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Math on what bikes Cost at every step -- maybe too much info(17 posts)

Math on what bikes Cost at every step -- maybe too much infowardinside
Nov 10, 2003 12:49 PM
A resent posting ask "Why DO bikes cost so much"? -- Which, of course, I do not agree that bikes cost a lot to start with. In 1970 the average bike sold in a bike shop was $300; and in 2000 the average bike sold in a bike shop was $300. In addition, to the deflation that represents; 2000 model bikes are much better quality & feature wise than 1970 bikes. But that is besides the point.
Cost on different bikes - where does it come from? For costing breakdown there are two types of bikes -- Standard bikes and Vanity bikes
VANITY bikes the costing makes sense only in the mind of the buyer; which is the whole point. A Colnago frame that costs $500 or less to make can easily be sold for over $3000 -- think Luis Vuitton bags (where a bag that costs $40 to make can sell for $1000). So no more explaining is needed.
STANDARD bikes are much more simple to understand; manufacturers make about 12 to 15%, importer/distributors make about 30%, and retailers make about 40% -- manufacturers have 8 to 11% overhead, importer/distributors have 24 to 26% overhead, and average bikes shops in the USA have 37.5% overhead.
So no one is making a lot. And all the numbers change for direct import container buyers such as supergo, bikesdirect, or coloradocyclist.
So you take the standard ULTEGRA Road bike put together by Ideal, Merida, Kenstone, etc -- with Aluminum Frame, carbon fork, Ultegra crank, brakes, shifters, DER, chain, cogs, Ritchey or VeloMax wheelset, Ritchey or FSA stem, post, bars --- the cost to produce is $560 - $570; so the cost to the importer/distributor is about $650 [which becomes $700 after landing with freight and duty], so a bike shop would pay a distributor about $1000 to $1100 for the bike; then the list price would be set at a retail of $1695 to $1995. If the bike is purchased direct in containers by bigger retailers like supergo, bikesdirect, or coloradocyclist, they would pay $750 to $800 and then selling price would be adjusted for their different cost structure (online sellers have a selling cost of about 15 to 17% - so maybe their sale price would be $1100 or $1200).
The percentage steps in markup is the same at all levels of standard bikes from List Price of $200 to $2000 -- may change a little over $2000. And in the case of Vanity bikes all the rules are out the window.
on the other handSteve_0
Nov 10, 2003 1:01 PM
one can buy a brand-new 100 hp motorcycle, complete with frameset, wheelset, gearing, saddle and bars (common to both), in addition to engine, clutch, full suspension, toolkit, lighting and fairing for the price of your 'vanity' bikes.

A 28 hp cycle for the price of your standard.

Yes, I think bicycles are expensive.
on the other hand part II.Marketing Dept
Nov 10, 2003 1:20 PM
I do support what wardinside (where does that screen name come from?, but that's another post) is talking about except on how he classified the bikes in his example.

The STANDARD bike in his example is actually a very high level bike if you consider all bikes. I would have to consider a standard bike as being something like I just bought my kid from Walmart (please all at RBR, forgive me).

Aluminum frame and fork, sram and shimano shifting and plenty of alloy parts, $39.91.

Could Lance win a stage of the TDF on it, maybe if it were his size?

Are bikes cheap? Absolutely. Are high-end bikes with carbon, exotic materials and name recognition expensive? That is a relative question that only the consumer can answer. Long live capitalism!!
Since you think bikes are expensivewardinside
Nov 10, 2003 1:37 PM
It is easy to lower the price of bikes; buy online. As I pointed out online sellers pay about 20% under shops and they have costs that are an additional 20% lower than shops.
So a bike that cost $570 to manufacturer can sometimes be purchased online for as little as $995 -- see the specials at supergo and bikesdirect.
Since that bike has freight from Taiwan and Duty at entry; paying $400 over factory cost is cheap. That is my
point and opinion.
I do understand that in the case of cameras, DVD players, etc., - there are even better deals closer to factory cost -- but the freight and handling is way different.
I also understand that Vanity nameplate prices are super high; but that is the whole point; no one inside the industry thinks those bikes actually ride better -- any more than a Luis V will carry my wife's stuff better (just don't tell her that!)
"no on inside the industry thinks..."Steve_0
Nov 10, 2003 1:44 PM
(shhh...gonna upset a lot of posters here)
I won't get upset, but that way neglects hidden costsrussw19
Nov 10, 2003 7:40 PM
And is therefore too simple. I am not a big advocate of your everyday joe buying online. However, if you know what you are doing, I am fine with it. The problem is that if you buy online you have hidden costs that don't show up right away. If you do your own work, many of those hidden costs go away. Building the bike, maintenence *and I am talking about doing it right.. not hanging the parts, there is a difference to me, but maybe not to everyone.

Then there is shipping, often offset by taxes if you buy local. And some online and mailorder houses offer free shipping. But not all, hence the hidden costs.

Then there are warranty issues... you have to ship the bike back if there are issues, costing you money.

