Not having a pop at shops or anything, I'm just curious to know what % difference there is typically between what a shop/industry rider pays, and what customers pay?
why would a retailer tell you their cost? its not only that of the bike it has to account for utilities premesis staff costs etc too, do you want to know these figures too?
PS 'trade price' can also cvary by business depending on 'through put' of stock, more sales more purchases from supplier can mean larger dicounts
Huge variations between shops & suppliers but on a full bike I've been told it's roughly a 15% mark up
To make a living?
Why is profit such a dirty word?
account for utilities premesis staff costs etc too, do you want to know these figures too?
Er, no. Read the thread title again. And if you don't know, why bother posting?
A good friend of mine used to run a bike part import business. Used to pay ~£80 for frames he'd then sell for £300. And he sold quite a lot of them!
Then CRC got in on the act started dealing with said frame/part business so I dread to think how little they pay considering the much higher amount of stock etc they must buy.
Not really one answer, varies on brand and shop. And quite rightly I doubt anyone will tell you actual figures, the profit most shops make on bikes is pretty small, especially when you add in things like 0% finance and price matching.
Huge variations between shops & suppliers but on a full bike I've been told it's roughly a 15% mark up
Gotta be more than that. I just bought a 2013 bike from my LBS at a 20% discount. Now, I have bought three bikes from them in the last 18 months so they look after me, but I know they're not going to sell at a loss!
I would expect it to be quite a lot for bike shops to even stay in business.
Can't imagine that they would sell many bikes a week, especially above the 1000 mark so a large profit would be required for the business to be profitable. Repairs and such may just cover wage costs of staff and tooling etc.
Shop riders don't usually get things at trade price, they get a discount - with some companies that discount is quite large as its subsidised by the manufacturers who like having enthusiastic shop staff riding about on their kit.
guess based on other similar industries would suggest that trade price is ~ 40-50% of retail.
A friend of mine that used to work at an mtb manufacturer in west yorks told me a rough guide was that they cost 1/3 of the rrp to make & they then sold them to the shops for 2/3 of rrp.
Tarquin, largest profit is on the cheapest items - profit on an inner tube is much higher than on a bike, just as Tescos make a much higher percentage on potatoes than on TVs.
I doubt the gross margin on bikes is as low as 15% but I don't know the facts.
Don't forget you're paying 20% VAT too. So if a retailer buys a frame for £100 and sells it at a gross margin of 15%, that's actually (100*1.15)*1.2 = £138 to you.
A good friend of mine used to run a bike part import business. Used to pay ~£80 for frames he'd then sell for £300. And he sold quite a lot of them!
That's far from typical!
On complete bikes (and as said it depends on level of dealer and value of bike (better margins on cheaper bikes usually), it's more than this:
roughly a 15% mark up
And less than this:
trade price is ~ 40-50% of retail
Not a vast amount, and worse than many components.
The margin will be higher to the SRP <edit than 15%>, but what the actual price is that's on the bikes varies from shop to shop
Finance stuff is usually a money maker - the finance companies are betting that you'll mess up on the repayment and end up paying well over and above
Trade price will be in the region of 50-60% of RRP, depending on quantities. Profit will be in the region of 10-20% of RRP for the shop to be healthy.
Big shops like CRC/Wiggle will get cheaper trade prices due to the volume they sell, they will also have lower fixed overheads so can afford to take a smaller markup, and with such a large volume of sales, can probably afford to take a smaller %age profit per item as well.
When I worked in a shop, trade + vat was about 30% off. Sometimes more sometimes a lot less.
The old intense importer springs to mind, 200 quid profit on a 2.5k frame.
[url= http://www.alibaba.com/trade/search?SearchText=bikes+direct+mountain+bike&Country=&CatId=18&IndexArea=product_en&fsb=y ]Here you buy some and set up your own shop to make £££'s[/url]
Biscuits anyone? 😀
IIRC this topic is banned on the southerndownhill/ride io forum. 😆
Supply chain ...
It's not unusual in retail (generally not just bikes) for something like the following - assuming unit sold at 100
Sourcing 20 (ie manufacturing)
Importer 30
Retailer 30
Tax 20
For bike this is why brands like cube which effectively don't have an importer have an advantage. Remember you have the transport costs (which are generally very low if you have scale) and costs like insurance and actual losses if stuff is damaged or turns out not to be manufactured properly. I would be surprised in the UK if VAT we pay is actually more than the manufacturing cost of the items.
