Isn't Bike Gear getting too expensive?

[bikeguy]

This would make some since if it were not for the fact that prices are more expensive world wide, not just in the US.

The comment earlier on about the US housing market has more to do with price increases than the war in Iraq. It is people, in the US, refinancing their houses to buy things they cannot afford in the first place. The people in the US are, and have been for the past at least 20 years, spending money they do not have. That puts a lot of money in the market place and the manufactures are happy to take it. Things will only get worse when the minimum wage is raised in the US, and the trickle up effect that will have. But in the end the buying power will remain the same in the US.

As others have said, there are bargins out there. Look at 2006 Record stuff. In a capitalistic society, it is the consumer that sets the price.

The trade deficit...foreign ownership of US stocks and bonds increasing, IPO's, increasing share dilution and dividend reduction. Yes, it's spending money one doesn't have. Just take a look at US M3 money supply growth, last 10 years. Astounding. Notice that as of 2006, the US Federal Reserve board ceased publishing M3 money supply numbers. Interesting, huh? The CPI basket has been adjusted recently several times..

About US prices.. you might to check that again. If the US currency drops in value (as it has) it becomes cheaper for other countries to buy US goods, while it becomes more expensive for somebody in the US to buy other country's goods. Why is gold (priced in USD) at near 684 USD/ounce while a few years ago it was near 300? Gold hasn't become more valuable, the US dollar has become less valuable!

-bikeguy

 

[vadiver]

The trade deficit...foreign ownership of US stocks and bonds increasing, IPO's, increasing share dilution and dividend reduction. Yes, it's spending money one doesn't have. Just take a look at US M3 money supply growth, last 10 years. Astounding. Notice that as of 2006, the US Federal Reserve board ceased publishing M3 money supply numbers. Interesting, huh? The CPI basket has been adjusted recently several times..

About US prices.. you might to check that again. If the US currency drops in value (as it has) it becomes cheaper for other countries to buy US goods, while it becomes more expensive for somebody in the US to buy other country's goods. Why is gold (priced in USD) at near 684 USD/ounce while a few years ago it was near 300? Gold hasn't become more valuable, the US dollar has become less valuable!

-bikeguy

This would be a great argument for the US consumers having a problem afording foreign goods. But the price of the cycling goods is up world wide.

So explain to me how the US govenments pathetic monetary policy has to do with cycling equipment made in Japan and Italy (other coutnries if you wish) and what they sell for in Finland?

 

[alienator]

Since all of that bicycle stuff is imported, don't forget the dollar exchange value because that's a biggie today. It's way more important than production cost increases or cost of living factors.

That's how we're actually paying for the war in Iraq. We're borrowing money from foreign countries. The result is a weakening dollar and higher prices for imported goods.

China, baby. China. They hold the mortgage on our activities.

 

[Paulie-AU]

I love that the top end is so expensive. Nothing better than riding past someone on super bling who is struggling. Same in races, Love it.

But if owning the super bling makes them happier then good for them. Better for them to be out on their bike then running me over in their oversized 4wd.

 

[IEatRice4Dinner]

By the way, does anyone know how well SRAM groups are selling?

a friend of mine works at a large shop in WI, they focus on mailorder, i asked the same question. he told me "we have a wall full of the stuff, no one wants it, i think we sold a groupo or 2 of the rival, but thats it."

i would say give it a few years.

 

[bikeguy]

This would be a great argument for the US consumers having a problem afording foreign goods. But the price of the cycling goods is up world wide.

So explain to me how the US govenments pathetic monetary policy has to do with cycling equipment made in Japan and Italy (other coutnries if you wish) and what they sell for in Finland?

Very little. However, prices haven't gone up here.



-bikeguy

 

[Bro Deal]

The comment earlier on about the US housing market has more to do with price increases than the war in Iraq. It is people, in the US, refinancing their houses to buy things they cannot afford in the first place. The people in the US are, and have been for the past at least 20 years, spending money they do not have. That puts a lot of money in the market place and the manufactures are happy to take it.

