Seeing as the current enormous price hikes for bikes and equipment was justified by last years rise in raw materials, are we going to see big drops in 2010 stuff now that raw materials can hardly be given away?
Seeing as the current enormous price hikes for bikes and equipment was justified by last years rise in raw materials, are we going to see big drops in 2010 stuff now that raw materials can hardly be given away?
Price rises are mainly due to the drop in the pound against the dollar. Some brands have not passed on the full exchange rate changes so they will for the next year. Yes there have been some raw materials that have increased in cost but bikes will be going up as far as I know not down for 2010.
Sorry!!
Compared to the rest of the 'high street' bike sales so far have hardly been effected by the recession, that is the real reason that bike prices will not be going down. It's a simple supply and demand curve while demand is high then so are prices.
smogmonster - your right for the 5 years running up to the recession prices where increased year on year as we are told that there is a shortage of raw materials thus forcing up the price. Alu, ti and steel is currently about a fifth of what it cost 3 years ago. Logic would say that the decrease in raw material costs should help offset currency fluctuations, but as we know that isn't the case.
Isn't it strange though how an XT cassette can nearly double in price in less than 12months yet Halfords can still sell a Shimano equipped bike for less than £150 just like it has done for the last 5 years.
halfords "69.99" bike has gone up to 99.99 and the 99.99 is 149.99 now 😉
I suspect there may well be a return to the established price points (£500/£1000/£1500 etc) but specs will be lower to meet these.
a few points that do matter in this debate, the cheap Shimano stuff is made in Singapore not Japan, the Yen has virtually doubled in value against the pound over the last 12 months. There is no way round this fact.
Material prices are off there peak, as is the cost of transportation(massively if you can get someone to insure your cargo!), but as most of these are priced in Dollars and the pound has also tanked against the USD, again no saving to be made. I have been told that some brands may be putting another 10-20% on the price next year to cover the currency hit.
Obviously there has been some hedging going on and the effective lag in what the market rate was and the rate agreed by manufacturers and suppliers will have had varying implications.
As i have pointed out before look at the Campag and Shimano price fluctuations over the last year, the Euro rate Tanked so Campag has gone up in price, look at the Yen rate and the effect on shimano pricing and weep. I noticed that someone was complaining about the price of DT stuff, if the currency goes from 2.2 to 1.6 CHF to the pound it isn't really surprising that the price that gets charged in the UK goes up.
The only companies that should still be able to maintain prices are those in the UK such as Hope, material costs will be reasonably even labour costs in our eyes won't have moved, transport is a little cheaper, etc.
All the above is correct regarding currency and it's effects on the cost of imported products into the UK, in fact if the £ stays low against the € and $ the threat of inflation will be a major worry rather than the concern over deflation that has been causing concern. The increase in bikes and related stuff will not be the only thing that goes up when you consider that we no longer manufacture (or grow) all sorts of stuff.
Raw material costs have bombed not just gone down, we are now back to mid07 price for various grades of steel and ally with some dropping massively in the last couple of months. Will this make it through to us? I'm not sure but if bike cannot not be sold (particularly high end stuff) due to lack of available cash or just people being cautious at this time then we could see some bargins. Bike sellers will have a fine line to walk and I suspect it's at the top end that there could be trouble (for them)and savings for us. There looks to be a big jump in prices, what was £1000 is now £1400+ £2500 bike is now £3000+ and so on, can we justify this extra as bike buyers. I would (and have) paid £3000 to 4000+ for bikes but right now would I move on to 5k, not on your nelly.
Sorry for all as it could be mostly b....cks, though I do spend 500k a year on metal.
mrmo - All valid points. What I was trying to illustrate though is that if you look at the price of other non bike related Japanese made goods they have not yet had a 25% price increase. The reason that bike companies have been able to put the their prices up so quickly is because demand has not been affected. We are still buying bikes and bits and bobs at the same rate as we were last year.
When/if demand drops for high end bikes and bits and bobs then rest assured we'll see price decreases.
Oh and I'm sorry Halfords have put their prices up. A Jupiter Trailblazer Mens 21" Rigid Mountain Bike sold for £79.99 in 07/08. The same spec bike now sells for £89.99. An increase of 8%.
All in all, we're still gonna get ****ed in the arse then.
Also, Halfords and Decathlon (French equivalent) have cancelled or put on hold all their new deliveries of bikes as they're not selling them.
RRP of XT Chainset 1995 (No BB) - £140
RRP of XT Chainset (with BB) November 2008 (ie. before recent price rises) - £140
Yeah, we're being really ripped off 🙄
Well sadly it does not work the other way around.
Price of the hope stuff at my LBS in France has not gone down so no new wheels for me 😉
Shimano XT M751 Chainset 2007 - RRP £104.99.
