Have you been priced out of biking?

It’s funny how Vitus can manage an XT sommet with fox kashima for £4000 but Nukeproof think £5400 is the right price for an equivalent mega, the frame prices only have a £600 price difference, I think most other companies have got together and decided £5500-£6000 is about right for similar spec, even then some do a mix with SLX bits.

Vitus is CRC own brand, whereas Nukeproof is Hotlines own brand. Chiggle own them both but NP is priced to sell via other shops, so includes extra margin for the shop.

Correct. The industry as a whole can’t settle on a standard wheel size, let alone a price for different spec levels. They will benchmark against others, but to say that they all get together to set a price is, IMO, laughably ridiculous.

Not sure that’s true. The industry as a whole has most definitely settled on a wheel size…. it’s whatever people dobt have, and will continue to be so.

First it was 26
Then 6fiddy
Then 29
Then mullet

Well, I can see why some people might think the mods are playing favourites.

Personally, I don’t think bike brands collude to keep the prices artificially high. However, I think there is a lot of wool being pulled over the eyes of consumers with regards to how bikes and components are priced.

I think my example on the last page about component prices vs full bike prices is reasonable.

I also think the Nukeproof vs Vitus example was interesting. How much of a premium are people paying to have the ‘not-Vitus’ head badge?

I can see how these issues would be of little concern if you don’t get out of bed for bikes that cost less than £12K but I don’t think that ‘Lolz’ was a particularly respectful response.

I think my example on the last page about component prices vs full bike prices is reasonable.

I also think the Nukeproof vs Vitus example was interesting. How much of a premium are people paying to have the ‘not-Vitus’ head badge?

Ben made the good point that one brand is priced to enable sales through traditional retailers. He’s right that bikes are different prices for many different cost reasons, not just because of things such as brand positioning. You are right that big brands agreeing up front to buy thousands of units of a component for complete bike builds won’t be paying the same as a retailer carrying only a few units in stock on demand… and that sometimes there’s overstock that has to be sold on, and sometimes that enables bargain hunting to take place.

You are right that brands agreeing up front to but thousands of units of a component won’t be paying the same as a retailer carrying only a few units in stock on demand…

I’m not even talking about the end customer. I’m talking about shops not being able to buy from the distributor cheaper than a consumer can by from an online retailer.

It’s not unheard of for industries to sell individual components to the end user at a reasonable rate. I’m not sure what the market’s like these days but a few years ago it was possible to build your own PC from parts for the same price and sometimes cheaper than it was to buy a complete PC.

Even if you were incredibly patient and waited for all the best deals I doubt you could build your own bike from parts and not end up paying at least 50% more compared to buying a complete bike.

What is it that makes the PC and bike industries so different?

(IME) At the high end of the market prices are about even, built versus bought, though once you get to silly money, (5 figure ebikes etc) it’s cheaper to buy the parts, at RRP, if the brand offers a frame kit. I’ve built much higher spec bikes for less than the top of the range premium brands charge, even if you just add up RRPs

Further more if they don’t, it can work out cheaper to buy the bottom of the range bike, then the parts for the top of the range to make your own, than just buying the top of the range. Even if you don’t manage to sell on all the lower range stuff.

(IME) At the high end of the market prices are about even,

When do you reckon this kicks in?

Certainly, I’ve never seen anything like you’re describing in my price range (around 3K – 4K).

Aren’t people expecting/hoping that by buying a complete bike they’ll be saving a bit of money over sourcing all the parts themselves? Obviously it’s not always the case, especially in more normal times were supply of parts is more consistent… but isn’t it a good thing when complete bikes offer a saving over buying all the parts yourself? Why don’t you want this to be the case BruceWee?

Think the CC framed Santa Cruzes, Sworks, pretty much any Pivot. Say north of 6k? Bikeradar had a massive rant at Santa Cruz when the last iteration of the Chameleon came out, because it was the same price as the parts.

Try it, price up a top end bike in parts.