My Mrs works in interiors - the mark up on furniture etc is bigger than above - by the time costs like rates etc are paid the shop breaks even
Why is profit such a dirty word?
Because life is a competition. Nobody likes anyone else to profit.
Tarquin, largest profit is on the cheapest items - profit on an inner tube is much higher than on a bike, just as Tescos make a much higher percentage on potatoes than on TVs.
Largest percentage profit, but not largest profit 😉
You would need to sell a lot of inner tubes making a couple of pounds on each!
Need to run a jewellers, 400% profit on stuff!
From bruneep's link...
Thought it said ARSE when I saw the thumbnail. Lovely "new design uniqueness"
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Sorry, carry on with the bickering
Completely off topic, but there's nothing immoral about profit IMO, only profiteering. No-one is suggesting that businesses in the "food chain" are profiteering to the detriment of others. Are they?
I'm actually very against these kind of figures being published. They oversimplify the economics of business operation and give fuel to idiots to try and leverage price down, putting the squeeze on independent businesses.
I've seen first hand customers in a mate's shop saying "yeah but I know how much you can buy it in for, so why do you need to make that much on it?" Errrr because you fool, it's got to pay the rent on the shop, the wages, the electric, the advertising costs, VAT bill and turn a profit end of year so we're here in 12 months.
I just bought a 2013 bike from my LBS at a 20% discount.
You see, that's insane. Sadly it's not an uncommon story on the bike trade forums - people want a shop to price-match an online price, but want to spend an hour talking to the shop about the bike first, then have the bike assembled, then get their free first service.
They want all the benefits of a LBS but don't want to pay for it.
I'm actually very against these kind of figures being published.
Which is why I don't think anyone in the know has actually named figures 😉
I'm actually very against these kind of figures being published. They oversimplify the economics of business operation and give fuel to idiots to try and leverage price down, putting the squeeze on independent businesses.
That's daft, it doesn't give them any leverage at all.
Customer is well entitled to ask for a discount. Shop is equally entitled to say no. Customer may well go and ask somewhere else and get the same answer.
It's a free market in operation.
hhmm, A lot of opinions here, but no one with a certain answer .. I know full well the average margin made on bike sales in IBD's, but after reading the above, not sure I should say!
Its such a long, dragged to death subject on forums..
I guess, the danger is in those whom (as its states on Privateer magazine, "for those who know the obvious") spend time on forums, & spend most of their money online, wanting to justify why they do so. The other group being IBD customers, whom, in real life, walk into good bikeshops, make friends, buy stuff, get free advice, & get their bikes fixed, & are happy with that. We have plenty of the latter as our regular customers, & also some of the former, which is cool.
What a bike shop makes on bike sales is their business, it varies, (not massively) but if we didn't, we wouldn't exist.
It's usually less than you think. The more obscure the brand, generally, the less it is.
When we bought accessories in bulk from our biggest brand, there was 40% margin after the VAT was paid. Which was the best I ever saw. Although that's a lot of gloves and bottle cages that you need to sell to make a living.
Margins are bikes are typically less. I'm not sure what percentage of the margin then went on rates, wages etc., but basically, giving someone 10% off pretty much halved the profit.
I just bought a 2013 bike from my LBS at a 20% discount.
They will have made almost zero profit on this, but, it's cash back in the bank that can then go on new, more saleable stock. Running a good shop is about stocking the right stuff at the right time, and there is a lot of risk trying to second guess how many (e.g.) £900 19" hardtails you might sell in the next 6 months.
I don't think you "trade" folks have any reason to feel so defensive really. Are your businesses really so threatened by discussing the business model a little? (Answer: no, because starting and running a bike shop is, I'm sure, bloody difficult and a lot more complex than buying a box for A and selling it for B!).
I worked in bike retail about 15 years ago. As a typical figure, the markup on bikes (trade to RRP) was about 30-35% as I recall. That was with Giant, Cannondale, Scott as the main brands.
Selling bikes off at 20% off is just to cover costs and keep stock current. Makes more sense than hanging onto a rapidly depreciating asset in the hope that you'll sell it closer to RRP.
They want all the benefits of a LBS but don't want to pay for it.
