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Retail markup and price negotiation?(9 posts)

Retail markup and price negotiation?DoothaBartman
Aug 10, 2001 10:46 AM
I've got a delima. I purchased a bike last year (at cost, without tax) that set me back 1700 dollars. I rode it less and less after I bought it because I gradually began to understand it was too small for me. When the realization had set in completely, I was working so much to save for school that not being able to ride it because of the improper size didn't bother me very much because I wouldn't have had time to ride a bike that fit me well anyway. Now that I have more time on my hands as a student I crave riding more than ever. I should be in the best shape of my life, riding hours upon hours a week, but the bike is so uncomfortable due to it's small size I don't want to ride even five miles on it.

I'm wanting to pick up a new bike, but I have to sell mine to get enough money to pay for another one. I was hoping to get around 1200 for mine and make up the difference with what little money I have now, but I've tried and tried selling mine with no success. The best offer I've recieved to date has been 950 dollars. That is absurd for the quality of this bike and the shape that it's in. It's got an Easton Scandium frame, Ultegra group, carbon fork, Mavic Classics Elite wheelset, and it has less than 600 miles of use.

I don't have enough money to make up the difference a 950 dollar sale would leave me with, so I've thought about just getting a bigger frame and swapping parts. The odd thing about that is most frames will represent the gap I would have between selling my bike and purchasing an entire bike anyway, so I'm just as screwed. I'm looking at getting into a bike (hopefully) for around 1600 dollars, and I'd be looking at a difference of around 700 that way if I sold my bike for 900 or so, and any decent frame retails for that or more, so you can see my delima.

My question for all of you out there in Messageboard Land is this: If I'm looking at a bike at a bike shop and the manager is asking 1800 plus tax, how far below that could an average consumer negotiate the price? How about a frame? If the manager has said getting a particular frame would cost 900 plus tax, how much can that be negotiated?

I know that in-stock bikes are negotiated easier because shops have to make room on a constant basis, so I understand that a complete bike might reach a lower price through negotiations, but as far as retail to consumers and cost to dealers, what sort of margin is there?

For illustration only, lets assume that there is a 40% markup on any item in a bike shop. I understand shops have overhead, but at some point in that 40% there is certain percentage where overhead is taken care of and the rest is profit. It seems like a consumer could offer to ensure overhead is met and SOME profit is made and would be able to get a deal for himself.

I know for a fact, as I have friends that work at shops, that employees get deep discounts. A bike with a 2700 dollar price tag in the shop ends up costing employees only 1400. I've seen posts at this very message board where posters have asked for websites that hook shop employees up with manufacturer's closeout prices, so I know that deals can be made. I myself got this particular bike at cost, but the circumstances were far from normal. I ran across a bike shop about to open and the owner wanted to get his name out, so he cut me a deal for word of mouth advertising. All things being normal, why is it that the average Joe in America has to pay retail while a select few get deals upon deals?

Any input on haggling or suggestions on how to get into another bike will greatly be appreciated.
re: Retail markup and price negotiation?erock
Aug 10, 2001 11:37 AM
I'll tell you what I did and maybe it will assit you. I did all imaginable research. I checked online, read articles, called and visited any and every shop in the area. I picked up literature wherever I could get my hands on it. In addition, I went to several shops that sold the same bike and asked them what they could do for me, a way in which they could help me out. I would tell them I had x amount to spend, and that I wanted Y bike. The fact that you KNOW what dealers pay for their bikes can also help. Talk to a manager or someone besides the wrench behind the counter. Take all the information you have gathered with you.
For the longest time I REFUSED to by another bike knowing that bike shop workers get the crazy 10% below cost prices. Why should I have to pay in full for both my bike and their rediculously low pro-deal bikes? I printed a ton of prices of the web and told the shop that i really wanted to buy a bike from them, but that I didnt see why the shops prices were so much higher. Shops know what can be found on the net and would much rather have you buy it from them instead.

Have you tried getting a job at a shop? Be nice to the shop guys and talk to them and explain your sitution. Sometimes their willing to work things out. Ask if they have positions available. This shop i went to is going to allow me to work towards paying the bike off.

So wait....you paid dealer cost for the bike yet are looking to sell it for the $1700 it normally costs? Sell it for the $950, you paid cost and would come out ok anyways. The components and wheels on that bike you have now are very good, though. Just look into getting a decent frame and swap all the parts over to the new frame.

