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The pound and the stock market are already priced at a no deal, so if there is a deal both will probably rise a fair amount, if no deal not so much.
Don’t forget the pound rose post referendum.
No it didn't, it plunged. https://www.bbc.co.uk/news/business-36611512
Got to say, with some of the prices of bikes at the moment I see why more and more people are going down the Marino route, might be doing that myself as their prices are really hard to beat
My Rocket arrived with me just as Orange were announcing the Formula spec 5 which was near-identical in spec to my Rocket. It was £3k more expensive!
Hmmmm, how close? The Orange was XX1 groupo with XO crank, carbon wheels, Renthal carbon bars, Fox Factory Transfer post, Hope hubs, Saint brakes, etc, etc..... Considering the frames cost about the same Cotic have done well to match the spec on a non discounted bike for 3k less. Not saying Orange don't know how to charge but I think Canyon and the like would do well to offer that spec for £3800, let alone Cotic.
As for price rises it's eye watering really.
When did good but mass produced steel hard tail frames jump from £350 to £600+?
When did £1500 bikes start getting spec'd with £700 bike forks?
When did a made of cheese rear mech cost £80, a low range cost £100 and top of the range £670!
Oh, and when did my current frame cost the same as the equivalent full bike (in the sale) 4 years ago?
It doesn't help that a notable part of the demographic who are seemingly attracted to the sport is wellmpaid middle management/wealthy professional people. Just look at the £500k dream house thread and I imply no criticism of those posting but it's pretty clear there's a fair few who aren't frightened of significant debt or who earn a really big wedge or both when you see people saying you can't get a house with good riding somewhere nice for £500k.
The industry has clocked this and in its desire to incessantly grow sales and make bigger profits it's piling more and more time into the 'next big thing' - got to be lighter, got to be stronger, more travel, more carbon, more gears ... Less longevity, more breakages, more obsolescence, more new bikes sold.
This isn't the UK pricing problem (which has been elegantly covered by supply/demand, exchange rates, commodity prices etc above) but it is I think part of a systematic shift towards more and more expensive products and while that's also leading to good trickle down we are also conditioned in our own minds to certain "specs" and I struggled for ages to look at kit below XT because I always bought XT and I didn't want to "downgrade". The thing is that Zee or SLX wasn't really a downgrade when it was two years newer.
Having grown up with a love of bikes touring, mountain biking, road riding I get a little fed up of the ever shifting goal posts, the disappearance/replacement of standards at the drop of a CAD programme - some of which are a retrograde step in function and reliability and questionable durability.
No it didn’t, it plunged
And then rose. By mid 2017 it was higher than it was at referendum. The outcome hadn't changed, brexit was still on but the pound rose.
And then rose.
Well yes, above a 7 year low, it tanked in 08/09 and never really recovered
From https://www.poundsterlinglive.com/bank-of-england-spot/historical-spot-exchange-rates/gbp/GBP-to-EUR
But its certainly not recovered to 15/16 levels. I was getting day trades at 1.30 before the referendum took hold and it started to drop (spike) nose dive
Quite apart from the £s value there's the small detail that whatever trading deals the EU has with various Far East Counties will cease to include Britain. As for the £, well prior to the Referendum a bag of organic Basmati was costing £3.25. It's now £5.....
We're getting off topic here, are prices getting silly, yes. Sweet F A to do with exchange rates, strength of the pound and Brexit.
Bike prices have rocketed all over the globe because they've realised we'll pay whatever they charge. Almost every company is getting full suspension frames knocked up in Taiwan for a few hundred quid then charging premium prices 4 or 6 times that for the finished product with oem shocks that cost them a fraction of what a shop would charge us.
They saved a fortune moving production to the far east but customers saw zero reduction in cost but arguably in some cases a reduction in alignment quality.
Chainreaction have sold Nukeproof mega frames for as little as £750 and still probably made a good profit, in the past few years that frames rrp as increased by over £600 I'd love to know what they pay for them, but no insiders will spill the beans.
And then rose. By mid 2017 it was higher than it was at referendum. The outcome hadn’t changed, brexit was still on but the pound rose.
Not true against the Euro. What currency exchange are you looking at?
Referendum a bag of organic Basmati was costing £3.25. It’s now £5…..
Ah the STW equivalent of bread and milk!
Transition Scout- 4 grand bike with SRAM NX. Crazy.