There is a lot of that as you know, I see it too, ultimately as you know it's about educating the customer as much as anything without making them feel stupid for making the wrong choice. I'd far rather someone bought a bike online (at a price we could realistically not match, or if we did we'd make very little on) but then came to our shop for servicing than be had over a barrel on a new bike price and feel resentful about it.
We've got several customers like this, and to be fair, I'd guess more than 50% of those who've bought online or elsewhere will actually buy their next bike from us at RRP (or close to it) because these are the people that go away and rave about our service to their friends and colleagues and have helped our shop grow so significantly in the last few months that we're actually looking to move to a bigger premises!
Which is why I don't think anyone in the know has actually named figures
Hehe. It's no secret a shop exists to make a profit, without making profit everyone would have to work there for free! But I can tell you, having worked in several other industries in the past, the Bike Trade is not run on huge margins for sure. Even things like inner tubes aren't that cheap to buy in any more, things like tyres and mechs I can often buy from CRC/Merlin/Planet X etc for cheaper than I can get them from our suppliers (once you've added the VAT) which DOES NOT HELP I can tell you... But then if you offer a good service, you've got nothing to be worried about as people will come back, and will buy from you in the future, and recommend you to their friends too!
The same is true in the car industry when it comes to parts and servicing too. If you're savvy, you can always shop online and find parts for your car for cheaper, and if you spend days looking you can always find a mechanic who's willing to work for peanuts (or is a friend of a friend etc.). But often people are short of time, and willing to pay more money for the level of service they receive from a main dealer, or the convenient garage just round the corner, as the level of knowledge and service is (hopefully) worth it. Of course there are garages (and bike shops!) out there with very poor service and still charge way too much though, but then these will lose customers in the long run and won't stay in business.
A good friend of mine used to run a bike part import business. Used to pay ~£80 for frames he'd then sell for £300. And he sold quite a lot of them!
About as untypical as you could get. Normally, if I sold a £300 frame to someone, once you take the VAT off it the shop is getting £240 for it. At the price it would normally cost us, we're lucky if once I've thrown the free bike build in on it (as you often might if your customer had bought a new frame at RRP) with my labour normally being costed out at £35 per hour, by the time I've finished building the bike we've essentially not really made a penny on it (certainly if I could have been doing other jobs instead it would have been far more profitable)... BUT... We now have one happy customer, who will go and tell his friends and colleagues about our shop, and come back and spend more money with us, get his bike serviced with us etc. So it has been worthwhile of course.
Too many bike shops are too scared of the online businesses out there. All I can say is that yes, they will often beat us on price, but they certainly can't come anywhere close to the service, and at the end of the day, people buy from people... Good service will always keep you in business!
This thread isn't complete until Hora comes on to tell us how bike shops are all ripping folk off and how he could easily become millionaire bike shop owner if only he had the guts to put his money where his mouth is.
I know, but I'm keeping schtum for now. pleaderwilliams is wrong and optimistic is all I'll say, njee is closest.
I don't know all the financials of bike shops but I do know that in my workplace the 3 employees earn a whole £1-£2 above minimum wage per hour, don't get any sick-pay nor non-stautory holiday allowance etc (not talking 17 year olds here either, 30s-50s, some with dependants).
I tend to find that people who ask for discounts on bikes, citing web prices or discounts they can get (sometimes after 1-2 hour's advice/discussion) rarely becoem customers, as they are presumably buying everything on price (which I can understand).
I'm happy to discuss the model, but I don't think giving specific figures means much - for one thing they're so variable. Okay, gross profit on bikes I sell varies between 10% and 50%, how's that?
buying a box for A and selling it for B!
Trouble is, some people do make that comparison. If you buy online it often is as simple as shifting a box from "incoming" to "outgoing", but if you buy in a shop you also have the time taken by the salesperson, the time taken to assemble the bike, and usually the time taken to do first and possibly ongoing services. So it's not a simple like-for-like comparison at all, really.
Smallish independant LBS will be about a 30% average across the brands on bikes. Thats based on distributor RRP [b]NOT[/b] what you knock them down too, so basicly the best part of sod all considering the amount they have to buy in each season just to be able to hold a brand. You can see why so many fail and why they have to charge a "fair" fee for repairs to survive.
I don't think you "trade" folks have any reason to feel so defensive really. Are your businesses really so threatened by discussing the business model a little? (Answer: no, because starting and running a bike shop is, I'm sure, bloody difficult and a lot more complex than buying a box for A and selling it for B!).
