|Specialized Bike Price||bikedoc|
Feb 22, 2002 8:22 AM
|I am looking at a new Specialized Allez E5 Comp. What price should I shoot for at the store?? Are these prices negotiable from shop to shop?? Thanks|
|LBS owners here say there's not much room to deal||cory|
Feb 22, 2002 9:20 AM
|I did a story on bike prices a year or so ago, and I was surprised how narrow the profit margins are. It's not like an SUV, where they can knock off $5000 and still make money. You may be able to get them to include cages or water bottles or gloves or something, but they don't have a lot of slack. Assuming there's not a HUGE difference, I think finding a shop with good service (attention to fit, a decent mechanic etc) is more important than screwing the price down another $40.|
|So what's the markup exactly?||Sintesi|
Feb 22, 2002 11:36 AM
|$7-800 on a $2000 bike? To me it's always "make the sale" establish the relationship, get the guy back in the store. If he has a bona fide deal somewhere else I'm gonna deal my ass off. Who cares if you only made 20% on this bike when you normally get 40%? Cry a little, let him know how it hurts you and then MAKE THE DEAL. You made money and you got a guy on the hook who feels guilty for swindling you. ;)
What I can't understand is how bike dealers can turn away business because the market doesn't meet their forecast profit margin. For example, I went to a local store the other day and asked what they wanted for a Dura-Ace rear cassette. The guy says $100. I tell him I can get the same thing for $70 from the internet. I go on to say I'll pay $85 just so I don't have to wait a couple days (plus I want to support the LBS). He says, "NOPE."
I don't get it. He buys the thing for $50 or whatever, there's a guy in his shop who will hand him $85 and he can't take it because $100 was his set price. He could have money in his hand, and a happy customer. He could buy another cassette and let the next bum pay a hundred for it. So what happens? I buy it on line, wait two days to have it delivered to my door and go on my merry way. I don't go back to his shop because I know he charges way too much and won't deal when faced with competition. To boot, I also resent the time I wasted going to his shop in an attempt to do business.
So I don't understand these "business people."
|The exact markup||TJeanloz|
Feb 22, 2002 11:57 AM
|The gross markup on a $2000 bike is anywhere from 20%-35%. This doesn't count the mechanic's time in assembling it, the costs associated with selling it (it will take a salesperson a couple of hours to execute the transaction), or the cost of capital associated with having the bike in stock. When all of these things are added together, the 'profit' on an expensive bike tends to be quite low- the expectation being that the customer will be a repeat offender when it comes to accessories.
In your cassette example, it would be cool if you were even close. The retailer spent more like $72 on the Dura-Ace cassette, has it listed for $100, had to pay shipping and other costs associated with it (capital, marketing, etc.). My shop was in Boulder, and there were a lot of times it was cheaper to buy a Shimano part at Excel (at retail) than from our wholesalers. It is never worth it for bike shops to deal on Shimano parts. The margin just isn't there. Most would rather not sell Shimano parts at all- but they have to because of market demands. I'm not saying you should buy the cassette from the LBS that you think is overcharging- but you shouldn't begrudge him not selling it to you on your terms.
|TJ -- What is the deal on components?||pmf1|
Feb 22, 2002 12:18 PM
|Does Shimano and other component manufacturers only lower prices for bulk dealers? Its been my experience that LBS price individual parts very high, I guess because they don't get them much cheaper themselves. I was going to blow my REI refund check on 2 DA cassettes, until I learned that they were charging $140 each for them. Another example -- my LBS wanted $145 for a set of Avid brakes. |
So what is the deal? Do you have to buy 100 gruppos to get a bulk deal? Is that how Excel, Performance, etc does it? Or is it market power? Do they negotiate these prices with manufacturers? I hear that bike companies do.
BTW -- Are you now gainfully employed in Boston?
|TJ -- What is the deal on components?||TJeanloz|
Feb 22, 2002 1:08 PM
|Excel has a few tricks up their sleeves.
