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

To produce bumpers for a car it costs around £7 – front and rear and that’s painted.

Is that the material cost? Does it include tooling, distribution, R&D, marketing, supply chain, QA, rejects etc? Is it the cost per unit of a massive production run?

Carbon fiber is pretty cheap by the kilo, as is epoxy. Much less than the 2000 pounds per kilo of cervelo’s RRP!

😉

As said there’s so many variables,

However (as an example) if something has an rrp of £100, and a trade pride of £50 (which isn’t very common) the shop buys it at trade plus vat, (so £60 not £50) and then loses £20 to the taxman as vat at final sale, leaving £20.

Not a lot really!

Richpenny – that’s everything in.

However thats on a constantly running production line making around 1 million per year. Still cost you a lot more at a dealer!

However (as an example) if something has an rrp of £100, and a trade pride of £50 (which isn’t very common) the shop buys it at trade plus vat, (so £60 not £50) and then loses £20 to the taxman as vat at final sale, leaving £20.

Um, no. In that example I buy it at £50+VAT=£60, but I reclaim the VAT. I sell it at £100 inc. VAT, but £17 of that goes to the VAT man. So my profit is £100-17-50=£33.

Yes I know I left out the reclaimed lower vat price. However you do have to pay it, and then claim it back but its another step and delay in finances for a small shop (assuming you reclaim monthly)

But more importantly, Why are you paying 17% vat and not 20%? 🙂

He isn’t……..

VAT is normally reclaimed quarterly, but it’s also paid quarterly so that evens out.

And I am paying 20%. I think you’re confusing inc and ex VAT 🙂

I think that you’ll find that on the whole, provided that stock levels remain constant then you are holding the money for the tax office, not the other way around, provided that you are actually paying your VAT, not reclaiming VAT each month/quarter. The only time i did that was before I opened and was stocking up.

We buy stuff at trade. We sell stuff, (generally, but often with discount) at RRP. Lots of stuff happens inbetween. My wife deals with that, at home, late at night (her brain kicks in at around 11pm) whilst I dream about our next promo, idea, brand, & even more so at the moment, shop move. We got two weeks to get it open, without closing the current one. Its been a long 3 months of toil, and I sit here right now typing “long legal words” in google to get accurate definition from our 50+page contract.

Yes, hopefully we will oneeeeeeeeeeee day, turn a profit. But it will be bloody well earned.

I haven’t written the above to justify our existence or garner sympathy,or to make anyone think that IBD dealers are either to expensive, or to valuable, but for a millennia man has made a living from another.

But if you actually walked into your local bikeshop, hung about a bit, got to know the worker ants in there, you might like em’ (although you might not!) but you might learn a few things (after all, fixing bikes all day, every day, along with the immense amount of knowledge is pretty priceless) so you might learn a few things. Even if you have been riding for 20years! 🙂 x

“I know that no one likes to pay more than they have to for anything, but as has been said previously, it’s nor just about what you are walking out the shop with, it’s about the service, the advice and the after sales care. If you don’t give a hoot about that then shop online, but there really is no conspiracy” – alexathome – I like this. Especially the last bit 🙂

(Sorry, cant do that clever “quote” thing !

Yes, especially as anyone who knows the bike trade knows we never, ever agree on anything – organising a conspiracy is just never going to happen 🙂

Many are also too feckless…

More well meaning BS?
You don’t state the brand so at least you’re not biting the hand that feeds you. Different brands have different pricing structures. Different retailers get different prices.

Ha another ‘I know it all keyboard warrior’, you don’t know me yet assume it’s BS!! I just answered the original question, straight to the point, no B.S!! i.e. What is the actual ‘Trade’ price that the distributors have to pay to my bike manufacturer v the RRP.

Yes there are then different retail ‘trade’ prices based on volume, a lot of us shop at Costco, Macro etc, we understand the concept 😉

I don’t have to state the manufacturer, and TBH it doesn’t make any difference if I did as all Manu’s are going to be a similar figure, if not less, as my bikes come from a European manufacturer that doesn’t turn out a fraction of the bikes that Giant, Specialized et al do. I just know for a fact that they supply both the UK and the Nth American distributors at that ‘trade’ price ratio as I’ve had my bikes from both of them since 2008.

I currently get them through the Nth American distributor, so I get it at 45% of the $ RRP and seeing as tax over there is only 12%, it actually ends up cheaper than UK ‘trade’ price 😆

I don’t have to state the manufacturer, and TBH it doesn’t make any difference if I did as all Manu’s are going to be a similar figure, if not less

It’s so amusing/frustrating/ridiculous (delete as appropriate) when someone who “knows everything” shouts out a statement such as this. Because if you were in possession of any real facts, rather than just your own experience and some heresay and conjecture, then you’d realise what you’ve said is complete bollocks!

Some manufacturers trade prices are better than others, and some by quite some margin. But none that I know of are approaching what you seem to be paying (you’re probably paying trade cost to the distributor, not to the retailer), and many/most are far more expensive. It’s not uncommon for a £1000 bike to cost a retailer £700, then add the VAT to that £700, cost of building it, storing it, first free service and the fact it might be sat on the shop floor for some time so hence gets discounted in the end, and you’ll see it’s not quite so profitable as you’re making out!

