Origin of Cooler Helmets?

Discussion in 'Cycling Equipment' started by Donald Gillies, Apr 26, 2006.

  1. So is it true that at a bike show 15 years ago, a customer came up to
    the Giro booth and said,

    "I need a cool helmet"

    And in fact, he was asking for a helmet with better ventilation. But
    the Italian marketing rep thought he was looking for a helmet that
    "Looks cool", and this is why so many helmets cost $125-$225 rather
    than $50 any more ??

    - Don "grin" Gillies
    San Diego, CA
     
    Tags:


  2. Donald Gillies wrote:
    > So is it true that at a bike show 15 years ago, a customer came up to
    > the Giro booth and said,
    >
    > "I need a cool helmet"
    >
    > And in fact, he was asking for a helmet with better ventilation. But
    > the Italian marketing rep thought he was looking for a helmet that
    > "Looks cool", and this is why so many helmets cost $125-$225 rather
    > than $50 any more ??
    >
    > - Don "grin" Gillies
    > San Diego, CA


    You mean retail for $125. They sure don't cost that much!

    Joseph
     
  3. [email protected] wrote:
    > Donald Gillies wrote:
    > > So is it true that at a bike show 15 years ago, a customer came up to
    > > the Giro booth and said,
    > >
    > > "I need a cool helmet"
    > >
    > > And in fact, he was asking for a helmet with better ventilation. But
    > > the Italian marketing rep thought he was looking for a helmet that
    > > "Looks cool", and this is why so many helmets cost $125-$225 rather
    > > than $50 any more ??
    > >
    > > - Don "grin" Gillies
    > > San Diego, CA

    >
    > You mean retail for $125. They sure don't cost that much!
    >
    >


    Just move that decimal one place to the left. :)
     
  4. Ozark Bicycle wrote:
    > [email protected] wrote:
    > > Donald Gillies wrote:
    > > > So is it true that at a bike show 15 years ago, a customer came up to
    > > > the Giro booth and said,
    > > >
    > > > "I need a cool helmet"
    > > >
    > > > And in fact, he was asking for a helmet with better ventilation. But
    > > > the Italian marketing rep thought he was looking for a helmet that
    > > > "Looks cool", and this is why so many helmets cost $125-$225 rather
    > > > than $50 any more ??
    > > >
    > > > - Don "grin" Gillies
    > > > San Diego, CA

    > >
    > > You mean retail for $125. They sure don't cost that much!
    > >
    > >

    >
    > Just move that decimal one place to the left. :)


    Maybe even two! I'll bet the snazzy packaging costs as much as the
    helmet does. A piece of styrofoam made in hundreds of thousands in
    China? Of course marketing and R&D costs money, but you gotta use the
    sales revenue on something, right?

    Tires is another racket, I think.

    Joseph
     
  5. Werehatrack

    Werehatrack Guest

    On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    <[email protected]> wrote:

    > Donald Gillies wrote:
    >>
    >> You mean retail for $125. They sure don't cost that much!
    >>

    >
    >Just move that decimal one place to the left. :)


    And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    manufacturing/retail ratios, but the disparity goes way up for fashion
    items. I don't think there's much chance that a $225-retail Giro
    helmet really costs ten times as much to make as a $20 Bell.
    --
    Typoes are a feature, not a bug.
    Some gardening required to reply via email.
    Words processed in a facility that contains nuts.
     
  6. Werehatrack wrote:
    > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    > <[email protected]> wrote:
    >
    > > Donald Gillies wrote:
    > >>
    > >> You mean retail for $125. They sure don't cost that much!
    > >>

    > >
    > >Just move that decimal one place to the left. :)

    >
    > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    > manufacturing/retail ratios, but the disparity goes way up for fashion
    > items. I don't think there's much chance that a $225-retail Giro
    > helmet really costs ten times as much to make as a $20 Bell.