Shimano XT Chainset M770 2009 - RRP £205.52
Jim that is slightly skewed as the M751 did not include BB where are the M770 does.
Oh and the current RRP on an XT chainset is £199.99
Oh and I'm sorry Halfords have put their prices up. A Jupiter Trailblazer Mens 21" Rigid Mountain Bike sold for £79.99 in 07/08. The same spec bike now sells for £89.99. An increase of 8%.
May I be the first to point out its not 8% but %12.5
My humble apologies. I got the RRP from CRC, should have realised that would be wrong 😉
ES71 BB (XT BB) 2007 - RRP £29.49
ES50/51 BB (LX quality, which is relevant here as the BB with a current XT chainset is the same as on an SLX chainset) 2007 - RRP £14.99
So in 2007 you could get the equivalent of a 2009 XT chainset and SLX BB for £120, where as today it will cost you £200.
Granted the 40% price increase from 2007 to 2009 almost mirrors exactly the % decrease of the strength of the pound against the Yen. But the raw material costs of alu and steel in 2007 were triple what they are today. So if we are to believe that current price rises were only applied to maintain a manageable profit margin is it therefore not acceptable to believe that a huge decrease in raw material costs will also soon be reflected in RRP's?
[i]The reason that bike companies have been able to put the their prices up so quickly is because demand has not been affected. We are still buying bikes and bits and bobs at the same rate as we were last year.
When/if demand drops for high end bikes and bits and bobs then rest assured we'll see price decreases. [/i]
Prices were put up to maintain margins, to keep businesses viable. It has nothing to do with demand. I doubt you will see many price decreases due to raw materials being cheaper, they may go down a little over time, but nothing like the increase we have seen.
Cost of materials in a bike costing £1000, probbably about £50 so halving that doesnt make it much cheaper.
Heres the sums, all roughly and margins on bikes are tiny compaired to accessories and parts.
RRP £1000
Shop Trade £620
Distributor £400
ex shipping duty etc £360
Manufacturer £200
So go on there must be a smart arse out there who can tell me how to build a £1000 bike for less than £200 ish!!!
Materials £50
Labour £50
Finishing/forging/CNC £50
All the other stuff £50
Capitalism has given you the money to spend on a bling bike, unfortunately capitalism has also just put the price up and you out of a job?
Nip
you seem to have missed out transport and vat/tax turnip..... takes up alot of the bikes markup.....
nobtwidler - sweet lord. It's lucky I did my GCSE's donkeys years ago. My sincerest apologies. I seem to be saying that a lot 😯
willyboy - obviously prices were put up to maintain margins but a margin of profit is only viable if the product is sold. If you don't sell a product it will not matter whether a RRP is set to make 1% or 100% profit, no sale = zero profit. So therefore profit margins/RRP's have to take into account demand as the product regardless of profitability still needs to be sold. So a company as large as Shimano or Madison will have looked at previous years sales figures and sales forecasts and set their prices accordingly.
So the reason an XT chainset costs £200 is because of 2 factors. 1: A 45% drop in the strength of Sterling when compared to the Yen. 2: Because Madison reckon they can still sell XT chainsets at £200.
Shimano XT M751 Chainset 2007 - RRP £104.99
in 07 i paid...
67quid for a 761 chainset with bb, cheapest i can find today is 129quid.
45quid for an x9 shifters/mech, 109 today.
but its thes same all over. i'm about to change my paddleboard, last year the cost was 850 this year 1300.
I am amazed every time these threads come up that people haven't realised just how screwed the UK economy is, most imported goods are sold in dollars (or currencies pegged to the dollar) and the exchange rate has gone from $2.1 = £1 last year, to $1.41 = £1.
Thats why the prices are going mental, and will be high for quite some time to come. Basically everything has been artificially cheap for the last few years and now its readjusting back to where it should be.
turnip - 38% margin seems a lot for the bike trade. Bike margins are normally in the teens and twenties. I may need nobtwidler to back up my maths though.
i bought the current xt chainset last summer for 80 quid at crc now same model is way more
[i]Because Madison reckon they can still sell XT chainsets at £200. [/i]
its not that they think they can sell them at £200, its that they need to sell them at £200 to maintain their business - our currency is knackered and this has affected all of the importing costs - do you not realise this?
its nothing to do whether they sell 1 or a million -if you need to put prices up due to a cost increase that is outside of your control then that is what you need to do.
Talked to the guys at my LBS and they reckon Shimano stuff are having another price increase in May...
Also about 38% margin on bikes ( or a little bit less) is what a good sized shop should achieve, i doubt many big shops will stock a brand with a margin of less than 30%
Yep, it's nothing to do with demand, and everything to do with not selling at a loss and maintaining workable margins. I don't think anyone wants to put up pricing and risk losing possible sales.
williyboy - if Madison thought they couldn't sell an XT chainset for £200 then they wouldn't stock them, what would be the point? Price is always based on the relationship between 'supply' (how much something costs to produce/buy in) and 'demand' (how much are customers willing to pay).
