Cost of bicycling: graphical followup

[The Wogster]

Robert Uhl wrote:
> Jasper Janssen <[email protected]> writes:
>
>>It is most especially not realistic to quantify the depreciation as
>>purchase price divided by expected lifespan -- that is in fact much
>>less realistic than writing it off all at once.
>
>
> I use sum-of-digits depreciation. It's fairly simple to calculate, and
> yields a nice depreciation curve which is steep at the beginning and
> shallow at the end. You figure out the depreciation period
> (e.g. months) and the predicted lifespan (e.g. 5 years); dividing the
> latter by the former you get 60 in this case. You now calculate
> 1+2+...+60, which fortunately simplifies out to 60*61/2 (in the general
> case, n(n+1)/2); this is 1,830. Say that the initial cost is $2,000:
> divide the cost by 1,830, yielding $1.093. Now, the first month the
> bike depreciates 60*$1.093, or $65.57; the second month by 59*$1.093, or
> $64.49; the last month it will depreciate by 1*$1.093, or $1.09.
>

A couple of points, first I think you said divide when you meant
multiply, 5 multiplied by 12 is 60. Second, your not counting on
residual or disposal value, for many items there is a point, where it
simply doesn't depreciate any more, for a bike that is probably
somewhere between $50 and $100, considering that you can often find 70's
road bikes selling in this range, it's probably a reasonable residual
value, when you stop actively depreciating a bike.

W

 

[gds]

The Wogster wrote:


<big snip>
if your doing $500 worth of
> maintenance on a $500 bike, well, why not replace it?
>
That would seem to depnd on what the new $500 bike is compared to the
old one.

The $500 bike that I bought in 1975 is far better than anything
available under $1500 today. The cro moly frame still has no rust and
no cracks. It has the Nuevo Record Campy friction shifters--really the
best I found of that vintage technology- and they are still working as
are the original center pull brakes (new pads of course). So, the
headset and cranks have been rebuilt/replaced a couple of times and it
has newer wheels.

I figure I have put ~$1200 into the bike over the past 30 years.
Interestingly a collector saw it recently and offered me $2000. I have
no idea what its worth but I've had it so long that it will stay in the
family a bit longer.

 

[The Wogster]

gds wrote:
> The Wogster wrote:
>
>
> <big snip>
> if your doing $500 worth of
>
>>maintenance on a $500 bike, well, why not replace it?
>>
>
> That would seem to depnd on what the new $500 bike is compared to the
> old one.
>
> The $500 bike that I bought in 1975 is far better than anything
> available under $1500 today. The cro moly frame still has no rust and
> no cracks. It has the Nuevo Record Campy friction shifters--really the
> best I found of that vintage technology- and they are still working as
> are the original center pull brakes (new pads of course). So, the
> headset and cranks have been rebuilt/replaced a couple of times and it
> has newer wheels.
>
> I figure I have put ~$1200 into the bike over the past 30 years.
> Interestingly a collector saw it recently and offered me $2000. I have
> no idea what its worth but I've had it so long that it will stay in the
> family a bit longer.
>

Everything that has some age to it, has three values, the depreciated
value, the value you could sell it for, and the replacement value.
Considering that a 1975 dollar is worth considerably more then that
today, actually according to a CPI inflation calculator 500 1975 dollars
would be worth $1823.36. Now if you had something more recent, say a 4
year old $500 bike, then your not buying much more (less then $50) so
perhaps if you had a 4 or 5 year old bike, that needed $500 worth of
repairs at the LBS, then it would be different.

W

 

[gds]

The Wogster wrote:
>
> Everything that has some age to it, has three values, the depreciated
> value, the value you could sell it for, and the replacement value.

I agree!

But you do leave out one other very important value- sentimental value.
Often that is the most important one in the calculation to restore vs.
replace.

 

[Jasper Janssen]

On Mon, 17 Oct 2005 19:27:55 -0400, The Wogster <[email protected]>
wrote:

>Bikes are like cars, a $15,000 car is worth $10,000 the moment you drive
>off the lot, and each year it drops a little less, until you get to a
>value of around $1,500, when it seems to stay around there, until it's
>ready for the wrecking yard.

$1500 minus the cost of the repairs that are probably going to be
necessary in the near future. Damage to the interior doesn't matter so
very much any more then, but a transmission on the brink of failing will
push the price down a *lot*.

>Items like tires, brake pads and chains would simply be an expense.

If you don't ride a *lot* (compared to the average American, not so much
to the average rbm or rbter), a chain will last more than a year. So why
is it suddenly an expense?

Jasper

 

[Jasper Janssen]

On 17 Oct 2005 20:11:06 -0700, [email protected] wrote:
>Jasper Janssen wrote:
>> Even if you do go for 'only depreciation',
>> depreciation on a bike is much, much worse than on a car. A bike loses
>> more of its value being rolled off the lot and after a few years it can be
>> entirely functional and well maintained and still only fetch a small
>> fraction of the purchase price.
>
>Explain to me again how this is different from an automobile?

Different steepness of the curve.

Jasper