS figure are the same. This disproportionately higher fixed cost is why the production runs for basic figures need to be much higher (certainly a lot higher than your typical HasLab campaign). Remember, volume brings the fixed costs per unit down. Variable (or material) costs would be proportional with the relative sizes, so well call it $5 in this case (as a complete and utter guess). Given that Hasbro's cost per unit at 9000 Rancors with no stretch goals is $222 in this hypothetical, let's look at what happens to the costs when a newly tooled Malakili gets added in as the first stretch goal with these variables.

($1,600,000 / 11,000) + $116 = $145 + $116 = $261.

Hasbro's per unit cost just went up almost $40! That's simply not practical. The expectations of such things were never reasonable. There are only two ways a figure like Malakili could have been included. The first is if the figure was being planned for future release in the main line to get to the appropriate production volume. Given the relatively low appeal of such a character, this doesn't seem likely. The second would be if it were included and priced with the initial offering. Considering the astronomical fixed costs per unit of a basic figure at the low HasLab volume, collectors would have revolted over the resulting price. I wouldn't be surprised if it pushed the cost up by over $75.

I feel bad that unrealistic expectations from the jump might be sinking this project. Even though I am not a TBS collector, I am backing this project because I think it's an amazing piece. You can too:

Click HERE to back the Rancor

I sense much flaming coming my way in the comments, so I will probably be giving that section a pass when this publishes. I will catch up with you all on Turkey Day.

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