We are widely trusted by our client base. How is taking back faulty stuff undermining our reputation? We have clients that purchase $50k+ at a time, we are hardly going to make a big deal of them sending some product back. Sometimes they tell us what's wrong, sometimes we can tell, sometimes that goes into a bin, othertimes we can tell from their description or by looking at it us ourselves that someone else may still be interested in the items for parts etc, and these are sold for small money and everyone is happy.
You'd spend hours trying to investigate an issue you may not find, harrassing customers with phone calls and emails to find out what they thought was wrong, then spend minutes thinking up a price and months trying to move it at the price? What a waste of time and surely a loss making excercise when it's all costed out, or you'd just bin it further contributing to waste and cost? We make a cursory consideration (ie guess) at the cost, halve it, neaten price to look sensible, sticker it and forget it.
I'll tell you what makes clients unhappy, and that is when you oversubscribe a production run, and that is something we've never done, and never will do. Maybe that's why everyone is happy.
While I totally agree with the thrust of what you are saying, I would still think that there is a difference with a larger corporation/business that deals in the tens of thousands of items, as against the Australian MR industry. Not sure exactly how many locomotives are done in each run by the different importers, but based on how things were a few years back there was a minimum order for them & it used to be around the 2500 models, with a reasonable amount of different colour schemes & variations in the model.
I would think that most would have ordered more than that, likely at least 3000, depending on what was seen as being saleable in a reasonable turn over period. I understand that most tended to allow for a 10% failure rate which covered spare parts, along with some small amounts of spares that some carried. I would think they would for that amount to cover the majority of spare parts also.
In what I have said is correct or close to it, I would not see any problems or reasons why they would not be in a position to not know, let alone not wanting to know what the fault was in order to warrant replacement & then what to do with the returned model. On that score the models which are deemed not fixaable certainly would be ideal for the spare parts bin, the others which were deemed faulty but fixable by modellers, would be those in the bargain bins, & depending on the skill levels of a modeller would likely play a part in whether they made the caveat emptor purchase.
Certainly, I would not be outlaying the prices I have seen asked, for some of the models, especially those I would normally be interested in buying.