What is "trade" vs "retail" price on a new bike?

When I was doing my first bike build I bought a SRAM cassette from the LBS, I wanted it straight away and paid RRP which was in the order of 70 quid. Fair dos that was my choice. I looked it up on CRC or Wiggle later and their price was about 45 quid, I knew it would be less but was staggered at the difference. So that’s how I buy them now. I don’t get how I can be expected to chuck away 25 quid every time I want a cassette, to pay some sort of LBS tax.

I’ve no beef with the LBS at all (that’s not my point here), in fact I can see a case that it’s them getting stiffed.

Why aren’t they getting angry on the blower to the distrbutor saying “how come CRC can sell this for 45 quid when our price to the customer is 70? That’s costing us footfall and margin every day!” ?

Is there not a 19% tax on bike parts in Germany which gets removed for export?

Cos CRC dont get them from the distributor, or if they do they buy in such bulk they get can DEMAND a greater margin, if they dont get it they take their business to another EU importer etc..

Economics of scale. Stack it high and sell.it cheap.
Also, a warehouse in the middle of knowhere is cheap compared to a lot of prime hogh street locations.

Is there not a 19% tax on bike parts in Germany which gets removed for export?

No for EU – its tax at source. You can only apply for tax removed (as a customer outside the EU can apply in some circumstances from a UK store)

So its a 1% saving of tax, I see.
Of course the Euro / Pound rate makes a difference.

I want a Saint chainset again 🙁

hora – Member

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.

You’ve proved my point. What’s wrong with a 6-year old crank? Why replace it? 2 of my bikes have 21 year old cranks. What’s wrong with something less than XT?

You feel you NEED XT when the only difference Deore would make is to vanity.

So trade price on a car is 40% of retail? No wonder Arnold Clark is so rich.

Last year I was looking at a new car with a RRP of £22k and the bloke at Arnold Clark let it slip that trade price was around £9k which accounted for the fact they could sell a 6-month old model for £10.5k and still make a profit.

cynic-al I’m running crank arms from two different bikes together. The Saint has been brilliant- I bought it when Saint was first released. The thing is I only run one bike, whereas alot of people spread wear and tear across at least two bikes over time. One bike/one build tends to accelerate wear.

I guess if I went Saint again the thinking is it’d last me again.

I briefly had old SLX- I could really feel it flex.

Are you sure about trade cost on new car(s)? I don’t believe that there is THAT much margin afforded to the dealer.

Last year I was looking at a new car with a RRP of £22k and the bloke at Arnold Clark let it slip that trade price was around £9k which accounted for the fact they could sell a 6-month old model for £10.5k and still make a profit.

He was pulling your leg. The margin is a fraction of that up front, and gross. The dealers will get back end bonuses based on CS results that will add a few % on, and that’s all. On a 6 month old car they registered as a demo they will get writedown support from the manufacturer, but not to the tune of half the retail value of the car.

I used to work for one of the largest manufacturers in the world. There is a few reasons why the motor trade is on its knees now. One main one being pathetic margins.

mattjg – Member
Ah OK, that makes sense. I assumed they subsequently ordered it from CRC too but that could well be wrong.

My LBS do – they get stuff at trade from CRC (presume it’s through hotlines or something)

Holysmokes !

I have most of my entire working life, in the process sacrificing two careers, & spent a lot of time in many different shops learning the trade, all to get the experience I wanted to be able to own & run my shop. Luckily that finally happened this April.

Reading this huge thread with interest and amazement, its obvious a lot of people are passionate about what they think is right/wrong, about where & where you do & don’t spend your money..

Like any business, we make money, not much, but enough to make it happen. Beats the crap out of sitting at a desk. But the main reason I do it, is because I love it so much. I love helping people out, NOT ripping them off, repaying loyalty, & supporting local customers & local riders that race bikes.

Running a bikeshop is not so much about making money, but more about giving something back to the local cycling community, & being there for anyone who needs us.

I go home each night, & read bike comics, (gota keep up!) while my wife sits in the dinning room doing the books. We dont talk about profit much, hopefully sometime in the future we will, but thats a few years away. In the meantime, ill just keep my hands oily 🙂

Best wishes for a successful shop, for a long time, Xeo. Cycling gets bigger every day.

Ultimately we’re all on the same side here, we just want to have fun on our bikes.

Yey!

We definitely are. Cheers mate 🙂

I wonder how many people drop out of the sport/hobby due to the constant price increases

I’d expect precisely none.

Is there not a 19% tax on bike parts in Germany which gets removed for export

anything bought within the EU has the EU 20% VAT added to it so you can eliminate tax from the equation.

And I thought the margins in the car trade were so low they made all their money on the finance agreement and target bonuses, hence the entire auto industry being on its knees in a recession?

Why aren’t they getting angry on the blower to the distrbutor saying “how come CRC can sell this for 45 quid when our price to the customer is 70? That’s costing us footfall and margin every day!” ?

