LBS reasonable markup

Keith Vetter

I'm all in favor of supporting local bike shops (LBS) but
what do people consider a fair markup?

Last year I needed some Look-type bike cleats. I went to a
bike shop, and, while they didn't have any in stock, the
owner just happened to be on the phone to the supplier and
he added it to their order. When they came in, the store
wanted $27 for them--that seemed expensive but not knowing
better and since they were ordered explicitly for me, I
bought them.

Later I saw that Performance was selling Look cleats (not
clones) for half that price.

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in stock,
but they looked it up in the catalog. The catalog price
was $13 and they said they could sell it to me for $21.
This time I declined.

So what to people consider a reasonable markup? My first
example I feel is clearly too high. The second one seems to
high but by how much?

Keith

Kantspel

Keith Vetter wrote:
> I'm all in favor of supporting local bike shops (LBS) but
> what do people consider a fair markup?
>
> Last year I needed some Look-type bike cleats. I went to a
> bike shop, and, while they didn't have any in stock, the
> owner just happened to be on the phone to the supplier and
> he added it to their order. When they came in, the store
> wanted $27 for them--that seemed expensive but not knowing
> better and since they were ordered explicitly for me, I
> bought them.
>
> Later I saw that Performance was selling Look cleats (not
> clones) for half that price.
>
> Last month, I needed another pair and I went to a
> different bike shop. Again they didn't have them in stock,
> but they looked it up in the catalog. The catalog price
> was $13 and they said they could sell it to me for $21.
> This time I declined.
>
> So what to people consider a reasonable markup? My first
> example I feel is clearly too high. The second one seems
> to high but by how much?
>
> Keith

A sucessful shop owner once told me "if no one complains
about the price then you're not charging enough". As a
customer you don't want to hear that (I was a little stunned
when I heard it), but the guy ran a great shop.

Ron Hardin

Retail more or less doubles the price, which they need to
succeed by the way. You walk in and expect them to stock
what you need, but a lot of stuff nobody walks in for.

On the other hand most retail businesses fail, so they have
to guess right what there's a need and a market for.

I abandoned LBSs not for the price so much as that they
stopped carrying a decent inventory.
--
Ron Hardin rhhardin@mindspring.com

On the internet, nobody knows you're a jerk.

Harris

Keith Vetter <keithv@clover.net> wrote:

> Last year I needed some Look-type bike cleats. I went to a
> bike shop, and, while they didn't have any in stock, the
> owner just happened to be on the phone to the supplier and
> he added it to their order. When they came in, the store
> wanted $27 for them--that seemed expensive but not knowing
> better and since they were ordered explicitly for me, I
> bought them.

Wow! I almost choked when a local shop wanted $16 for them a
couple of years ago. Then I found out all the shops charged
that. But $27 is highway robbery for two pieces of plastic.
Find a good online source and buy several pair.

> Last month, I needed another pair and I went to a
> different bike shop. Again they didn't have them in stock,
> but they looked it up in the catalog. The catalog price
> was $13 and they said they could sell it to me for $21.

Yikes! First, why is it that these shops don't carry such a
common item? And how do they justify such a huge markup?

Art Harris

Matt O'Toole

Harris wrote:

> Keith Vetter <keithv@clover.net> wrote:
>
>> Last year I needed some Look-type bike cleats. I went to
>> a bike shop, and, while they didn't have any in stock,
>> the owner just happened to be on the phone to the
>> supplier and he added it to their order. When they came
>> in, the store wanted $27 for them--that seemed expensive
>> but not knowing better and since they were ordered
>> explicitly for me, I bought them.
>
> Wow! I almost choked when a local shop wanted $16 for them
> a couple of years ago. Then I found out all the shops
> charged that. But $27 is highway robbery for two pieces of
> plastic. Find a good online source and buy several pair.
>
>> Last month, I needed another pair and I went to a
>> different bike shop. Again they didn't have them in
>> stock, but they looked it up in the catalog. The
>> catalog price was $13 and they said they could sell it
>> to me for $21.
>
> Yikes! First, why is it that these shops don't carry such
> a common item? And how do they justify such a huge markup?

I have a couple of extra pair somewhere that came with
shoes. Maybe I should put them on eBay, with a healthy
reserve!