The problem is, whilst you're absolutely correct, you have WAY too many internet warriors shouting from the rooftops about how easy it is just to buy a box for £1000 and then sell it for £1500 lets say... Then they come into your store, to tell you this, and how you should feel guilty for trying to rip them off!
The flipside is as you've quite rightly pointed out, it's a lot more complex... But build your reputation around the service you offer, rather than just heavy discounting, and you will slowly but surely maintain a profitable business.
Selling bikes off at 20% off is just to cover costs and keep stock current. Makes more sense than hanging onto a rapidly depreciating asset in the hope that you'll sell it closer to RRP.
What he said. Can tell you that selling some bikes for 20% discount means they'd literally be being given to customers at cost price. Not all granted, and discounting is a good way to get rid of old stock to make way for new current models, but discounting so heavily a brand new model is rare.
perthmtb - MemberHuge variations between shops & suppliers but on a full bike I've been told it's roughly a 15% mark up
Gotta be more than that. I just bought a 2013 bike from my LBS at a 20% discount. Now, I have bought three bikes from them in the last 18 months so they look after me, but I know they're not going to sell at a loss!
Same here. I actually got 27% off a 2013 bike. I didn't haggle or owt, just asked what sort of deal he could do me.
The problem is, whilst you're absolutely correct, you have WAY too many internet warriors shouting from the rooftops about how easy it is just to buy a box for £1000 and then sell it for £1500 lets say... Then they come into your store, to tell you this, and how you should feel guilty for trying to rip them off!
You just have to say "sorry sir/madam, I can't help you any more with that" and move on.
As I said, it's a market, and it works in both directions. Customer can go elsewhere, but shop is equally entitled to look for other customers.
also now may purchases from shops are made where the shop does nto hold the stock directly, you purchase and the item is delivered from the distrubutor or manufacture eiether direct to you door or for a bike to the shop to be setup - this lessens the risk to the shop in holding dead stock
As for discounts, when i was a saturday boy...was told 'When the customer asks for a cash discount, offer goods instead of money off'
This is better for the shop as they can offer the value of the goods and the customer sees the value but the shop has paid less for it so does nto loose as much.
also now may purchases from shops are made where the shop does nto hold the stock directly, you purchase and the item is delivered from the distrubutor or manufacture eiether direct to you door or for a bike to the shop to be setup - this lessens the risk to the shop in holding dead stock
That works better for higher value items - at the lower end (which, unglamourous as it is, is where most shops make the money that keeps them in business) customers expect stock and will often go elsewhere if it's not in the shop when they want it.
also now may purchases from shops are made where the shop does nto hold the stock directly, you purchase and the item is delivered from the distrubutor or manufacture eiether direct to you door or for a bike to the shop to be setup - this lessens the risk to the shop in holding dead stock
That only works for bikes really. plus i would say it's a bit misleading to customers marking something in stock that is actually not but is at the supplier.
People visiting a shop for day to day small items tend to want them when they visit and that model falls down.
In retail, the general rule is -VAT (20%) and halve it. Bikes are a commodity like everything else. Expect no different.
In retail, the general rule is -VAT (20%) and halve it. Bikes are a commodity like everything else. Expect no different
Are you serious?
djaustin & others earlier:
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In retail, the general rule is -VAT (20%) and halve it. Bikes are a commodity like everything else. Expect no different.
So trade price on a car is 40% of retail?
No wonder Arnold Clark is so rich.
In retail, the general rule is -VAT (20%) and halve it. Bikes are a commodity like everything else. Expect no different.
He's not wrong sadly!
For general retail. The "Expect no different" quote is TOTALLY off though... The Bike Industry is definitely not in the same league though when it comes to margins, not by a long chalk...
So trade price on a car is 40% of retail?No wonder Arnold Clark is so rich.
New car industry is even worse than the Bike trade for margins... Where they make all their money is in optional extras, and the dreaded finance. But typically if a dealer sells a car for £10k, it's cost them £8k or more to get it in...
think some of the trade are too defensive/possessive for reasons already stated (complexity of market, other costs), anyone hoping to use the information as a negotiating tool is on a hiding to nothing. Shops are free to
but not sure how they actively look? My issue with LBSs was never having stock and being told "oh we can order that in for you", yes and I can order it myself and get it quicker for less. Usually when someone visits an LBS they want the item there and then. Judging what stock to hold is obviously a killer decision for LBS owners.look for other customers
A recent 'impulse purchases in LBS' suggests there is real value in holding high-end kit, loads of respondents who'd spent £££ on a whim after going in to buy something else.