What is the point of buying in stock and then trying to sell it at a price that nobody is willing to pay? I know maths isn't my strong point but I do know that the company that sells 1000 units and makes £1 profit per unit makes more money than the company that sells 500 units but makes £1.50 profit who in turn makes more money than the company that sells nothing but would have made £2 profit per unit.
Nobody has said that the cost of importing goods from abroad hasn't increased. What I have been trying to illustrate is that so far there hasn't been a decrease in demand for mid to high end bikes and accessories and that is why mid to high end bikes and accessories have seen higher price rises than almost everything else.
Most 'high street' retailers have had to cut margins to keep stock moving. So far it seems that the 'high end bike trade' has been able to keep it's margins roughly the same which means that either demand for products hasn't changed or that the whole bike trade is about to hit the skids.
No-one is going to sell at a loss to get more volume Jim.
Oh and I know that Trek don't sell £1000+ bikes to a certain large bike chain that begins with 'E' and ends with 's' at a price that they can make 38% margin on.
So if they aren't making 38% profit it's pretty safe to assume that your local independent bike shop isn't making anywhere near that sort of margin.
I reckon people will start buying down the ranges, they will buy the same part for the same money, just SLX instead of XT etc. Lets face it most decent level kit works perfectly fine.
The demand for mid range bikes & parts is probably fairly inelastic. There is a minimum threshold for functional, durable kit. Everybody is still riding their bikes, and stuff wears out. Most people will rethink the £400 flatscreen tv or the laminate flooring in the living room a very long time before they start cutting back on bike stuff.
And so they should!
Oh cmon kelvin do you really think that if an XT chainset is sold for any less than £200 then it will be sold for a loss?
If that is the case then Madison will be bankrupt within 12 months. If you think that Madison's profit margin has been stripped to virtually zero on Shimano equipment then even a slight down turn in sales will result in them going under.
Well, Yen devaluation is on the way, so all those Japanese made Shimano goodies should come tumbling down in price before long, what with commodity prices still in the toilet....Devaluation of the Swiss Fr might also make DT forks look cheap as well! (yeah right...)
"Japan's industrial output fell 38pc in February (year-on-year), mostly concentrated into the last four months. No major economy imploded at this speed in the 1930s. The country has been hit by a double shock. As an export power it has taken the brunt of Anglo-Saxon belt-tightening: as the world's top creditor it is cursed by a "safe-haven" currency that soars in moments of danger – largely because the Japanese bring home their wealth till the storm passes. Normally, Japan can cope. This time, the yen's rise has pushed the economy over a cliff.
The yen must come back down to earth, and soon, or Japanese society will start to disintegrate. If necessary, the Bank of Japan will force it down by intervention, as occurred in 2003-2004."
Jim I think the point is, Madison need a mark-up to maintain their own cost structure. There isn't long term value for them in trying to absorb price increases. People will probably balk at paying £200 for something that used to be £120, but they will go out and buy whatever is now available at that price point.
I get what you are saying about top end stuff, I don't think the demand is necessarily as strong, but nobody is going to cut their gross margins when costs are on the increase. We are also coming from a mindset where prices were continually falling, and everyone was after the latest products, to one where people will make do and mend. The cycle will play itself out over the summer but unless there is a lot of 09 kit unsold or the pound rallies I don't think there will be big discounts any time soon.
Well folk are going to buy what they can afford: lower-spec products at a lower price. And the distributors will be stuck with a glut of high-spec units or be forced to flog them at a loss to get the cash turnover they need to buy new stock (they can't get credit at the moment).
So I guess sensible Shimano will have reduced production on XT and XTR. Perhaps this is why they brought our SLX?
P.s. I'm off to buy a new chain and extend the life of my chainset!
P.s. I'm off to buy a new chain and extend the life of my chainset!
That's the most sensible thing I've read on this thread so far. I just had to replace my XT rear mech. I downgraded to SLX (which is really nice BTW), but subsequently ended up getting stung for a new chain, granny ring and cassette because I'd kept the same old chain going for as long as was possible.
I think I'll stick to single speed and leave the worrying about the price of groupsets to someone else.
The UK economy is stuffed - like a few others that believed in the magic of economic bubbles rather than basic arithmetic. Our currency is getting worthless -[url= http://www.goldiac.com/gold-or-cash.html ] here's one dire prediction[/url].
Prices are going to rise as a result, unless we restrict trading to countries with equally damaged currency.
You'd imagine Middleburn isn't exactly upset at increasing cost of Shimano stuff making replacing chainrings rather than getting a new chainset look far more appealing!