Matt O.

Todd Kuzma

Keith Vetter wrote:

> Last month, I needed another pair and I went to a
> different bike shop. Again they didn't have them in stock,
> but they looked it up in the catalog. The catalog price
> was $13 and they said they could sell it to me for $21.
> This time I declined.

I don't know what catalog they looked in, but that sounds
like a pretty high wholesale price for Taiwanese Look
cleats. Even gen-u-wine Looks don't cost that much.

Still, for small parts, a keystone margin (50%) is pretty
common in retail.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery LaSalle,
Il 815-223-1776 http://www.heronbicycles.com
http://www.tullios.com

Todd Kuzma

Harris wrote:

> Yikes! First, why is it that these shops don't carry such
> a common item? And how do they justify such a huge markup?

We stock them, but they really aren't a very common item.
Remember that roadies represent a very small part of the
overall bicycle market. Bike shops make their money selling
$350 comfort bikes. The volume is all in the family market,
not the enthusiast market.

We are not a big shop, but we do a fair amount of road stuff
because we own Heron. We sell 3-4 pairs of Look replacement
cleats a year.

Also, if the shop is charging $21 for an item that they buy
for $13, that is not a huge mark-up. Actually, that's a
fairly small mark-up for that type of item.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery LaSalle,
Il 815-223-1776 http://www.heronbicycles.com
http://www.tullios.com

Rick Onanian

On Fri, 11 Jun 2004 17:44:41 GMT, Ron Hardin
<rhhardin@mindspring.com> wrote:
>Retail more or less doubles the price, which they need to
>succeed by the way. You walk in and expect them to stock
>what you need, but a lot of stuff nobody walks in for.

In this case, the OP did not expect them to stock what he
needed, or even if he did, they failed to do so. At that
point, what's the difference if the bike shop orders it or
he orders it from Performance?
--
Rick Onanian

Jkpoulos7

>My first example I feel is clearly too high. The second one
>seems to high but by how much?

A guy on ebay was selling them 10/pair shipped from England.
For things like this buy a couple sets to last a year at
nashbar etc. Cheaper than being ripped by a shop. Markups
vary from industry to industry- autos are 5 to 10% markup
while clothing can have a 100% markup(yes the Gap still
makes money when you buy a shirt on sale for 9.99)

Tcmedara

kantspel <prefer@nomail.com> wrote:
>
> A sucessful shop owner once told me "if no one complains
> about the price then you're not charging enough". As a
> customer you don't want to hear that (I was a little
> stunned when I heard it), but the guy ran a great shop.

That's a great way to look at it! And if enough customers
don't like it, they will seek alternatives. The shop will
then lower prices, find ways to cut costs, or go out of
business. That's the system! I'm new to this group, but
recently kicked off a flame-a-thon in alt.mountain-bike for
posting letter to an LBS where I complained about a mickey
mouse charge and crappy customer service. You'd think I'd
insulted the Pope while visiting Rome!

Ironically, I support both sides on this one. Shops should
charge as much as they think they can get away with, and
customers shouldn't let 'em get away with it! That's why
competition -- in bike parts, airlines, or breakfast cereal
-- is good. If forces innovation and gives buyers options.

Tom

Gs

For that price they should've at least offered to replace
them for you. If shops want to charge you for their so-
called "better customer service", then they should provide
it. Otherwise, why be loyal? Secondly, I don't think any
formula for a mark up is fair. Not 50%, not double. What's
fair is what's competitive. If they can't compete with
Performance, then they should at least base their price on
what the going market price for the product is, even if it's
barely worth their while. Did you ever get the line from a
salesman when you bought a car that "for that price we won't
make any money"? Well, the truth is, that not the consumer's
problem if a business can't make enough money at a certain
price. The consumer's problem is getting a fair market
price. You don't have to shop around for the lowest price on
earth, but you'd be nuts to treat your LBS like it's a
charity and just give them extra money out of your pocket.