Direct selling is killing the old multi-tier business model. CRC, Wiggle, On One etc all regularly sell kit for less than LBS can get them from the respective distributor/importer. Recent thread about the ICE V8 dropper post with the guys from R53 getting very defensive. Still cant figure why a post made in the far east, marketed by a French company, imported by to the UK by R53 and then sold by an LBS is a viable model in 2012, or why I should pay more for a "UK sourced" item when I can buy it from a euro retailer for substantially less and have an EU warranty. Consumers resent the fact that most stuff we read about in magazines or on the web cost the same in £ as it does in $ or Euros, and this alone drives bargain hunting and the feeling [i]someone[/i] is ripping us off.
Years ago the motorbike market was hit by grey importers bringing bikes in from the continent cheap. Dealers were up in arms and refused to service them in a bid to deter customers, but the official importers eventually responded by dropping bike prices by £2K overnight, matching and killing the grey market (I think Honda even bought all the grey stock up).
Some high ticket items have large mark-ups, which are undermined (along with the brand image) by discounting. Take this for instance
which is similar to discounts the likes of Turner (those £900 5-Spots from CRC) and Ibis (£1100 Mojos from TBC) have been sold at in the last 12 months or so.
My experience is that high end kit does NOT have any higher margin.
That's a 2011 bike - they are clearing old stock at a loss.
That's a 2011 frame - they're desperate to shift it at any cost, even if they take a hit on it. That doesn't mean the margin is that big.
In fact premium stuff usually has smaller margins - the logic being that they're more desirable so the retailer will have customers beating a path to their door.
Edit - yeah, what he said 😉
I cannot believe they will sell old stock [i]at a loss[/i], that makes no sense it would be cheaper to skip them, or just stack em up outside and let people help themselves to them.
The fact it is an old model doesnt change what the importer/distributer sold it to them for, or what the RRP was set at. Are you saying Pauls Cycles, whos entire business model is selling old-stock-at-half-price is actually a charity giving stuff away at a loss?!
edit: having thunk about it are Pauls benefiting from a mixture of high volume buying (compared to LBS) and selling and/or grey importing meaning they get the stuff cheap and sell at low margin per item?
Fair play if people are really making a loss selling old stock, I am picking at the business model and the market LBS have to compete in I'm not anti LBS. My point is consumers will be deterred from spending full RRP on an item when theyve seen an older model of the same thing go for so much less, it immediately devalues the brand (or model, the ASR7 was obviously a non-seller as Evolution were selling em off when they ditched Yeti) and makes it harder for them to justify RRP on the new model. Some manufacturers try and control/limit this by not supporting mail order - I think Trek can only be collected in-store so the only reduced stuff you see on the web is from places with a real store presence like Evans, J E James etc?
Its not business I'd want to be in, and all the successful ones I can think of survive on level of service generating repeat custom (I've mail ordered from TBC and raved about their level of service on here, if they look after lowish value mail order customers so well they must have a legion of happy bike buyers).
crashtestmonkey - MemberI cannot believe they will sell old stock at a loss, that makes no sense it would be cheaper to skip them, or just stack em up outside and let people help themselves to them.
That would be correct only for stock you are ordering in.
Once you have a £1.8K bike and have paid say £1.2K for it, you are making a loss selling it at <£1.2K (my definition of loss), but you're still getting something for it rather than paying someone to take it away (your definition).
Pauls' will be buying stuff cheaper than half price in order to make profit.
I cannot believe they will sell old stock at a loss, that makes no sense it would be cheaper to skip them, or just stack em up outside and let people help themselves to them.
Um, no. Selling at a loss means you're still getting something, even if it's not what you paid for them. Skipping them means you get nothing.
Are you saying Pauls Cycles, whos entire business model is selling old-stock-at-half-price is actually a charity giving stuff away at a loss?!
I don't know how they work, but I'd guess they buy up old stock at a big discount, and therefore still make a profit. A bit like how TKMaxx do it for clothes.