I almost bought a base Specialized fat boy to bring it up to top spec, but didn’t really have the space to store all the extra bits while they sold on, that would have been 3k in 2016 (though discounts were more prevalent then)

The reason why once you get to the silly priced bikes you can build them yourself for less even at RRP is that the majority of people that buy 10K bikes don’t frequent MTB forums and don’t build their own bikes. They are generally cash rich and time poor and just want the best bike (in their minds) and prepared to pay for it. You typical investment banker isn’t going to be arsed figuring out which pressfit bottom bracket adapter he needs.

a massive rant at Santa Cruz when the last iteration of the Chameleon came out, because it was the same price as the parts

See, that complaint is more understandable (in normal times, when the parts are actually easily available), but BruceWee is questioning the opposite practise… when bikes cost a bit less then sum of their parts. I’d have thought people expect/hope to pay less when buying a complete bike than if they bought all the parts separately from multiple sources? No?

Sorry, missed your first reply Kelvin, yes, previously, though economies of scale, bulk ordering etc, a bike was cheaper than a pile of parts, over the last few years though, that’s been less and less the case, brands seem to be looking more at what the parts sell for aftermarket and pricing their full bikes nearer to those numbers.

See, that complaint is more understandable (in normal times, when the parts are actually easily available), but BruceWee is questioning the opposite practise… when bikes cost a bit less then sum of their parts.

It’s not a bit less, it’s a ridiculous amount less (for a 2K to 3K bike, at least). Or at least it was. Last time I was looking at buying a frame and all the parts needed for a complete bike I gave up when the price was 50% higher than the complete bike. I hadn’t even got as far as seatpost/saddle, stem/handlebar, tyres, and finishing kit.

The point is not that there shouldn’t be some discount for buying a complete bike. The point is that manufacturers are able to provide bike companies with the parts so cheaply that the excess can be sold onto online retailers who can sell it to us punters at less than shops can buy from the distributors (who lets not forget are also buying a lot of these parts so why aren’t they benefiting from economy of scale?)

This doesn’t happen with computers so why does it happen with bikes?

Ahh… selling excess OEM as “grey market” after market product. Not sure I want to see this end entirely. There is no way I could have afforded my bike without a fork dumped by Santa Cruz and a shock dumped by Canyon! But it’s a very real problem for bike shops, I agree.

Kelvin, you asked me why I don’t want a discount when buying a complete bike.

Let me turn that around and ask you, why do you want to be gouged when buying parts?

I expect bike brands to use their buying power to reduce the cost of my bike*. I’m not surprised when a new chain costs me more than it costs a bike brand who promise to buy thousands. I want at least some of that saving passed onto me, the buyer.

[ *all in theory … my last complete bike purchase was in 1991 ]

I expect bike brands to use their buying power to reduce the cost of my bike*. I’m not surprised when a new chain costs me more than it costs a bike brand who promise to buy thousands. I want at least some of that saving passed onto me, the buyer.

OK, but the distributor also buys chains by the thousand. Shouldn’t we be able to have some of those savings passed onto us as well?

I guess the problem could be the distributors. They often have a monopoly, after all, which has never been the best business model when it comes to passing savings onto consumers.

I’m not sure how things work in consumer computer products but I’d be surprised if computer shops had to deal with a single distributor for each geographic area. Assuming that’s not the case I think that’s why there’s not much difference between complete computers and individual parts.

All I read into that, is that people may be paying too much for complete PCs. Perhaps there’s a good reason for that. Better warranty/support than a self build?

The extra cost/price of a local distributor point is a good one. But try buying, say, an individual chain from outside the UK now… yeah… good luck with that.

All I read into that, is that people may be paying too much for complete PCs.

Could be.

Or it could be that we’ve been getting ripped off by the distributors who have a monopoly on supplying bike shops and the price that we pay for complete bikes and with online retailers is far closer to the price we should be paying in bike shops.

Which online retailers? The ones that are effectively bike ships, or the huge warehouse suppliers with their multiple own brands? There are many reasons that bike shops can’t hope to meet their prices. Who handles warranties if we lose local distributors, or they don’t factor that work into their costs/prices?

If the process was fair I would expect a small discount if I was using an online retailer vs an lbs (ie not 50%+ off) with the trade off that there is going to be more hassle if something goes wrong.

It seems to me that the manufacturer – distributor – retailer model is a relic from the pre-internet age. With modern distribution channels you have to ask if it’s really necessary. I would say it isn’t but it suits everyone except bike shops and punters to keep using it. It makes life easier for manufacturers to just deal with a few addresses and shipments and it obviously suits distributors since they’d go out of business without it.

