hey bike dealer lets talk about price now ;-)

[Rick]

My son will likely buy a Giant OCR3 2005. We are Canada and the price asked
before any haggling is 850.00 tax in, so out the door. It is a reasonable
price ? How much room do we have to play ??

Can we get more if we ask for free stuff , e.g. speedometer, water bottle
etc etc instead of price reduction ??

Thanks for your input

Richard

 

[Frank Drackman]

"Rick" <[email protected]> wrote in message
news:[email protected]...
> My son will likely buy a Giant OCR3 2005. We are Canada and the price
> asked before any haggling is 850.00 tax in, so out the door. It is a
> reasonable price ? How much room do we have to play ??
>
> Can we get more if we ask for free stuff , e.g. speedometer, water bottle
> etc etc instead of price reduction ??
>
> Thanks for your input
>
> Richard
>
>

It might have changed, but a few years ago most dealers charged just
slightly above costs for a bike. If I were you I would pay retail and build
up a good relationship with the LBS. IMO it is a much better long-term
value than trying to save a few loonies up front.

 

[Gooserider]

"Frank Drackman" <[email protected]> wrote in message
news:[email protected]...
>
> "Rick" <[email protected]> wrote in message
> news:[email protected]...
>> My son will likely buy a Giant OCR3 2005. We are Canada and the price
>> asked before any haggling is 850.00 tax in, so out the door. It is a
>> reasonable price ? How much room do we have to play ??
>>
>> Can we get more if we ask for free stuff , e.g. speedometer, water bottle
>> etc etc instead of price reduction ??
>>
>> Thanks for your input
>>
>> Richard
>>
I don't know about whole bikes, but I know the markup on my new frame/fork
was pretty steep. I paid $1100 with a paint upgrade, and the invoice I saw
was for about half that.
>
> It might have changed, but a few years ago most dealers charged just
> slightly above costs for a bike. If I were you I would pay retail and
> build up a good relationship with the LBS. IMO it is a much better
> long-term value than trying to save a few loonies up front.
>

 

[Mike Jacoubowsky]

> I don't know about whole bikes, but I know the markup on my new frame/fork
> was pretty steep. I paid $1100 with a paint upgrade, and the invoice I saw
> was for about half that.

I'll have what your dealer's having! Perhaps if it were a lesser-known brand
the dealer could make that much money, but for name-brands, the markups
aren't even close to that. A good dealer isn't making much money on bikes,
considering the lower markups, amount of time spent getting somebody fit,
bike assembly, taking care of stuff down the road... what we hope to do (and
generally succeed at) is to create a new addict that will be coming in to
buy jerseys, shorts, helmets, computers, wheelsets... all sorts of cool
stuff that goes along with the bike.

A really good dealer will do everything he/she can to make sure you feel
terrible every time you walk past your bike and can't ride it for some
reason. A really good dealer can't stand the idea that your bike is sitting
in the garage, not being ridden for some reason or other. If there's a way
to make that bike more appropriate for how you might use it, they'll figure
it out. They'll go out of their way to address fit & mechanical issues that
might be keeping you off the bike. They'll help you come up with ways to
rationalize to your significant other why it's a good thing you spend so
much time on your bike (the most-common one being, hey, isn't it better to
be having that mid-life crisis/affair with a bike instead of another
person?).

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

 

[[email protected]]

Stay away from those awful compact frames

 

[Gooserider]

"Mike Jacoubowsky" <[email protected]> wrote in message
news:K_nAe.337$_%[email protected]...
>> I don't know about whole bikes, but I know the markup on my new
>> frame/fork was pretty steep. I paid $1100 with a paint upgrade, and the
>> invoice I saw was for about half that.
>
> I'll have what your dealer's having! Perhaps if it were a lesser-known
> brand the dealer could make that much money, but for name-brands, the
> markups aren't even close to that.