[i]I cannot believe they will sell old stock at a loss, that makes no sense it would be cheaper to skip them, or just stack em up outside and let people help themselves to them.[/i]
Which is better in your pocket on a frame you paid £1000 for? £500 to buy new stock which you can make a profit on OR nothing?
Some bikeshops/businesses have 14, 30 etc day credit accounts as well. I imagine Credit control at some Distributors have a few choice words to say about accounts paying late, accounts on hold and cash upfront accounts..
Same as every industry. 'Poor ol LBS' - I say some bikeshops are great, however customers are also feeling the pinch and are not ungrateful, saps to take money off etc etc etc.
Its a business.
Many, many years ago I use to put the IT systems in for a white/brown goods retailer; gross margin was usually in the order of 50% with net/profit at 5-10%.
But, the overall price of something often has no bearing on its cost of sale. For example, at a later supermarket I worked for we calculated that bananas' were our most profitable (as in percentage) item as their cost to sell were so low. The importer basically delivers a crate which is then put on a shelf and the lid taken off.
[i]old model doesnt change what the importer/distributer sold it to them for, or what the RRP was set at. Are you saying Pauls Cycles, whos entire business model is selling old-stock-at-half-price is actually a charity giving stuff away at a loss?! [/i]
Distributors will have old stock they need to shift and they will be playing the same game, get rid at any price to raise funds to buy new stock and to clear space in the warehouse to put that stock into. Pauls are simply taking advantage of that situation.
Mister P has it. On occassion you have to drop something at a loss to release cash for new stuff. Fact of business. Unpleasant and actually horrible to do but cash is all.
But, the overall price of something often has no bearing on its cost of sale.
Yes - one problem with the bike industry is it often is based on "cost plus" pricing - you work out how much it costs you to make something, add on margins for distributors and retailers, and that gets you the retail price. Fine, until part of that chain changes, and it takes no account of customer demand.
Another way is to work out what price people will pay for something first, then work back from there.
The mark up on bikes is **** all.
If you want to make money in retail, sell poncey t shirts or something similar.
INRAT
I've seen trade prices in my previous job. Orange and Santa Cruz I remember particularly as I was surprised at how high the trade price was! I was especially surprised at the cost of the upgrades on Orange bikes were (hope bits, forks etc)
Needless to say some of the figures quoted on here are ridiculous and some folk are living in cuckoo land
Too many mouths to feed in the chain though isn't there? Thats why the end-sellers margins can be soo tight.
Edit- Houns, which can mean Orange are raking it in on home/UK sales?
Once you have a £1.8K bike and have paid say £1.2K for it, you are making a loss selling it at <£1.2K (my definition of loss), but you're still getting something for it rather than paying someone to take it away (your definition).
Al (and MrP) you are of course correct, my fuzzy logic blamed on coming off a night shift... See also edit about Pauls Cycles.
Mister P has it. On occassion you have to drop something at a loss to release cash for new stuff. Fact of business. Unpleasant and actually horrible to do but cash is all.
It'd give me a break-down. If it's any consolation I am still bitter about not buying a reduced Mojo frame when I had the chance...
Orange .. I was especially surprised at the cost of the upgrades on Orange bikes were (hope bits, forks etc)
I was always amazed that upgrading a part on an Orange seemed to involve paying full RRP of the new part (eg. CCDB, Hope headset) but not deducting the cost of the part being upgraded and replaced. Seemed close to theft to me, or business genius as people were prepared to go along with it...
Are you serious?
In retail, that's the mark up on the high street. There will be a distribution dependent on commodity, and I can accept that bikes may be below the median. But be under no allusions about what things cost and what we pay.
Why do you think Specsavers offer 2 for 1? And I know a lot about the mark up on glasses 😉
And yes, I perused the Giant trade catalogue, and 50% may be off, but not by too much.
I went in to my LBS the other week to get some gear cable outer thingy, and was surprised how cheap it was. i was expecting to pay double the online price but it was actually sligtly cheaper. I think the guy just rounded it up/down cos he was being nice, which means he'll get my custom again.
I know the bike shops don't make a massive profit on stuff generally but the seems to be to many that aren't willing to help themselves by helping the 'potential' customer. I know some of these customers will just go away and buy from the internet but if you just ignore them or shrug them off they won't come back when they brake the thing they bought of the internet fitting it!!
I rarely use a LBS but i do lots of research and if i still end up with the wrong thing i understand it's my fault, and i have to take the hit.
