A few times now,I've seen people mention that their LBS charges 10% extra for bikes bought through Cyclescheme because Cyclescheme get 10% discount. My LBS doesn't do this and I don't think they'd be getting my Cyclescheme voucher if they tried.
Has anyone had experience of this?

My LBS told me they don't make much money from the C2W scheme, but didn't try to charge me more.

Brixton Cycles did this to me. If I'd thought about it harder I wouldn't have accepted it. It was genuinely the case that if the bike wasn't on C2W they wouldn't be getting the sale. Fine in most other respects, but that annoyed me, when it sunk in. 🙂

the lbs' i spoke to would only do things at full retail price, no discount, in order to cover their profit margin

Apparently it's got something to do with the government taking 10% of the cost of the bike back from the shop as a tax!

I just bought my c2w bike. It had £300 off in the sale and I negotiated another £200 off. I like Evans 🙂

Cyclescheme take 10% of the cost of the bike from the shop.
I can kind of see where the retailers are coming from. I understand that a bike they've already discounted has already cost them some profit without losing another 10% to Cyclescheme. I'm looking at Planet X bikes and they add 10% to the price. Some of the offers there represent very good value indeed and I appreciate their margins will be small and they are perhaps more reliant on volume to make money.
If a product is worth it then you have to put these things in to perspective.
Think how much Cyclescheme are making out of all this for doing not very much at all!

the lbs' i spoke to would only do things at full retail price, no discount, in order to cover their profit margin

Bikes purchased via C2W are supposed to be sold at full RRP so discounting and sale prices are not allowed. Adding 10% seems ridiculous and I wouldn't give a shop my money if this was their practice.

Bikes purchased via C2W are supposed to be sold at full RRP so discounting and sale prices are not allowed.

Mmmm – have you got a reference for that?

I had to pay RRP for my bike – if they had asked for 10% extra I would have gone elsewhere – very cheeky imo! Yes they pay a fee to cyclescheme but they also get loads of business from it, and most people don't pay RRP if paying 'cash'.

Bikes purchased via C2W are supposed to be sold at full RRP so discounting and sale prices are not allowed.

not true –

What used to happen in alpine is if an item was a sale item – ie already reduced either it would have 10% added on or the sale price revoked – which ever was less. On an RRP sale nothing would be added

when i worked in a small independant we never added the 10% on – certain shops local to my old small independant shop used to and our customers werent shy in being vocal about their disgust at this

I can see why some are tempted to do it and one of the LBS owners who posts on here has suggested that they may be tempted to do it soon.

IMHO LBSs are getting marketing support from Cyclescheme and are getting additional sales through being a member shop. in addition, I suspect that folk who buy bikes through cyclescheme remain as customers for that shop for other purchases e.g. accessories and kids bikes etc.

An LBS would have to be very sure of its market and quite brave to stick a 10% premium onto bikes sold through the scheme.

Mail order box shifters e.g. Planet X with tighter margins are a different kettle of bananas and can almost be excused for doing it.

Thanks for making my future purchase sound so exciting Geoff 😀

I,very recently bought a Planet X carbon sl on the C2W scheme, they asked for another £100 on top and I was willing to pay that for a bike that, after much research, was VERY good value for money!!
I feel it all depends on the bike and the retailer! I would not have paid extra for a Trek, Spesh,Giant as they dont represent the same value and are already overpriced!

ooooooh, now that's a whole other thread and indeed has been several times in the past 😀

Think how much Cyclescheme are making out of all this for doing not very much at all!

I was hoping someone was going to pop up and say "no this is a gpvernment scheme to get more people out of their cars and onto bikes no private company is making fat profits from a government awarded contract" Wishful thinking on my part.

When I got my C2W a few yrs ago the scheme reps said "full rrp" and so did the shop (had to use halfords). I've since heard an LBS say 10% on top for C2W but that's because the bike is being advertised below rrp already. Anyone charging 10% over rrp cos you're using C2W is bang out of order.

…unless they're working on tight margins as it is.
There has to be a bit of give and take I s'pose.