I don't know what to tell ya, Mike. He didn't exactly SHOW me the invoice,
but he left it in plain sight on his desk. I paid $1100 for a Gunnar Sport
f/f, and I saw the invoice showing about half that.

 

[Rick]

<[email protected]> wrote in message
news:[email protected]...
> Stay away from those awful compact frames

Why ???

 

[Ken M]

Much the same when I sold new cars. The "price" they advertise, the
"price" they say is invoice, and the real "price" they pay are much
different. Retail businesses typically mark up the price about 200 to
300% so there is a lot of wiggle room. However not to many business
will admit to this practice.

Ken

P.S. I also worked for a wholesale supplier at one time.

 

[Mike Jacoubowsky]

> Much the same when I sold new cars. The "price" they advertise, the
> "price" they say is invoice, and the real "price" they pay are much
> different. Retail businesses typically mark up the price about 200 to
> 300% so there is a lot of wiggle room. However not to many business
> will admit to this practice.

Ken: In the bike biz, this is categorically untrue. I doubt it's true in
much of any business in which a product is so-easily identifiable from
place-to-place, as people *do* make comparisons, and the barriers to entry
are low enough that, if someone were actually making significant money, a
new shop would quickly open up with lower prices. That's how most of the
world works. The exceptions will be found in businesses that primarily do
repairs (auto parts for repairs get pretty extensive markups, I've noticed,
and it doesn't take a wholesale catalog to figure this out... you just look
at what they charge you vs what you could but the same thing for elsewhere,
and when the difference is 100%...).

With cars, there's a "holdback" percentage that doesn't exist for bikes. We
don't get advertising rebates etc at the end of the year, and our inventory,
when it declines in value, is eaten entirely by the dealer. Both of these
are marked differences between the auto and bike industry. Another
difference is that car dealerships actually make money on warranty repairs.

> Ken
>
> P.S. I also worked for a wholesale supplier at one time.

But I suspect it wasn't the bicycle business. We have something like half
the number of dealers presently that we did six years ago, and many
manufacturers are bleeding quite a bit of red ink. It's not a high-margin
business for the primary categories.

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

 

[D2]

Please support your 200-300% mark up, I'd love to invest in that
business model. I was in a highly competative retail business for 10
years and the standard mark up from dealer cost to retail was 100%.
Quantity buys and quick pay term could sometimes net you an extra 5-15%
and/or 60 days to pay.

Let's say the MSRP is $1000.00. My cost is $500.00. Hmm, a $500.00
dollar profit on a $500.00 investment sounds pretty good. . except: The
industry I was in had an average discount of 30-35% (it's much higher
now). So now that $1000.00 will net me a $200.00 profit. Out of that
profit comes shipping, insurance, payroll, utilities, finance charges,
rent, shrinkage, etc,.
Gotta sell a lot of stuff to make that monthly nut!

Now factor in a buying public that expects deep discounts and assigns
little or no value to intangibles like service and I wouldn't be
surprised if we're all buying bikes from Wal-Mart one day. (And we all
know how stellar their selection and service is.)

Some things are worth paying a fair price for.

You gets whats you pay for and you deserve whats you gets.

 

[Ken M]

No it was not the bicycle business, it was the office supply business.
But generally speaking retail items are marked up considerable over
what the retail seller pays for them. There are some things that do not
get much of a mark up at all say 15 to 25% on larger ticket items like
top of the line pc's and such. Perhaps bicycles fall into this
catagory. But on smaller ticket items say cyclo computers probably have
an even greater mark up maybe up to 400% But I bet if you did an
inventory of a bike shop and calculated what the shop paid and what the
shop would take in if it sold out of it's entire inventory you would be
very surprised at the profit. Now that is gross profit of course.

Ken

 

[gds]

I agree that you would be surprised--but at how small the profit was.
Please let me know all the owners of bike shops that make it to the
list of the wealthy in the community. I think most LBS's canprovide a
living for their owners, but not wealth. As a shopper in LBS's for many
years I'm struck by how much they all seem to struggle.