I've worked in both the trade and retail side of bikeland. Mark-up varies massively, depending on all sorts of stuff such as the tier the shop is on (depending on how much stuff they order from that particular supplier) and costs of raw materials/fuel (at one point the distributor I worked for was publishing pricelists weekly with RRPs due to the dollar/pound/yen having a bit of a spat).
As a rule of thumb, bikes and frames (and most 'high-end' parts, come to that) are not massive percentage mark-ups - if a shop selling good kit can make 30% it's doing very well. Consider that wages, overheads and a profit have to come out of this, it's not a lot.
Want to make good money in bikeland? Sell cheap bikes, low-end tyres and inner tubes, and keep a warehouse of them. Most LBSs are run by enthusiasts that love the sport, so deserve your support.
On the flipside, look at someone like Next, where the model is very different and 80% profit on the shop floor at full price (pre-VAT) is not uncommon. Why did companies such as Eisenegger (remember them?) manage to have 80% sales all the time? Because, as long as their clothes were marked at the RRP for a period of time (the exact amount I forget, but not long) they could then legally slash it, thus selling 'expensive' kit at a massive discount.
If you want to make money in retail, sell poncey t shirts or something similar.
Exactly.
And if you want to have to justify your existence to people who think you're charging too much for a frame because steel costs have gone through the roof, then open a bike shop.
Most LBSs are run by enthusiasts that love the sport, so deserve your support.
But the kit in these sort of shops is still VERY expensive. How can an entusiast who is a customer afford those prices? Everyone seems to go on about 'poor LBS' - however we all aren't Audi driving/expense account-types awash in money. We, the customer also have running costs; bills, lighting, fuel, heating and children.
What about us? Why is it 'evil' to want the maximum bang for your own buck? Why do some folk think its evil to shop online?
[i]however we all aren't Audi driving/expense account-types awash in money[/i]
That is why there are options like Acera 😉
hora - Member
But the kit in these sort of shops is still VERY expensive. How can an entusiast who is a customer afford those prices?
Does that consumer NEED xtr etc?
It is your choice of course, but the price you pay for a cheap deal online is that your choice of LBS becomes limited.
I can't even contemplating affording XTR. I NEED a new chainset at the moment. Currently I am running my 6yr old Saint driveside with a 3yr old non-driveside arm.
Shortlist is XT max and even the price (£130?) is too much I feel. I wonder how many people drop out of the sport/hobby due to the constant price increases? Its a bicycle, we aint talking that they are all carbon/ti beasts- alu mainly.
How much does it cost for a new starter motor for a car? Factor in economies of scale (lots more starter motors are made than XT chainsets), and £130 doesn't sound all that bad.
And of course there's Deore which is perfectly decent stuff.
Ill copy n paste my last response to this question.
Theres only 1 distributor I can think of that works on a pre VAT markup of 50% with a few of its lines. Factor in VAT and youre looking at 30% markup surely? Highest top rate buying 100k of bikes a year would probably get you a 36% markup, but to shift 100k of bikes youve gotta pack um high and sell um cheap.
In an ideal world where everyone sold at RRP youd make a gross profit of maybe average 30%, but everyone price shags, so in reality on bits 15% on a bike, 20%, but then factor in the time building it, selling it and the first free service which comes out of the price originally..
Put it this way, if you opened a 100k account with Madison tomorrow with one massive order of Shimano, on most lines youd still pay more that buying it from Rose Bikes AFTER paying your VAT at Shimanos top rate.
Basically if youre a shop owner theres more markup in buying from a german retailer than the UK distributor.
Basically if youre a shop owner theres more markup in buying from a german retailer than the UK distributor.
Why don't they do that then?
('s funny, I dinged a rim the other day and asked the LBS for the cost of replacing and fitting it. They looked it up on CRC).
Some do. But warranty would be a concern.
('s funny, I dinged a rim the other day and asked the LBS for the cost of replacing and fitting it. They looked it up on CRC).
Why not, its quicker to search crc for mavic 729 than get the mavic book out and work out vat and markup. CRC will list the RRP
Ah OK, that makes sense. I assumed they subsequently ordered it from CRC too but that could well be wrong.
http://www.rosebikes.co.uk/article/shimano-slx-crankset-hollowtech-ii-fc-m670/aid:591873
Why is it sooo much cheaper?