The other thing CRC is able to do because of the size of their operation is to go to Taiwan, China, etc. and buy OEM components direct off of bicycle manufacturers. So if you’re say pacific cycles and you’ve got, oh i dunno, 3,000 extra xt cranksets from last year. You’ll sell them on to CRC direct at cost or a tiny mark up which is significantly down on most shops trade price let alone retail. Then taking into account the scale of their operation, business model and fixed overhead spread they can sell them on at a small mark up which is still a good profit over all though in the process they go really quickly as they’re massively reduced compared to RRP.

As to Rose’s prices well firstly Rose are a manufacturer too so they probably deal with Shimano direct instead of adding in distributor margins. Secondly they’re also probably the biggest high end bicyle retailer in Germany a country of 82 million people so they’ll have huge buying power. All of these add to reduce their price. Plus the Vat thing as pointed out further up the thread.

As some posts above.
depends on the brand.. distributed/imported vs brand direct
depends on the shops purchase volume
depends on the spec level on the bike, but a mark up on a full bike might be in the region of 40% for a well spec’d mtb

e.g. shops buys from distributor for $3160, with a suggested retail of $4650
Factor into that shipping costs, assembly etc etc and whatever discount the shop is offering to attract buyers through its doors.

Parts however are 100% markup. From shops cost to rrp

A $100 set of bars costs the shop $50.
This pretty much holds true for absolutely every component from every parts distributor in Canada.

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.

Erm, Halfords/Bikehut have some “crazy” discounts on their low end bikes that remind me very much of the “officers’ club” way of trading. Ditto bikes and bike stuff at JJB and Sports World.

He was pulling your leg. The margin is a fraction of that up front, and gross. The dealers will get back end bonuses based on CS results that will add a few % on, and that’s all. On a 6 month old car they registered as a demo they will get writedown support from the manufacturer, but not to the tune of half the retail value of the car.

I used to work for one of the largest manufacturers in the world. There is a few reasons why the motor trade is on its knees now. One main one being pathetic margins.

A good friend has worked for three or four of the biggies in recent years: I know of one of the largest manufacturers in the world whose slightly necky “list” prices in the UK are 30-40% or so more than a main dealer could actually sell for cash (as opposed to making anything back on finance or trade-in) without making a loss. Although that may have changed in the last few months: I think it was about March this year when I had that conversation. I also know however that the same margin is not nearly as “healthy” for the dealer across the street selling a rival or “superior” brand.

It would seem that the same is being reported about bicycles on this thread. Hey ho.

@frank4short ta for informative post

When I use to play golf all the club run pro shops were members of a buying conglomerate, thus giving them purchasing power on a par with the larger golf chains.

Does this model not exist within the bike industry, and if not why not?

Bearback. 100% markup! You’re having giraffe.

One thing I will point out. Do bikeshop owners shop around themselves when they need things for their business or self or do they shop at the closet business for all their goods?

No. I thank ya 😉

Bearback is talking about Canada though.

The Internet really is full of crap!

Thanks for your sagely and helpful observation Razzer. 😀

I saw a (Kona) pricelist in my LBS a few years ago and the trade price was about 50% of retail. This was the official Paligap pricelist.

My neighbour is Sales Manager for the local Vauxhall dealer and he maintains the trade price on new cars (Insignia) is (You guessed it) 50% of retail price.

Lots of less than objective folk saying it isn’t so but there is a lot of evidence to back it up.

– One thing I will point out. Do bikeshop owners shop around themselves when they need things for their business or self or do they shop at the closet business for all their goods?

No. I thank ya – YES, I thankyou. (hora)

Massive generalist statement. I run a bikeshop, we do our best to provide good service to everybody that comes in.

My uncle runs a local Butchers, which is PACKED every Saturday. I hate online shopping, its not my thing (along with a lot of other people) I bet your bottom doller, most peeps who use their local bikeshop, don’t bother with forums, or online shopping, to busy with their families, or work ect. They just like to get on a Sunday & have some fun.

New car industry is even worse than the Bike trade for margins.

About £200 in a £20k car margin. The dealer will get a kick back from the manufacturer for hitting targets though. Typical dealer will make 1-2% gross margin in total on a good year (sales + after sales). OH is a regional manager for car dealers and has worked for several major car manufacturers – it’s a piss poor business model, you’d make more selling the dealership and putting the money in a post office savings account.

ScottChegg – Member

I saw a (Kona) pricelist in my LBS a few years ago and the trade price was about 50% of retail. This was the official Paligap pricelist.

Maybe – that’s a high margin though, and trade will be ex-VAT, and retial inc-VAT, making it 40%

I bet your bottom doller, most peeps who use their local bikeshop, don’t bother with forums, or online shopping, to busy with their families, or work ect. They just like to get on a Sunday & have some fun.

Seriously?

Insulting people who don’t shop with you is hardly going to bring them round is it?