1. They are a bike manufacterer, remember Macalu, Gios and other Excel specific lines? Having this designation allows them to buy directly from Shimano for 'OEM' pricing- roughly 10% below what other distributers pay.
2. They also buy enough volume that they can (and do) work a currency arbitrage- if things happen to be cheaper in Australia because of currency issues, they'll buy a container load from Australia.
3. Foreign offices. For most components, they have a buyer in Italy working directly with the manufacturer. Essentially, they skip the wholesale distributer altogether. Excel pays roughly the same for most parts as QBP- only QBP sells to shops, Excel to consumers.
I am now employed, though not gainfully, as an investment banker in Boston.
|Thanks, and it could be worse ...||pmf1|
Feb 22, 2002 1:24 PM
|You could be emloyed in a widget factory, or be in Law School. |
Hope you like the East Coast. I have grown to like it, except for housing prices which are really through the roof (esp in Boston).
|Well, now I know. Got an inside guy.||Sintesi|
Feb 22, 2002 12:39 PM
|Interesting to hear TJean. Thank you. I guess it's nice to find out when some of your assumptions are wrong. I'm learning. But I don't think I'm essentially in error.
Maybe shops should give up trying to make a profit on Shimano altogether and sell the stuff at a margin to simply cover cost. Because either way, the guy (me) is going to buy it where the price is lowest and the shopping most convenient. If they can provide a service that spreads good will, says yes to a customer and gets him or her back in there then that makes sense to me.
From what I can understand from you, is that a portion of bicycle retail does not make money, in fact it is almost impossible. If you can't compete, why compete? Do what you can do that the internet can't. The LBS pays $72, I offer $85, next unsavvy (or rich) kid that walks in pays $100. I still don't see the problem. It's stupid not to deal regardless. Is it incumbant on me to understand the LBS position or is it on them to understand my viewpoint? It's the prior not the latter. Joe Shmo doesn't owe Local Bike Shop the time of day. What do you think?
Let me ask you this. How many Shimano cassettes do you suppose Excel has to buy to get a reasonable discount on cassettes to sell at $70. What would you suppose their margins are? If you know, that's great I'm curious about this stuff.
By the way, I'm not anti-LBS I want to support them but I can't afford em. Simple as that.
|Here's the thing though,||TJeanloz|
Feb 22, 2002 1:02 PM
|It seems like the shop should be willing to bargain, but because the margin is so low on Shimano parts, inventory turn has to be very fast. So the shop only has one or two in stock (we kept one of each ratio), so if I sell one to you for $85, some guy might come in the door 5 minutes later willing to pay $100, but I don't have the cassette anymore.
I don't think anybody owes the bike shop anything. "Save your LBS" is a load of crap. It's a business, if you don't need their services, you shouldn't feel obligated to pay for them.
|So what's the markup exactly?||Helduser|
Feb 22, 2002 12:40 PM
|It's these same dude's who get real pissed when you go and buy something at performance bike shop. Hey it's all about saving a buck. Especially if you can get it somewhere else for cheaper. Buyer loyalty is crap nowadays. Especially when you have so many avenues to make purchases. I guess they figure your taking a chance buying over the internet and the fact that they're local is appealing. Frankly, for people who are serious about cycling the bike shop is merely a parts supplier. As long as the return policy's elsewhere are decent why buy from the local guy.|
|re: Specialized Bike Price||cyclopathic|
Feb 22, 2002 9:58 AM
dealers usually match the price. I would go with one who would "customize" it for you (fit, change saddle etc) or closest to home. agree with comment above
|The Elefantino Special||Scot_Gore|
Feb 22, 2002 10:20 AM
|There's a used 2002 Allez E5 Comp on E-bay right now. It's a 56cm. You lose the warranty, and the relationship you gain with the sale, you can decide how much under retail that's worth to you.
THIS IS NOT SELF PROMOTION, I AM NOT THE SELLER, JUST PROVIDING INFORMATION.
(Get well Mike)