That's just a few of the financial arguements... not getting fit properly and other things come into play as well. These are things that you should be getting at the LBS because you ARE paying for them. If the shop doesn't see it that way, that's an issue you should bring to their attention, but that is also getting off topic of this thread. Besides it also falls into my opening remark of buying online is fine, if you know what you are doing.

But then again, computers and cars are the same way... I can get them online if I know exactly what I want and don't need to pay for the service of having someone tell me about what I am buying during the buying process. Armed with knowledge and information, buying online is great, but it's not for everyone, nor should it be.

It also neglects issues regarding local economies and putting money back into your local government's funding pool. But that is also another off topic issue to this thread.

The problem with buying online vs. buying at the LBS is that the shop and the etailer are not on level terms. So to compare the two is not very accurate, until you factor in the one single valid point universal to all of us... that is that our money doesn't care about level playing fields. My money likes me and therefore likes to do what is best for me, not my local economy. And I can't think of anything that trumps that.

Russ
Different twist..spluti
Nov 10, 2003 1:50 PM
I work in an environment of aerospace design and development. We provide hardware for basic physics, and scientific research. Our support lab can build darn near anything out of any material. If we built the Dogma Ego in our facility it would probably cost you $150,000.
My point? We pay alot for R&D on newer and lighter and more aero stuff.
re: Math on what bikes Cost at every step -- maybe too much infoBostonDave
Nov 10, 2003 1:16 PM
Thanks; that's good info. It helps me feel better about the $1095 I spent last week for my new bike. :)
This is a consumer message board and you know itbikeshopguy
Nov 10, 2003 2:04 PM
And you are fat + dumb + ugly = stupid jerk

hows that for simple math
Bitter?gala7516
Nov 10, 2003 2:37 PM
Can you explain why an educated consumer is a bad thing or do you only have personal attacks?
Then maybe you should leave itrussw19
Nov 10, 2003 8:46 PM
If you seem to get so upset that cosumers know exactly what they are paying for, maybe you shouldn't be here. Go back to your own shop and try to pull the wool over their eyes there. Some of us believe in being honest with our customers so they understand what they are paying for and what they are getting. If you don't want them to know, fine, don't tell them. It's not my place to tell you how to run your own business, but it's not your place to tell any of us the same.

You can always post all you want on BicycleRetailer's web boards you know. That's an industry site... check it out. It may be more what you are looking for.

One thing about your posts that strikes me is that you seem to have very little respect for consumers. If that is true, how do you deal with them when they are in your shop? I am just wondering if you scream and yell at the informed ones there too and call them names.

Russ
While I agree, an "informed" consumer is often a PITATJeanloz
Nov 11, 2003 7:00 AM
When a consumer is correctly and logically "informed" it is a quite pleasant experience to deal with them. Unfortunately, and I know you will be shocked to learn this, not all of the information presented here and in other places is correct.

There's nothing worse than selling a bike, and having the consumer "know" things that aren't true. To wit a customer says something like: "I KNOW Litespeeds are made in China, I would prefer American-built titanium." Well, I understand the confusion, because Litespeed does sub its aluminum bikes out to China, but their ti bikes are built in Tennessee. And I've been to the factory and seen them built - but the customer, who has been so wisely informed by RBR et. al., believes I'm lying to make the sale, because he knows all Litespeeds are built in China.

An informed consumer is great to deal with, no doubt about it. A mis-informed consumer is one of the most frustrating experiences a salesperson can encounter.
russw19 = always the voice of reason, thanks (nm)innergel
Nov 11, 2003 7:20 AM
Run out of coffee this am?ChazWicked
Nov 11, 2003 10:08 AM
Seriously... what's up with the aggression? Someone posts about costs & markup of various bikes, what gives. I simply cannot find anything that would or should anger anyone in the original post. Most people here are riding rather swank bikes so ... whatever, you make no sense.

chaz
Not to defend the aggressive tone,TJeanloz
Nov 11, 2003 10:25 AM
But I will point out that the markups he advertises, and the pricing structure, are not all that accurate. It is frustrating for a retailer to have incorrect information out there, particularly with regard to pricing.
re: Math on what bikes Cost at every step -- maybe too much infogenanest
Nov 10, 2003 2:18 PM
No one ever asks why a $90K Porsche is so expensive when you can get a Hyundai for $9K. Or how about a $350K Ferrari F40? When you are riding a Colnago C40 or a Trek 5900 etc. you are riding almost the same machine that pro racers ride at the highest level of the sport. How many drivers can say (or afford) that? Now its true that few of us weekend warriors can do justice to these bikes, but we can surely feel and appreciate what we're riding.
THANK YOU SO MUCH for posting true bike costssylvie
Nov 11, 2003 6:38 AM
I got a bike online; which tuned out to be great. EXCEPT 2 bike shops gave me a really hard time over it. Now I see why! They can not compete on price; so they act like jerks. This is not true of all bike shops - I did find one that was very nice and even told me what a great deal I got.
Anyway, thanks again for helping to inform consumers.