In June, Catalyst Game Labs will be adjusting prices on products most affected by recent tariffs. Our popular Salvage Box products will see a $1 price adjustment. Forcepacks and Box Sets will go up $5. Sourcebooks, for the moment, will not be adjusted—but we may reassess them in the near future.
It may seem strange to announce price increases even as tariffs fall to a less-terrible level than they were only a week ago, so we want to walk our customers through the process for complete transparency.
The article Catalyst posted last month about the destructive nature of the recent tariff implementation stands as our overall response—yes, they are a tax on Americans, and why this means prices will rise—and we won’t be revisiting much of that here. We already laid out all the math.
Instead, we will underline two important points here:
- CGL was taxed $240,000 in March for unexpected tariffs.¹
- Today’s 30% tariffs create a 10% MSRP increase just to break even.²
Despite inflation driving up costs over the past several years, Catalyst has not instituted systemic price increases since Covid-driven adjustments in 2021. We work very hard to keep our prices as low as we can and safely remain in business. This is part of the reason, we believe, why BattleTech and Shadowrun have maintained a high level of customer engagement despite market disruptions (like Covid or tariffs).
At the moment, the future holds three possibilities:
- Tariffs go down (but will likely not disappear altogether).
- Tariffs remain stable at or around 30%.
- Tariffs go back up.
The Good: Tariffs Go Down
The messaging on tariffs has been inconsistent at best. One day the word is that tariffs “should be 80%” and the next is that “Tariffs will possibly come down, but should remain at least at 10%.” This feels a lot like pinning our national economy to a board and throwing darts at it. Still, tariffs being reduced again is a possible—and we believe likely—outcome. Eventually.
If tariffs come down, the largest issue Catalyst has to deal with is the unexpected loss of $240,000 in March. We managed to absorb it, then, but that loss of cash flow will ripple downstream for years. Loss of jobs. Fewer products manufactured. Lower gross revenue.
Even if Catalyst was willing to absorb the cost of a 10% permanent tariff—and it’s likely we would—we will still require these price increases to slowly claw us back toward pre-tariff parity. Very slowly. Assuming only a slightly reduced sales velocity (due to the new pricing) it will still take an estimated two to three years to get back to even.
The Bad: Tariffs Remain Stable
I’m not sure many companies have the margin to absorb a 30% tax increase on their Cost of Goods Sold (COGS), and for those that do, I doubt they’ll be willing to be so self-sacrificing. A few months, maybe. Not for years. Even in the past few weeks I’ve read articles one day that promise “our prices will not go up” and then a week later “yeah, our prices are going up.” It’s not evil. It’s just business.
At 30%, Catalyst will likely absorb half of that in a three-year plan to hold prices as steady as we can. That still means lower net profit and fewer opportunities to take risks or attempt something innovative. The 15% tax we can not easily absorb (long term) requires a minimum MSRP increase of 5%. That reduces our ability to regain parity on our pre-tariff position, slowing us to a possible four-to-five year recoup, but at least we reduce the shock to our customers and the market in general.
The Ugly: Tariffs Go Back Up
We are not putting in much effort to counter this possible threat, as there is simply too much uncertainty. How much will they go up? For how long? Also, anything higher than 50% is likely to cause so much disruption we expect to lose several (more) game companies, as well as a real percentage in local game stores.
If this were to happen, there would be nothing to do but hunker down and ride out the storm. Yes, this may result in a new round of price increases to remain in business. More likely, we will rely on product already in the warehouse and put a long-term hold on most new product development and manufacture.
It wouldn’t be fun, but we will survive the chaos.
How Can You Help?
Everyone at Catalyst Game Labs understands that these aren’t perfect solutions. Our top priority (after remaining in business) is to safeguard the market position and legacies of BattleTech and Shadowrun, as we introduce new games as well. This is how we do that.
But asking you to keep purchasing our product, regardless of price increases, is too easy of an answer. We trust you to engage with these seminal properties in whatever way works for you. In the meantime, don’t panic. Things may change, but the gaming industry will endure. BattleTech and Shadowrun will endure. If you can spare a kind word of support for your local game stores or your favorite publishers, then yeah, do that too! Nothing means as much to us as hearing kind, supportive words from our customers.
We appreciate it.
We appreciate you.
Notes:
1. “unexpected”: Files are delivered to the manufacturer at least three months in advance of being manufactured. In this case, we committed to this product in October(ish) well before tariffs were announced. And even though the product was scheduled to arrive before the tariff cutoff, thanks to several port issues (caused by tariff chaos) we were delayed in transit several weeks.
2. The math: A $40 product with $5 COGS and $4 net income. A 30% tariff/tax increases COGS to $6.50. Raising the price to $44 allows for a $17.60 Discounted Price. $17.60 - $7 (development) - $6.50 (COGS) = $4.10. Okay, we make an extra dime.