Buying bikes direct from the importer makes a big difference of course. The guys who win when it comes to prices are the guys who work for the big companies, and get their bikes at what they actually cost the importer to buy (not the retailer). These very few, and very lucky guys, are the ones that will end up with bikes for less than 50% of the RRP cost, but for the guys working in your LBS they’re not saving an enormous margin buying their own bikes than you could get if you shopped around/online most probably.

i used to own a shop that sold marin and giant, and on a bike that i sold for about 2300, i got about 250-300 quid, that was on there rrp

Buying bikes direct from the importer makes a big difference of course. The guys who win when it comes to prices are the guys who work for the big companies, and get their bikes at what they actually cost the importer to buy (not the retailer). These very few, and very lucky guys, are the ones that will end up with bikes for less than 50% of the RRP cost, but for the guys working in your LBS they’re not saving an enormous margin buying their own bikes than you could get if you shopped around/online most probably.

That’s true! I have had a few frames at this level, and the difference is quite staggering. This is also how Pauls etc manage to discount so heavily. In my opinion it is damaging for brands to do this thou as it becomes their one of the only outlets. Look whats happened to RM and Tomac, I don’t think any LBS’s would be likely to take them on, reducing the desire for a consumer to own one, as warranty issues and servicing etc is problematic when there are few dealers.

Some manufacturers trade prices are better than others, and some by quite some margin. But none that I know of are approaching what you seem to be paying

Which ones do you know of? How many years ‘in the industry’ have you under your belt?

Some manufacturers trade prices are better than others, and some by quite some margin. But none that I know of are approaching what you seem to be paying

Which ones do you know of? How many years ‘in the industry’ have you under your belt?

This is also true. margins vary between 42% (very rare, on low end cheaper brands when they have too much stock etc) and as low as 23% on high end frame sets. These are the two ends of the spectrum, the usual for big distributors will be as stated earlier in the thread between 32% and 37% depending on quantities ordered etc.

That’s not really disclosing any industry secrets regarding pricing structure, just an overview, which others have outlined earlier.

It’s so amusing/frustrating/ridiculous (delete as appropriate) when someone who “knows everything” shouts out a statement such as this. Because if you were in possession of any real facts, rather than just your own experience and some heresay and conjecture, then you’d realise what you’ve said is complete bollocks!

Some manufacturers trade prices are better than others, and some by quite some margin. But none that I know of are approaching what you seem to be paying (you’re probably paying trade cost to the distributor, not to the retailer), and many/most are far more expensive

‘mboy’ – So my own 4 years experience with one manufacturer isn’t ‘fact’ then ❓ I have spreadsheets with distributor and RRP prices on it sent to me every year, so what part of this isn’t a fact? There are 9 other riders in the team who have also had these deals in the past 4 years, so I know it’s not a one off deal for me and that will be 9 other people with the same ‘experience’, is that still not a fact??

I meet and talk to the Engineers and Marketing men from the manufacturer every year too – another ‘fact’!!

I also stated that I was getting my bikes off the distributor, but you dispute my figures and then just confirm what I stated!!

So who is talking bollox exactly???

TBH I’m not bothered what you think, I’ll just smugly carry on riding my new bike every year that’s cost less than 50% of the UK RRP 😆

This is also true. margins vary between 42% (very rare, on low end cheaper brands when they have too much stock etc) and as low as 23% on high end frame sets. These are the two ends of the spectrum, the usual for big distributors will be as stated earlier in the thread between 32% and 37% depending on quantities ordered etc.

My experience.

I have spreadsheets with distributor and RRP prices on it sent to me every year, so what part of this isn’t a fact?

What’s confusing is you seem to be talking about distributor or manufacturer pricing, which is different to what shops pay for things. I’m not sure how you’re accessing that pricing – perhaps it’s a sponsorship thing or something – but those prices will of course be lower than a shop’s normal trade price.

Ben beat me to it, but sponsored riders/staff will sometimes get super special deals where everyone in the supply chain, manufacturer, distributor and retailer all waive their profit. It’s actually quite rare, so you are really lucky. It doesn’t reflect the pricing that a retailer can access on a day to day basis.

It’s actually quite rare, so you are really lucky.

Indeed, and it’s not usually the sort of thing that manufacturers like people willy-waving about – maybe not a good idea to mention it in public?

‘mboy’ – So my own 4 years experience with one manufacturer isn’t ‘fact’ then I have spreadsheets with distributor and RRP prices on it sent to me every year, so what part of this isn’t a fact?

Its from one brand, giving you a limited view of the industry. You make some valid points BUT only limited to the brand you deal with. (obviously through no fault of your own)

So who is talking bollox exactly???

99% of forum users.

What the others above have said…

TBH I’m not bothered what you think, I’ll just smugly carry on riding my new bike every year that’s cost less than 50% of the UK RRP

Good for you… But as has been said, your argument has zero relevance at all, as you are paying significantly less than the UK “trade” price for the bikes. Whatever reason this is for, is up to the company that sponsors you, but the price you pay is 100% totally irrelevant to what the bike shop that stocks the brand you ride has to pay for it… This is what you’ve not grasped.

Indeed, and it’s not usually the sort of thing that manufacturers like people willy-waving about – maybe not a good idea to mention it in public?

I’ve known peoples sponsorship deals end in the past for telling all and sundry just how little they were paying for their bikes from the distributor/manufacturer… It can go a long way to devalue a brand if the guy racing them is telling everyone just how little they actually cost!

Maybe pause for thought next time before you mention how little you paid for your new bike…

Goodlord ! everyone seems to have the “answer”, but there is no answer! who the bloody hell pays what-for-what-with-how-much-this-and-how-much-that is pretty out there .. the INDEPENDENT retailers all have their own margins and buying power, meaning there is really no answer, only an average ! (re a previous comment of mine)

I bought MBUK the other day, so today I smugly went to work wearing my free woolly gloves.