That is exactly what I was referring to. I see people around me take out HELOCs and buy BMWs, boats, $50K remodels of their kitchen, you name it. These are people who if they had to pay for those themselves, they could not do it. They are in debt to their eyeballs, but the housing bubble combined with loose lending standards and new loan products has made it possible for them to go even further into debt. The numbers in the U.S. for the amount pulled out of housing equity over the last few years are truly staggering. Most of the current economic expansion is due to consumer spending fueled by easy money.

A lot of this money has gone into luxury goods, which includes high end bicycles and accessories. Manufacturers have been steadily hiking their prices to sop the available money up, so prices at the high end have sky rocketed. The same effect can be seen in the collector car market and the art market. Both those markets had similar bubbles that popped during the recession in the early 90s.

As alienator mentioned, the moment the Chinese decide they want to concentrate more on the return and safety of their investments rather than continuing their industrialization, the dollar is toast. They got us by the short ones.

 

[vadiver]

Very little. However, prices haven't gone up here.



-bikeguy

And for the most part they are not out of line in the US either. In the mid 80s I bought at Trek 1000 for about $500 US, I recently sold it for about $300 US. Today, Trek's MSRP for the 1000 is $709.99 US. I would not consider a 50% price increase in 20 years out of line. Compare that to virtually no increase since the war in Iraq started and the argument does not hold.

Further it makes no sense.

Why would a manufacturer raise their prices when their customers cannot afort their product in the first place?

The problem is there is too much money, not enough.

 

[vadiver]

That is exactly what I was referring to. I see people around me take out HELOCs and buy BMWs, boats, $50K remodels of their kitchen, you name it. These are people who if they had to pay for those themselves, they could not do it. They are in debt to their eyeballs, but the housing bubble combined with loose lending standards and new loan products has made it possible for them to go even further into debt. The numbers in the U.S. for the amount pulled out of housing equity over the last few years are truly staggering. Most of the current economic expansion is due to consumer spending fueled by easy money.

A lot of this money has gone into luxury goods, which includes high end bicycles and accessories. Manufacturers have been steadily hiking their prices to sop the available money up, so prices at the high end have sky rocketed. The same effect can be seen in the collector car market and the art market. Both those markets had similar bubbles that popped during the recession in the early 90s.

As alienator mentioned, the moment the Chinese decide they want to concentrate more on the return and safety of their investments rather than continuing their industrialization, the dollar is toast. They got us by the short ones.

I agree on the (preceivebly) cheep money being the root of the problem. People in the US complain about how bad the economy is while they are walking out of stores with $5000 TVs/Bikes they do not need. Eventually they are going to need to pay for these things, and that is when we are going to get in trouble.

Tax revenues are way up in the US. Unfortunately so is spending. Until the US Congress decides to pass ballanced budgets like they did in the 90s we are toast. We are not going to do anything with the Social Security/Medicare Mess until 2013 at the earliest, and at that point we are really going to feel the pinch. You should always deal with your finantial problems as far out as possible and as soon as you know it is a problem.

 

[wongaga]

I have no credentials to make economic pronouncements, but what I can say is, if you think US prices are bad, you ought to see what we pay at our Aussie LBS!

Example - Conti GP4000's around A$91 retail, but $40 or so mailed from Probikeparts. Many many people are bypassing the local stores, but the LBS's are still making huge money here. The reason for that is the middle-aged and bay-boomer blokes who have discovered cycling. To most of these guys, $10K or so for a bike and stuff is chicken feed compared to yachts or Harleys etc.

So, like houses and everything else, it's them (whoops, us) wicked baby-boomers who are largely to blame. Poor kids is all I can say.

 

[vadiver]

I have no credentials to make economic pronouncements, but what I can say is, if you think US prices are bad, you ought to see what we pay at our Aussie LBS!