As far as I know we don't grow rice, we buy it in from the far east, unlike bread and milk. And it's not subject to the old chestnut of us paying more and more for technology. It's just an indicator of the £s waining buying power.
Whilst being surprised at the price of topline suspension bikes we get more for our wages than we did back in the early 90s, a lot more, and that's down to cheaper manufacturing and distribution costs as a result of modern technological advances.
Almost every company is getting full suspension frames knocked up in Taiwan for a few hundred quid then charging premium prices 4 or 6 times that for the finished product with oem shocks that cost them a fraction of what a shop would charge us.
Worse, at shop retail prices end customer paying more like 10+ times the original cost. What we end up paying is layer upon layer of profit and then a load of tax. There are companies now that just charge what they like. Even to the point where Santa Cruz, Specialized and others have been caught out selling bikes for more than it would cost to buy the frame and build it with the same parts yourself at full price. The cycle industry in particular is way overpriced and takes customers for mugs. Margins in some other retail industries are dire by comparison.
If you use a chart with a bit more granularity it's pretty obvious. But the larger point is that it's not necessarily negative events that cause drops, it's the uncertainty prior to the event. The biggest drop in recent history wasnt caused by the referendum, it was an erroneous article in the FT
https://www.cmegroup.com/education/images/2020/the-british-pound-brexit-and-the-pandemic-fig01.jp g" />
If you use a chart with a bit more granularity it’s pretty obvious.
What's pretty obvious, even from your chart is that the post referendum high point is lower than the the pre referendum one, that the post referendum high is actually only higher than - the at that point - unusual lows pre referendum (the dip in early 16 I think correlates to the announcement of the referendum) but regardless your chart is USD to EUR and USD to GBP.
(and the EUR USD rate in 2015 is dropping on the back of the Greek issue largely so more bad news. Www.theguardian.com/business/2015/mar/11/euro-12-year-low-gainst-the-dollar)
I am tight AND prices are getting silly
Not just the top end prices but the middle ground. The lower end stuff (around £1000) is still good value and seems to be better than many years ago.
Luckily I ride a very basic bike and source and build myself so always get discounted parts - because I am tight.
Surely if bikes are being sold for 10x the cost there would be a couple of companies massively undercutting the market? I know there are some cheaper brands like canyon or Vitus but if someone sold for X2 the cost they would sell more than anyone else
With a budget of £2,700 for a British enduro-trail FS, you should have loads of choice if you look at nearly new.
I got my Five secondhand but absolutely unused - to be honest, I suspect it was creative accounting from the previous owner using cyclescheme - but hey, if it gets top rate taxpayers 40% off and that gets me 50% off for a practically new bike, that's good with me!
A question - has the price increase of post-brexshit imports narrowed the gap between UK made and imported goods.
For example, have Shimano XT brakes gone up more than Hope?
Surely if bikes are being sold for 10x the cost there would be a couple of companies massively undercutting the market?
There would also be some very wealthy bike companies.
The issue is in part people see a shock for sale for £350 with an rrp of 700. they assume the cost of that shock is massively lower to a frame maker than crc (which it likely isn't unless the bike Co is giant). They then assume that because crc can sell the shock at £350 on its own then that's what it should cost on a frame. They forget the bike co has to check it, handle it, warehouse it, assemble it onto a frame, QC it repack it, and ship it plus make money on all those things. Crc then whacks their 40% on the whole thing and it's up at rrp fairly quickly. That's before you've paid designer's, testers marketeers, audi driving it consultants and so on.
The cost of parts in my particular line of work is about 10% of the breakeven on the low cost stuff, about 70% on the high. It takes just as long to build something cheap as expensive, just as much warehouse space etc. But market perception is A is cheap B is expensive, so I make much less margin on A but I make a much bigger margin on B it support that.
[Made up numbers alert] The market will bear 400% markup on a 10k super bike that costs 1200in parts and 800 in labour etc to make. They won't bear that on a bike that cost 1k total because its only got £200 in parts so it's "a cheap bike" so the markup is 60% despite the reality that both bikes should have about 200% on them.
exchange rate, inflation, demand>supply, brexit, covid.
shop around. life is full of choices. personally i'm not fussed about cars, so my car costs me zero a month, whereas many of my colleagues lease posh cars £200-400 a month.
same with kids, i have friends who pay £850 a month in childcare, a £4k bike doesnt seem that expensive, 6 months of childcare.
the german sites and CRC are still selling deore/slx/XT brakes for £56-70 an end,
they assume the cost of that shock is massively lower to a frame maker than crc (which it likely isn’t unless the bike Co is giant).