If trade is £50 and RRP is £100 margin is about 40%

VAT is £17.7

Margin is £33.33

Expressed as a percentage 33.33/83.33 – 40%

If you take 10% off RRP, sale price now becomes £90

VAT = £15

Margin only £23.33

Expressed as a percentage 23.33/75 = 31%

TRADE prices are always expressed EXCLUDING VAT, wheras Retail prices include VAT. Just trying ti make sure everyone is working to the same formula.

Note from above just how much is taken in VAT, it’s not the LBS ripping you off, but maybe the government is…

– Insulting people who don’t shop with you is hardly going to bring them round is it?

Absolutely no way did I come on here to insult anyone! yikes. Sorry if I did so 🙂

Dangerous place !

And cynic-al. My figures for trade vs. RRP are from working in a relatively large chain, that mostly sold low-end bikes, about 10 years ago. The trade vs. RRP is totally accurate for that situation, profit varied, on bikes (as opposed to accesories) it was indeed at the lower end of what I suggested, and I can well imagine it is lower on high-end stuff in the present day.

I also understand why so many involved with bike shops are getting a bit defensive. But all that was actually asked was what is “trade” vs. “retail”. My experience was 40-50% ‘markup’, it seems a lot of people are quoting in that range. If it really is much lower as many are implying, say below 30%? Then all currently in the industry have my sympathies. 10% to get discounts, overheads and profits out of must be impossible.

Small shops, its lower than 40%. UK average would be around 30%. I know this to be fact, having run a Southern UK Account base for a major distributor for two years, and currently own a shop.

Any dealer that is knocking on 40-50% are making big commitments to that brand, a long history & a solid sales base. Just like the distributors we buy from, they also have to forecast that following years sales. How the bikes are sold (discount ect) is down to each shop.

PW – fair enough – I am talking about IBD with decent bikes, which I assumed was where the OP was coming from.

Absolutely no way did I come on here to insult anyone! yikes. Sorry if I did so

Dangerous place !

Sorry xeo, having read it again I’m sure it was intended perfectly innocently, it just seemed like it was an implication that those who shopped online must have no work/family/life etc and spent all their time on forums.

I bet your bottom doller, most peeps who use their local bikeshop, don’t bother with forums, or online shopping, to busy with their families, or work ect. They just like to get on a Sunday & have some fun.

don’t bother with forums, or online shopping , to busy with their families, or work ect

yeah, ‘cos shopping online at CRC takes more time out of my busy schedule than schlepping to my LBS, finding somewhere to park, paying for the privilege, explaining what I want, being told they can order it in, going away, 3 days later schlepping to my LBS… 🙄

I know people who don’t even know which chainring to be in and have their saddle at both-feet-flat-when-sat-cycling proficiency height that shop at wiggle and CRC as well as the LBS. Relying on your customer base being ignorant of competition seems like a fragile business plan.

Hotlines own CRC so that’s why CRC can sell stuff so cheaply, and from a personal perspective (i work in a bike shop) it is sometimes cheaper for us to buy stuff from CRC than get it direct from the various trade distributors (hotlines/fisher/etc…etc).
Utterly crazy and as a small bike shop with one member of staff who’s worked his bollox off and sunk everything into his shop for the past two years it was just about breaking point for him till i started work a few weeks ago to ease the workload and share the stress levels, we earn absolutely fec-all (i earn so little i get tax credits etc) but we both love the job along with working on bikes and sorting out problems for customers who are grateful for our knowledge and experience, we constantly wobble from one bill to the next as accounts need to be paid on time and it is extremely difficult/stressful making ends meet, as for stock it would be so nice to have a shop stocked with nice shiny kit but we are not in a financial position to afford the massive outlay to buy it, not now…perhaps not ever unless we win the lottery but i don’t care. As long as we can ensure the customer leaves with a happy smile and a fully working bike i’ll continue to work in the trade, we get cakes,coffee, beer etc brought into us on a daily basis by our loyal customers and it’s this reason we work in the shop, to see a customers face drop in amazement when you hand back a bike that 2days previously was unrecognisable and unrideable due to being hidden under a mountain of filth and oily grime is worth all the stress and long unpaid hours, and then for the customer to come in the following weekend to profusely thank you as even when the bike was brand new it never worked as well makes me very happy indeed, certainly better than how i felt in my previous thankless job.

I’ve personally never used an LBS in over 25yrs of riding mtb’s, however there are many people out there who have no mechanical sympathy or knowledge about components or how their bikes work and function in the slightest, we are here for those folk who just want to get out and ride, and if something breaks or fails then they know and trust our advice/repair skills and accept our prices may be higher than what’s available online but they understand will never rip them off and we will always try and help them out whatever the problem.

(written on my iphone as i sit with an antibiotic iv in my arm so excuse any spelling mistakes/grammar fec-ups)

Well said Somafunk.

CRC own Hotlines though. Well, in partnership with someone else.

As for ‘fragile busioness plan .. it works, we are about to move into a shop 8times the size, & for the recored, Im to long in the tooth to be ignorant of anyone, i like to think. Read what I have written above & take it the way you choose to.

Got my tin hat, waiting for the grenades !