Given that this is a niche hobby there hasn’t been any significant will to push for fairer pricing but who knows, maybe the price increases will cause manufacturers to start rethinking their distribution models.

Bruce – you’re unhappy with component pricing and what you see as an overly comfortable manufacturer-distributor relationship.
Others aren’t.
What practical steps do you propose which could move both closer to what you think it reasonable?

I imagine it would cost an awful lot to buy all the individual parts to make a car…

I’m not in the bike industry but in my industry pricing is very different for OEMs vs distributors. The main reason is volume but it’s more complex than that – for example, the more bikes fitted with your parts, the more spares you’re likely to sell and the more people are likely to choose your parts for self-builds because every good bike with your parts is advertising you.

Complete price vs frame price has been one of those weird things for a long time, i remember 20 years ago you’d get the specialized (and others) catalogue, and see the price of a stumpy m4 frame being say 1k, and full builds starting at 1.5k, up to the s-works pricing.

It’s just catering for your market, the frame is the biggest area they can move the margin on in full builds, you factor in the RRP price to the full build cost, they aren’t, they are working the full market, and having the required margin on each level.

I don’t think i bought a frame only for years due to the price comparison against full builds, it was only really when ’boutique’ style frame only stuff hit the market it became a little more competitive, so the ellsworths/turners/foes/intense/etc, but i dare say only from the prices they had their frames at!

Fairly sure that even if Manufacturers would sell to retailers (eg LBS or a “not also a distributor web retailer) most retailers probably don’t want the hassle of importing goods, especially in the UK because you know Brexit.

You are probably  going to get more distros in the UK rather than less as smaller manufacturers that have previously sold direct to consumer decide they no longer can be bothered dealing with the UK direct.

I work for a manufacturer (not cycle industry) and we sell direct in small volumes, through distros and to large OEMs, there are big differences in pricing and often product!

I’m sure this has already been said, but… i’d like to buy a new bike, but from what i can see, what at even the lowest estimate you would describe as an ‘entry level’ bike is now near, or north of, £1000.

Now one thousand pounds might not sound a lot to some of you, but it’s quite a lot to me. It probably sounds a lot more to someone new to it.

I will be looking @ second hand in the foreseeable.

What practical steps do you propose which could move both closer to what you think it reasonable?

The question I’m asking myself is what is the differentiating factor between the likes of Box Components or Microshift and Sram and Shimano. Are the former selling their products cheaper because they are fundamentally inferior or is the saving coming from avoiding the traditional distribution model?

I honestly don’t know, we’re getting way beyond my area of expertise (if I even have one).

However, we do seem to be sticking with the same distribution model for big manufacturers that we have had since before the internet. I’m certain there are tools available that could eliminate the need for the monopoly distributor model which, imo, is where a lot of the unnecessary mark up is coming from.

Bruce – you’re unhappy with component pricing and what you see as an overly comfortable manufacturer-distributor relationship.
Others aren’t.

If you take a gander at this thread I think you’ll find at least some people are.

It’s difficult to say what’s going to happen over the next few years. I would imagine we’re going to see more companies who are looking to disrupt the traditional distribution models.

On the other hand, I think we’re going to see the manufacturers whose bread and butter is £500 commuter bikes doing very well so I don’t see Sram and Shimano’s dominance being challenged any time soon.

The next few years is going to be interesting, I reckon.

@BillOddie – What do you mean, differences in product?

I imagine it would cost an awful lot to buy all the individual parts to make a car…

Admittedly it was a long time ago, hence Escort, but I think a car mag did this in 70s/80s and it cost 3 or 4 times the amount to build up the car from parts.

Yes, but having in the past worked in Automotive for a major manufacturer, the cost of the parts bears little relation to what they charge for the spares. I kid you not when i say the discussion was around – “how much do you think someone would be willing to pay for this?”

I’d be willing to bet the same thing happens in the bike industry. Why does an inner tube cost £3 when a tubless valve costs £8. Why does a 12s chain cost £30 when a speedlink is £15? Etc, etc.

How much of a premium are people paying to have the ‘not-Vitus’ head badge?

I made a significant saving by buying direct from Carbonda.

I’d be willing to bet the same thing happens in the bike industry. Why does an inner tube cost £3 when a tubless valve costs £8. Why does a 12s chain cost £30 when a speedlink is £15?