 

[Ken M]

I will agree with you somethings ARE worth paying a fair price for. But
there is no point in getting ripped off by being an uneducated
consumer. I personally think the original poster is probably getting
about the best deal he is going to get.

Ken

 

[Ken M]

Like I said, that is gross profit, that gets eaten up by other things.
Your LBS has many other things that they need to pay for in order to
stay in business.

Ken

 

[gds]

So then what is your point? If we agree that net profit is what
matters. And if we agree that it is hard to come by for most LBS's,
then it would seem that the gross profit can not be excessive. Am I
missing something?

 

[D2]

It used to be that you had to give up a lot of margin on high-end
products and make your money on accessories. You had to sell a lot of
accessories but at least you could make some profit and, if you did
your job well, gain a repeat customer for future accessory purchases.

The Internet and, to a lesser extent, mail-order catalogs have put an
end to that. A lot of buyers don't see the logic of paying $50.00 for
a cycle computer at the LBS when they can point and click and get the
same item for a lot less. Of course many time these are the same
people who can't understand why the local dealer won't jump through
hoops when they need a bike serviced or wonder why the dealer can't
afford a deep inventory of bikes, parts and toys.

While I have bought things on line when I could not find them around
town, all of my bikes have been bought locally and I make a point of
buying my expendables at the LBS as well. The few extra bucks are well
spent when I need a wheel trued in a hurry and I'm accomodated.

It seems we all want selection and service but few are willing to pay
for it.

 

[The Wogster]

Ken M wrote:
> No it was not the bicycle business, it was the office supply business.
> But generally speaking retail items are marked up considerable over
> what the retail seller pays for them. There are some things that do not
> get much of a mark up at all say 15 to 25% on larger ticket items like
> top of the line pc's and such. Perhaps bicycles fall into this
> catagory. But on smaller ticket items say cyclo computers probably have
> an even greater mark up maybe up to 400% But I bet if you did an
> inventory of a bike shop and calculated what the shop paid and what the
> shop would take in if it sold out of it's entire inventory you would be
> very surprised at the profit. Now that is gross profit of course.
>

Gross profit really doesn't count for much though, because out of that,
the dealer has to pay, rent, utilities, staff, lawyer, accountant,
shipping fees, tools for wrenches, parts inventory, interest,
promotional costs and probably a bike dealer can greatly extend this
list. This results in Net Profit, often considerably less.

Say a bike costs the dealer $800, and represents $150 worth of other
costs, the dealer marks it at $995.00, because his competitor offers a
similar bike for that. Net Profit ends up being $45, given a gross
income of $450 a week, he needs to sell 10 bikes a week. You may be
right, where a cyclecomputer or a pannier makes a higher profit level,
but you don't sell as many of those. A dealer really wants you to load
the bike, because it's the only way to make it pay......

There is a saying, if you want to start a business, that will be worth
$10 million in 5 years, start with $20 million today.

W

 

[Ken M]

My point is that there are alway three different prices, the advertised
or sticker price, the price they say they pay, and the real price they
pay. And depending on the item you wish to purchase this can be a very
small differnce or a very big difference.

Ken

 

[Ken M]

I think you are wrong on the number of small ticket items vs the big
ticket items. Take the cyclo computer for instance. I am sure that they
sell 10 of these a week. While they probably only sell 3 or 4 bikes per
week. So if they are only $45 per bike and only selling 3 or 4 a week
that only $180 a week. And if the computer costs the shop $10 and he
sells them for $40 and sells 10 a week, thats $300 gross profit on the
computers.

About starting with $20million if you want it to be worth $10million in
five years. Best not to start the business in the first place!

Ken

 

[Ken M]

Well again I agree with you. I will point and click for some stuff, but
for other stuff say a saddle, I will go to the LBS and buy there
because I can "see" "touch" and feel the saddle. The same if I were
buying a new bike. Now chains, lubes, quick links etc I will point and
click.

Ken