Example - Conti GP4000's around A$91 retail, but $40 or so mailed from Probikeparts. Many many people are bypassing the local stores, but the LBS's are still making huge money here. The reason for that is the middle-aged and bay-boomer blokes who have discovered cycling. To most of these guys, $10K or so for a bike and stuff is chicken feed compared to yachts or Harleys etc.

So, like houses and everything else, it's them (whoops, us) wicked baby-boomers who are largely to blame. Poor kids is all I can say.

Ouch. Right now I can get the GP4000 for about $50US vs $72US for what you are paying.

But as long as people keep paying the retailers this premium, prices will only rise. Supply and demand.

 

[OoAmericanGirl]

We paid the same price for my boyfriend's new trek 1000 as my dad paid for my trek 1000 in 2001. It took him a bit to get over paying $700 for a bike. If you think about it, we got more for our buck because the new trek has both a carbon fiber fork and seat post in addition to being a better all around bike (my old trek had a quill stem for crying out loud).

 

[wongaga]

Yes, complete bikes are much cheaper than they were a few years ago, but once you have bought your bike and need to buy assorted gizmo's.......yikes!

This also makes it less desirable to do major upgrades on a bike unless you absolutely love the frame or are getting a super-duper deal on the new parts.

 

[Powerful Pete]

(my old trek had a quill stem for crying out loud).

What was/is the problem with traditional stems, beyond the fact that they are not 'as cool' as the modern types?

 

[wongaga]

Pro - adjustable height

Con - take around an hour plus a new bar tape to remove/refit bars

But I bet if you drilled down far enough, you would find lower manufacturing/machining costs driving the manufacture of threadless forks is behind it.
I fitted a quill-to-threadless type adapter to my steel-framed racing bike and it is a great compromise, offering the advantages of both types.

 

[Powerful Pete]

Con - take around an hour plus a new bar tape to remove/refit bars

Thanks. Actually it was a rhetorical question, but in any event your 'con' made me laugh!

 

[RedHotIron]

Who sets the price for all this stuff anyway? (Hint: it isn't the manufacturer, the distributer, local retailer or cost of materials.)

Actually, supply creates demand & not vice-versa. The bike makers produce the "must-haves" & cyclists buy them. There was little or no demand for the items before they were produced.

 

[vadiver]

Actually, supply creates demand & not vice-versa. The bike makers produce the "must-haves" & cyclists buy them. There was little or no demand for the items before they were produced.

Not exactly.

Yes makers produce what they think cyclists with think are "must-haves". Some makers spend a considerable amount of assets researching their new product. However, if the cyclist does not determine it is truely a "must-have", the price drops and the maker stops production.

The new product has to produce a profit or the maker retires it. We really only remember what truely was a "must-have" if it makes it. We do not remember what never made it.

One non-cycling example would be the NBA's new basketball. Yes the makers made it, but demand is not there and it is history. The entertainment industry is another great example of how this works.

 

[BornInZion]

If a "must have" is a truly new concept, and there becomes a great demand for it, competition springs up to the benefit of the consumer. A great example of this is "index shifting systems". We all got along fine before they came on the market, right? Would you buy a new top line bike with down tube shifters? (Lance Armstrong always had his mountain stage bike fitted with down tube shifters in order to save weight, interestingly enough.)
The first rule of business is: Make what people want.
The majority of small business fail in the first five years because they fail to produce what people want, at a price people are willing to pay, at a profit.
Sometimes a "must have" is simply a fad, like Pet Rocks, Hula Hoops and Mood rings. But even then, those were items people preferred having instead of money. Once the fad ran it's course, it didn't matter how many were produced, or how much marketing was devoted to selling them, there was no more demand at any price. (Leading me to think that your "production leads to demand" is problematic.)
Tailwinds!

 

[alienator]

(Lance Armstrong always had his mountain stage bike fitted with down tube shifters in order to save weight, interestingly enough.)

Not exactly. Downtube FD shifter. That's it.