"Keith Vetter" <keithv@clover.net> wrote in message
news:b811ab79.0406110833.7d35fc62@posting.google.com...
> I'm all in favor of supporting local bike shops (LBS) but
> what do people consider a fair markup?
>
> Last year I needed some Look-type bike cleats. I went to a
> bike shop, and, while they didn't have any in stock, the
> owner just happened to be on the phone to the supplier and
> he added it to their order. When they came in, the store
> wanted $27 for them--that seemed expensive but not knowing
> better and since they were ordered explicitly for me, I
> bought them.
>
> Later I saw that Performance was selling Look cleats (not
> clones) for half that price.
>
> Last month, I needed another pair and I went to a
> different bike shop. Again they didn't have them in stock,
> but they looked it up in the catalog. The catalog price
> was $13 and they said they could sell it to me for $21.
> This time I declined.
>
> So what to people consider a reasonable markup? My first
> example I feel is clearly too high. The second one seems
> to high but by how much?
>
> Keith

Hunrobe

>keithv@clover.net (Keith Vetter)

wrote:
>I'm all in favor of supporting local bike shops (LBS) but
>what do people consider a fair markup?
>
>Last year I needed some Look-type bike cleats. I went to a
>bike shop, and, while they didn't have any in stock, the
>owner just happened to be on the phone to the supplier and
>he added it to their order. When they came in, the store
>wanted $27 for them--that seemed expensive but not knowing
>better and since they were ordered explicitly for me, I
>bought them.
>
>Later I saw that Performance was selling Look cleats (not
>clones) for half that price.
>
>Last month, I needed another pair and I went to a different
>bike shop. Again they didn't have them in stock, but they
>looked it up in the catalog. The catalog price was $13 and
>they said they could sell it to me for $21. This time I
>declined.
>
>So what to people consider a reasonable markup? My first
>example I feel is clearly too high. The second one seems to
>high but by how much?
>
>Keith
>

Before deciding what a "reasonable markup" is you have to
consider the total cost of just staying in business and
where the profits come from. For example, have you ever
wondered why it is so much more expensive to have a car
repaired at a new car dealer than at the garage down the
street? It's because the dealer's service department profits
pay the entire cost of the daily operation of that dealer-
utilities, salaries for all the hourly wage employees, the
new carpet in the showroom, property taxes on the football
field sized car lot, even a good part of the dealer's "floor
plan". The markup on the cars they sell is where their
profit is generated so the best deal for the individual
consumer is to buy the car there but have it serviced
elsewhere. Your LBS works in a similiar way. They probably
don't make a lot of money on the bikes they sell. They stay
in the black on the profits from the accessories they sell.
That's not to say you have any kind of duty to subsidize
them. Just realize that it's not a "rip off".

Regards, Bob Hunt

Mike Jacoubowsk

> Last month, I needed another pair and I went to a
> different bike shop. Again they didn't have them in stock,
> but they looked it up in the catalog. The catalog price
> was $13 and they said they could sell it to me for $21.
> This time I declined.
>
> So what to people consider a reasonable markup? My first
> example I feel is clearly too high. The second one seems
> to high but by how much?

My guess is that you're dealing with a shop that has very
little, if any, expertise in road bike equipment. It was
simply not something they wanted to get involved in, and
they may not be buying from the best source either. He might
even be special-ordering them from a source he doesn't buy
anything else, and charging you for freight as well.

We sell "real" Look cleats for about $13 if I recall
correctly (not at the shop right now so don't have the exact
amount handy). We buy them in significant qty (probably 50
at a time) because we sell lots of them.

If someone needed an obscure (to us) BMX part that we had to
special order only that part from a distributor, we wouldn't
be very competitive on it either. By the time we paid
freight (which we don't have to pay on large shipments from
our regular suppliers) and a likely minimum-order surcharge,
the price kicks up pretty nastily. However, we'd also
recommend that someone try a shop that regularly deals in
such merchandise.
--
--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

Dennis P. Harri

On Sat, 12 Jun 2004 11:04:26 -0700 in rec.bicycles.misc, "GS"
<xLuckyStrike21@Yahoo.com> wrote:

> Well, the truth is, that not the consumer's problem if a
> business can't make enough money at a certain price. The
> consumer's problem is getting a fair market price. You
> don't have to shop around for the lowest price on earth,
> but you'd be nuts to treat your LBS like it's a charity
> and just give them extra money out of your pocket.

of course when they close because of cheapskates like you,
then you'll whine because there's no local shop. what a
buncha horse puckey.