Actually it is. By quite a lot. Or at least I think it is. Of course I don't know CRCs buy price but I do know that OE vs retail trade even at small OE quantities is a massive price difference.
whereas many of my colleagues lease posh cars £200-400 a month.
same with kids,
Nah its not, that every parent I know wishes they got their kids on a sort term lease doesn't make it so.
Actually it is. By quite a lot. Or at least I think it is. Of course I don’t know CRCs buy price but I do know that OE vs retail trade even at small OE quantities is a massive price difference.
I'm sure you're in a position to give a genuine view on that though I'm guessing that a big part of the reason those shocks etc arrive in shrink wrap or grey box is they are OE?
Been a long time since I worked in tech retail but I remember back then an OEM copy of Windows cost us about 40% of a retail copy but that a retail copy certainly wasn't resellable at 50% of rrp without making a loss. (Iirc OEM was around 25% of rrp, retail was about 60% of rrp). Apples and oranges though.
I don't doubt for a second what your saying about OE vs retail costs, I just doubt that's what most of the cheap sellers are buying/paying.
It's just the same with other goods. I can get a perfectly good fly rod for under £100, an outstanding rod under £400 or I can pay £800 for a rod that only an expert would have an advantage with. I'm not skilled so both my roads and bikes are perfectly good [with the exception of my uber sensitive nymphing rod]. Again prices are a fraction what they were in real terms and today's inexpensive rod matches a very good one of 12 years ago, due to advances in technology.
So yes stuff is going to stay higher than it was recently but the present generation is still getting much more for their money.
Sorry skipped over all the exchange rate stuff, goes way over my head. Sonder bikes seem to review well and look to be pretty good VFM.
[Made up numbers alert] The market will bear 400% markup on a 10k super bike that costs 1200in parts and 800 in labour etc to make. They won’t bear that on a bike that cost 1k total because its only got £200 in parts so it’s “a cheap bike” so the markup is 60% despite the reality that both bikes should have about 200% on them.
interesting.
Whats the take on the profit margins on other bikes? I'd always had in my mind that having the abiity to turn out thousands of mid range hybrids, or sell £8k road bikes (they dont even have suspension, wheres the money going?) was beneficial to the companies that do it.
Compare Cube and Canyon* with the likes of Commencal, Santa Cruz, Orange, Bird who are MTB only (or nearly so).
*yes, both direct sales, wanted to avoid the big 3
I agree, prices are getting silly but I keep coming back to the Boardmans for a grand. It is an awful lot of bike for the money. Similar the bossnut.
That and 2nd hand if the COVID tax disappears any time soon. I’m hoping the winter knocks this a bit as some of the used prices now are mad.
I’m sure you’re in a position to give a genuine view on that though I’m guessing that a big part of the reason those shocks etc arrive in shrink wrap or grey box is they are OE?
Thats indeed true, but then there's also the fact that CRC are willing to run on very low margins, so some of its OE being resold cheap as you say at something like the price on a bike, and then there's just stuff they're selling cheap but is actually retail. Its a lottery what you're buying!
I have a SRAM OEM price list somewhere I will post a link to it. You will be gobsmacked how much cheaper a shock is OE than Trade even
CRC and merlin both have their own brand bikes they were able to get OE parts for
They I assume were told to stop flogging on the OE overstock to the general public
I’d always had in my mind that having the abiity to turn out thousands of mid range hybrids, or sell £8k road bikes (they dont even have suspension, wheres the money going?) was beneficial to the companies that do it.
There's a lot of ways to make things beneficial though. Higher volumes tend to result in reduced costs both for stock and handling. You can operate at lower margins on higher turnover. Higher volumes insulate you better against small problems (1 warranty in 10 sales is unlucky but it's expensive, 1 in 1000k isn't). Bigger premises are cheaper and so on.
Oh and turnover is king. I'd rather make 20% on 2 million turnover than 40% on 1million.
(those mid range hybrids have gotten more expensive too)
Its a lottery what you’re buying!
That's the advantage of wiggle, buy very expensive haribo, get random free bike parts.