Stuff should be at retail, most schemes stipulate this. Though my colleague managed to get winstanleys to split the difference on a giant fcr in their sale……which was a result

I had 10% knocked of the RRP so I could have the bike I wanted on the C2W.

Nothing has to be at retail. That's why some LBS charge an extra fee for using Cyclescheme and why Evans can let you buy sale items using your Ride2Work voucher and effectively give you a double discount.

Remember you are not buying a bike but your employer is and then they are hiring it to you with payment made via a method of salary sacrifice, with a final payment made at the end if you take ownership of said bike.

Employers routinely try to get the bike(s) at lower prices to help their cash flow and in very rare cases actually pass that saving onto employees as well.

The scheme was originally launched as a basic bike hire option whereby employers purchased bikes and then hired them to their staff. Unfortunately no employers took it up because they could not get a return on their investment. Hence salary sacrifice was bolted on the side.

gunnagofasta – I,very recently bought a Planet X carbon sl on the C2W scheme, they asked for another £100 on top and I was willing to pay that for a bike that, after much research, was VERY good value for money!!
I feel it all depends on the bike and the retailer! I would not have paid extra for a Trek, Spesh,Giant as they dont represent the same value and are already overpriced!

see that makes no sense at all. You wouldn't be buying a Trek, Spesh or Giant from Trek, Spesh or Giant, you are buying it from their dealer. They may well be over priced but its the manufacturers that set the RRP not the shop. I would expect that the shop is making a smaller margin on the bikes than Planet x would be.

Shop elsewhere?

If you must grumble MrBikeshop then don't participate in the scheme?

If more people avoided RRP and avoided extra-cost, businesses would soon learn the 'market wont support them'.

Simples.

I think its odd how bikeshops have a twee attitude to pricing when it suits them.

The only thing like this I heard that with Halfords, while they would try to get bikes for C2W scheme customers, from ranges that they don't normally sell would then charge full RRP for it. Seemed fair enough to me as no doubt they would have to pay more to a make that they don't normally deal with.

When someone above says the Gov get 10% off the shop for a C2W bike, is that on top of the VAT or instead of? If it's instead of then they are surely making more than a normal sale?

Maybe this needs answering by a LBS owner who knows exactly what goes on.

depends on the scheme

evans run their own scheme and thus loose no money

most lbs participate in a scheme run by a company called cyclescheme which employers sign up to

it is this company which takes the 10% as an admin fee

I wondered how long it would take Hora to get here with his tales of how these LBS owners are raking in small fortunes. I've been wondering why, if he's so sure this is the case, he's not already opened Horas Bike Emporium, offering a wee discount (to undercut the greedy competition) and thus coining it in.

Oh yes, because they went into it as a 'calling' and not to make money 🙄

Mosquito is a registered participant in the governments 'tax-free bikes' scheme administered by Cyclescheme.
There is a hefty charge of 10% to us on all sales through Cyclescheme however we only charge a nominal 5% to account for this and the increased administration involved.

Direct from Mosquito's website. Plain for all to see, so no complaints but makes me think twice about whether I really, really want that Fixie Pure Blood.

For a bike we sell at £1000 we get £900 from cyclescheme and £850 from Halfords depending on what voucher the customer has.

On a £1000 bike the gross margin under the cyclescheme will then become in the low 20's (percentage wise). The net after PDI and a 6 weeker and the 7 day waiting time for the cash to come in drags this down a bit more.

This makes quite a difference to the profitability of a business. Turnover increases for sure as we can all agree there are more bikes being sold to people who perhaps would not have bought.

What it has also done though is artificially boosted demand for £600-£1000 bikes that was not there to the same degree before the scheme. If the take up of the scheme diminishes then we 'should' see a drop back to the sub £500 commuter business that actually is a little bit more profitable in percentage terms.

The scheme is a good thing, if used correctly and not abused etc but the real value in it is seeing more cyclists out there and the servicing of the bikes they buy over the year. To restore the margin to normal levels we need to see a customer back over the 12 months for 2 services and accessory sales.

Each bike shop is different will have differing business models of course but this is our situation. For transparency and clarity etc.