Hope this helps.
I wish I could work at the local shop.DoothaBartman
Aug 10, 2001 11:51 AM
There is only one in town and the owner and I have locked horns on the very thing I'm asking everyone about here. Every time I say the words "How much of a deal can I get on that?" his reply is "That IS the deal." We don't get along, especially when I'm willing to make sure his overhead is met and he still makes a profit and he refuses to cut me a deal even when his employees get half off. The closest bike shop besides his is 70 miles away.

If I sell my bike for 950 then I'm limited by funds on hand and would only be able to pick up an 1100 or 1200 dollar bike, and any frame worth getting is going to cost at least 500 dollars.

I appreciate the reply though.
You probably are not going to like this answer, but.........Len J
Aug 10, 2001 12:30 PM
either buy a used bike after selling your bike for $950 or buy a used frame (for whatever you can afford based on selling your exiting frame) and swap parts. If you are sure you know the right size, you will end up with a much better bike for the money than buying new. Look at your situitation in reverse, the guy buying your bike for $950 is getting a great deal.

An LBS has to make enough money to stay open. He either can do that by selling many bikes at a low margin per bike or by selling a few bikes at a high margin per bike, it's as simple as that. If he is the only LBS in town, there is not much you can do short of going somewhere else or buying on the net.

Hope this helps. I know that it sucks to lose money on a perfectly nice bike, but sometimes you got to get the best you can with what you have. IMHO for you that is used.

Len
re: Retail markup and price negotiation?fuzzybunnies
Aug 10, 2001 4:51 PM
My question is why the hassle about the price shop employees get to make. Belive it or not it can far less than half the retail cost and is usually 10-30 percent off wholesale. But those employees make suggestions that others listen to when they come into the shop and that's part of competition and advertiseing. I have a tendancy to recommend vittoria tires since I use them the most, due to the fact that they give me the best prices as an employee and are more affordable. As a result vittoria makes more money from the shop where i work than continental does making thier discount as good for them as it is for me. Also might want to take into account what the average shop employee makes, to start with, you can make as much as the guy behind the counter asking if you want fries with that. Usually making most things too expensive for the average shop guy with out the discount. The same guy who's working on a second bike while you're out riding. Frames come up on ebay all the time and don't go for that much, usually 3-5 hundred for unused examples. I'd say take a look around the web if you don't like local offerings and you will find something. But don't whine about the fact that you have to pay as much as everyone else just cause a shop guy can get it cheaper. Or would you ask the local burger king for a value meal for the same price thier employees pay(looks pretty lame from this perspective). TTFN
re: Retail markup and price negotiation?TJeanloz
Aug 11, 2001 9:21 AM
I had a rule when I worked at the shop- I didn't pay for anything. And I could convince almost every manufacturer that I worked with to give me their products to use. Is this fair? Not only is it fair, it's good business. Customers are more likely to buy products from the manufacturers that the employees prefer. Employees are more comfortable with how the products work, and can thus sell them more effectively. And employees know who to talk to when they see a way that a product can be improved.
re: Retail markup and price negotiation?fuzzybunnies
Aug 12, 2001 2:47 PM
I always found the free stuff rare but really hold manufacturers strictly to the warrenties. Hounded spinergy for 2 years till they finally caved and replaced the wheel for free. Same with shoes, helmets, and various other breakables. TTFN
Just buy a new framespookyload
Aug 10, 2001 8:32 PM
Seems pretty obvious to me. If your parts are good, and the only reason you aren't riding is because the frame is too small, replace the frame. If you truely have the desire to ride, then skip the beer bashes and pizza for a month, and use the money to get a frame. You can pick up a decent frame used here for $350. Now you aren't going to get a Colnago C-40, but you can find a Giant TCR for that price very easy. That being just one example of how you can put the water pipe down and go ride.
As for the "select few" and their deals....TrekRider
Aug 11, 2001 6:13 AM
The average bike shop employee is not the highest paid individual on the face of the earth...far from it.

The employee purchase program, which you are alluding to with the comment: "...why is it that the average Joe in America has to pay retail while a select few get deals upon deals?"..allows a shop employee to purchase ONE bike, road and mountain, per year.

This "rule", the one-mtn.-and-road-bike-per-year thing, is pretty much across the board from manufacturers. It's a way of letting the employee buy their product t a bit of a discount, usually 20% off wholesale, get the product out on the road, and do some advertising for the shop and manufacturer in the end.

Don't begrudge the shop employee this small benefit of working in a job that chronically is underpaid.

Oh, and that hypothetical 40% markup.....most shops' markups hover in the low-to-mid-30% range.