There’s a lot of ways to make things beneficial though. Higher volumes tend to result in reduced costs both for stock and handling. You can operate at lower margins on higher turnover.
that was my thought on the hybrids - churning out containers full of middling spec city bikes funds/subsidises the comparitively low numbers of offroad wonder chariots.
Oh and turnover is king. I’d rather make 20% on 2 million turnover than 40% on 1million.
You can't apply a total simplistic approach like that. You could turnover all the money in the world, but if you're not making anything, you arn't going to last.
Turnover, profit & cashflow are all important.
And me, I'd much rather make a healthy 40% (assuming good cost control) on £1m than do twice as much work to make the same amount of money. If the opportunity for growth is there, it can be managed far better with higher margins.
The company I work for would go bust if we only ever made 20% gross.
They're also a gateway drug. I mean no one woke up one morning amd thought "I've never done drugs before but I reckon I'd like to try a few gram of meth today" it's the same with bikes "oh, that hybrid thing looks like it could get me fit and save a few hundred quid in petrol" 18 months later "hmmmmm £380 for some jockey wheels, ooooohhhhh and they come in red. Screw holiday the kids"
You can’t apply a total simplistic approach like that. You could turnover all the money in the world, but if you’re not making anything, you arn’t going to last.
Turnover, profit & cashflow are all important
Yes, I thought it was fairly obvious that was a massive over simplification.
“Oh and turnover is king. I’d rather make 20% on 2 million turnover than 40% on 1million.”
I take it you don’t run your own business?
Lower profit and higher turnover is always higher risk and more stressful. You need more staff, bigger premises, more complex admin systems, and if market forces change your costs or selling price (exchange rates, commodities, competition) then you more easily swing from profit to loss.
They’re also a gateway drug. I mean no one woke up one morning amd thought “I’ve never done drugs before but I reckon I’d like to try a few gram of meth today” it’s the same with bikes “oh, that hybrid thing looks like it could get me fit and save a few hundred quid in petrol” 18 months later “hmmmmm £380 for some jockey wheels, ooooohhhhh and they come in red. Screw holiday the kids”
Only £380, you cheapskate!
https://www.pushcartel.co.uk/shop/ceramicspeed-3d-printed-titanium-oversized-pulley-wheels
Lower profit and higher turnover is always higher risk and more stressful
That very much depends on why your profit is low, a company investing and expanding will have a naturally lower profit vs one which isn't, a company selling too cheap could very easily have a higher % profit than one selling at a sensible price, even at the same level of turnover.
No I wouldn't take a 50% dip in profit for 100% increase in turnover year on year but I'd very happily spend into loss over a few years to see a 100% increase in turnover with an expected return to profitability at 80 or 90% of previous levels in the mid term.
As above, my statement is a massive over simplification but growth in revenue isn't just a vanity trip and higher profits aren't always the sane pursuit.
Only £380, you cheapskate
Well yes, but I can buy a significantly over priced mini bag of haribo and get free £380 jockey wheels. Those ones probably don't come with sweets.
There's some merit in favouring higher-turnover & lower-profit business models, as it might indicate a more mature and stable position in the market.
Depending on a high profit margin and low volume might leave you more vulnerable to competitors.
But that's making some assumptions, obvs.
Re. bike pricing, we're all knowledgable enough to understand that it's not just cost of parts and everything else is profit for bike companies, but - as mentioned - some brands' "aspirational" pricing of their halo models is just silly.
but – as mentioned – some brands’ “aspirational” pricing of their halo models is just silly.
It all seems pretty consistent, around £10k for the top end model with carbon wheels, top end group set, top end finishing kit etc.
It's much like the car market you can buy a 318 (or whatever the entry level BMW is now) or you can take out a mortgage and buy a 750.
There are people who will buy top end bikes and top end cars....
as mentioned – some brands’ “aspirational” pricing of their halo models is just silly
I think its as much that those halo products don't actually seem to be that outlandish beyond the price. Sure its factory suspension and xtr shifting etc but none of that is actually *that* spectacular.
If those halo models were equipped with a £1400 derailleur cage and trickstuff brakes etc we might look at the [crazy] high priced stuff and think "wow" about something other than the price, as it is the halo models look a bit too normal.
For want of a better analogy it's a bit like finding there are no bugattis or maybachs to drool over, but if you want top of the line for twice the price of your standard mondeo you can have aircon and heated seats.