It is unlikely we will ever add on 10% to a sale under CS – we are hoping to negotiate better margins with the bike brands to allow more breathing room as after the VAT increase it will be even tighter.

Anyway thats as much as i can say really.

yup hora in no idea shocker

why not put your money where your mouth is and revolutionise the bike trade – if your ideas are so good you could be rich !

If you're after a good deal shop around (best time is in winter) and pay outright, if you need a bike now and don't have cash upfront C2W can get you a discount, normally not as good as if you shop around but better than most credit/HP deals.
all IMO of course.

Donk speaketh the sense.

donk speaketh the sense there, but not above:

Donk – Member
Think how much Cyclescheme are making out of all this for doing not very much at all!
I was hoping someone was going to pop up and say "no this is a gpvernment scheme to get more people out of their cars and onto bikes no private company is making fat profits from a government awarded contract" Wishful thinking on my part.

Cyclescheme aren't government appointed, they're just a private company who saw an opportunity to make some money by being an intermediary between companies who want to run cycle to work schemes and bike shops. The way the government have set up cycle to work, companies are able to purchase bikes directly and deal with setting up the employer agreement themselves, but cyclescheme are providing a service which does this for them. To the employers it is cost effective as it costs them nothing, to the employees they don't care as they still get their bike and the model cyclescheme have set up means the lbs takes the hit.

IMO if an LBS is going to add on 10% for using cyclescheme they shouldn't have signed up with cyclescheme in the first place as they knew the terms.

Nice honest post from teh bikechain there

I've just done some calculations, and for my scheme (others may vary) I pay £638.53 for the (£1000) bike, I also get a £100 safety eqipment voucher (I needed a new helmet anyway), the scheme runs for 3 years so the maximum to buy the bike at the end = 12% (£120) Total + £658.53 (if my employer gives me the bike at the end of the scheme I pay the tax and NI on £120 so I save even more) do you really believe that you can get easily get the bike you want when you want it, at the best part of 35% discount? 🙄

to the trail_rat and thebikechain – DON'T enter into the scheme then? Its not rocket science. Plus as said above.

I do have a clue- well run bikeshops owned by businessmen also have a better clue as they make money from a business. Bikeshops dont want charity- they just want money for goods sold.

Im not an enemy of bikeshops- I just dont 'get' some peoples weird view of them as though they see a bikeshop as a hub of community and joy (remove the till then and I'll believe that).

pjt201 – Member

donk speaketh the sense there, but not aboveOK, thanks for clarifying, I had originally assumed the best but then feared the worst, if CS came up with it all and approached the government then fair enough, good luck to them. I had visions of a government contract awarded to shady business men who had paid large party contributions, shady dealings, kicks backs etc etc.

There is a profit to be made but it is small. Any profit is worthwhile to an extent of course but there is the balance between staff needed to administer the sales, after sales, servicing, other costs etc that for SOME shops with differing target margins it makes it hard for them.

To exclude customers who wish to use the scheme would be (in our case) commercially daft but for some business models it might make sense.

I can see how a shop would be reluctant to keep going with the scheme with the admin involved and what with VAT going up the margin is squeezed even more.

You have to also consider, if someone is willing to pay an admin fee to get the bike they really want then a good businessman will take that fee happily, why wouldn't they after all? If this works for some then that's cool.

I don't think it would work for us however. We will more than likely carry on as we are and look for more add on sales to recover the difference.

I was hoping someone was going to pop up and say "no this is a gpvernment scheme to get more people out of their cars and onto bikes no private company is making fat profits from a government awarded contract" Wishful thinking on my part.

Don't confuse C2W with Cyclescheme. C2W is the name for the tax arrangement that allows an employer to rent a bike to you on a salary sacrifice basis. Cyclescheme is one of a number of private enterprises that offer a package that minimises the administrative hassle to employers. They make their money by charging retailers a percentage, reducing their margin.

No government awarded contract – just private enterprise offering convenience for a price. There's nothing to stop your employer administering a scheme themselves, buying the bikes direct from a shop and ensuring that the agreement they draw up with you conforms with the Consumer Credit Act etc.