Yep, must be an element of what they can get away with but also volumes I would think. Inner tubes has been made for years in their millions whereas tubeless valves are newish and not sold in such high numbers but the valve price does seem high.
As for something like a speed link, that does smack of taking customer for a ride if a specific link for their chain is only available from the manufacturer then bit of a captive market.

@daffy Marzocchi were buggers for OEM spec stuff, some of it was a bit crapper, others had upgrades, it just depended on what the manufacturers asked for (the benefits of cross compatible products and a huge parts bin).

Personally I can’t see how selling high volume goods direct to shops would benefit consumers as it would place an admin burden on both the manufacturer and retailer that never existed before and would have to be costed.

Brexit (house!) hasn’t helped either as previously you could have easy access to several European distributors whereas now that access comes with the aforementioned admin burdens. What’s the solution? I’m not sure but distributors certainly help to get product into the country, no doubt, which is easier when it’s an entire container load rather than piecemeal.

I’d be willing to bet the same thing happens in the bike industry.

It happens in all industries. You set the price that people are willing to pay. If that means that there’s no profit in it, then it doesn’t get made. OR you go about persuading people that the price IS worth it.

Or modify the product. A decade ago car manufacturers thought EVs were too expensive. And they were – but Tesla realised they could crank up the power easily, make it look smart, and people would then pay for the batteries.

Vitus is CRC own brand, whereas Nukeproof is Hotlines own brand. Chiggle own them both but NP is priced to sell via other shops, so includes extra margin for the shop.

And the cost of paying Sam Hill and sending him around the world to race is charged to Nukeproof.

The question I’m asking myself is what is the differentiating factor between the likes of Box Components or Microshift and Sram and Shimano. Are the former selling their products cheaper because they are fundamentally inferior or is the saving coming from avoiding the traditional distribution model?

A company with a huge product range and high volume will be able to adjust the prices based on what the market can sustain i.e. what people will pay, and get their profit on those lines. It doesn’t matter if a particular product is profitable, just that the company as a whole makes profit. There could be all sorts of reasons for companies to produce a product that just about breaks even.

I’m not a bike industry insider but I can imagine that say Shimano would do an exclusive deal with say Giant. So they’d supply millions of Altus or Tourney groups for basic bikes at or near cost, just so they could also sell more Dura-Ace on top end TCRs and make a fat profit on those. That’s a win/win, because Shimano get lots of security – Giant shift huge numbers of bikes and the Tourney pays for the factories, the staff, the machines etc but they also have good volume on the high end stuff where the profit is; and Giant get a great deal on cheap stuff so their low end bikes can be competitive whilst having a fairly good deal on the high end stuff too.

Box components sell tiny amounts of kit and they probably have to make and pay for it in advance so they need to make a modest profit on each unit, but it needs to be reasonable VFM otherwise why would anyone buy it? So they’re probably somewhere in between cheap and expensive Shimano.

@BillOddie – What do you mean, differences in product?

It could be a true custom product – equivalent could be a manufacturer’s custom tune on a rear shock or different offset on a fork (remember when Trek did that?) or just different colour stickers on fork.

It could be supplying a downspec’d product to hit a OEM pricepoint – e.g. lower spec freehub with less points of engagement.

It could be supplying an assembly – e.g. Shimano aftermarket cranks no longer come with chainrings, the OEM (and hence grey import ones) do, Rock Shox Select+ forks are OEM only unless grey market.

Does that make sense?

All of the above happen. What doesn’t happen afaik incase anyone’s interested is oe parts supplied at a lower spec than on the label or aftermarket equivalent but labelled as the same. So those crappy oe tyres are in fact the brand’s crappy tyre compound, you can’t buy oe parts that are cheaper made but badged identically as far as I’ve ever seen.

Yeah I had an OE shock that didn’t have adjustable compression damping, it was branded as such, with a different model designation, but that designation was not available after market.

Problem was it was on a bike that had been built by the shop from parts (and sold honestly) and the shock had been off a different bike and the pre-set compression damping was way too high.

What doesn’t happen afaik incase anyone’s interested is oe parts supplied at a lower spec than on the label or aftermarket equivalent but labelled as the same.

How different does the labelling have to be? Would a white brand logo (OEM) vs yellow (AM) be enough?