    Yep, I would guess the cost of manufacture of a ~$190 (retail price)
    helmet to be in the $4-6 range (i.e., buying one is a confirmation that
    Barnum was correct!).
     
  7. Werehatrack

    Werehatrack Guest

    On 26 Apr 2006 11:07:06 -0700, [email protected] (Donald Gillies)
    wrote:

    >So is it true that at a bike show 15 years ago, a customer came up to
    >the Giro booth and said,
    >
    > "I need a cool helmet"
    >
    >And in fact, he was asking for a helmet with better ventilation. But
    >the Italian marketing rep thought he was looking for a helmet that
    >"Looks cool", and this is why so many helmets cost $125-$225 rather
    >than $50 any more ??


    Naah, I'm pretty sure that the helmet makers probably collected a clue
    from the way riders were decorating their lids, and got the idea that
    they could offer "fashion statement" versions at extra cost. And, of
    course, once their marketing people figured out that making a swoopy
    "aerodynamic" helmet enhanced the profit potential, it was pretty much
    inevitable that there would be stupid-price lids to go with the
    stupid-light bike bits.
    --
    Typoes are a feature, not a bug.
    Some gardening required to reply via email.
    Words processed in a facility that contains nuts.
     
  8. Werehatrack wrote:
    > On 26 Apr 2006 11:07:06 -0700, [email protected] (Donald Gillies)
    > wrote:
    >
    > >So is it true that at a bike show 15 years ago, a customer came up to
    > >the Giro booth and said,
    > >
    > > "I need a cool helmet"
    > >
    > >And in fact, he was asking for a helmet with better ventilation. But
    > >the Italian marketing rep thought he was looking for a helmet that
    > >"Looks cool", and this is why so many helmets cost $125-$225 rather
    > >than $50 any more ??

    >
    > Naah, I'm pretty sure that the helmet makers probably collected a clue
    > from the way riders were decorating their lids, and got the idea that
    > they could offer "fashion statement" versions at extra cost. And, of
    > course, once their marketing people figured out that making a swoopy
    > "aerodynamic" helmet enhanced the profit potential, it was pretty much
    > inevitable that there would be stupid-price lids to go with the
    > stupid-light bike bits.
    >


    All aimed, with great financial reward, at the stupid.
     
  9. Ozark Bicycle wrote:

    > Werehatrack wrote:
    > > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    > > <[email protected]> wrote:
    > >
    > > > Donald Gillies wrote:
    > > >>
    > > >> You mean retail for $125. They sure don't cost that much!
    > > >>
    > > >
    > > >Just move that decimal one place to the left. :)

    > >
    > > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    > > manufacturing/retail ratios, but the disparity goes way up for fashion
    > > items. I don't think there's much chance that a $225-retail Giro
    > > helmet really costs ten times as much to make as a $20 Bell.

    >
    > Yep, I would guess the cost of manufacture of a ~$190 (retail price)
    > helmet to be in the $4-6 range (i.e., buying one is a confirmation that
    > Barnum was correct!).


    Well, yes and no. While the *incremental* cost of a high-end helmet is
    certainly within this range, the molds to make the helmets are not
    cheap. When I worked as a reporter for a bicycle trade magazine,
    someone at Giro once told me that a typical helmet mold (CNC'd from
    aluminum) cost on the order of $100,000.*

    Since a separate mold is needed for each size, a set of three molds
    (S,M,L) is around $300K. The FEA software required to simulate impacts
    (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    significant investments to be amortized over the helmet's lifetime.

    Giro's top-end helmet used to be the Pneumo. Then they introduced the
    Atmos. They've kept the Pneumo around because once they've paid off the
    helmet molds, Giro's margins go through the roof--there's no reason to
    retire a perfectly good $100K mold. But the huge costs to be amortized
    should not be ignored just because the post-amortization margins are so
    good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    retail, $99 dealer cost) before they break even. They've certainly
    broken even on the Atmos.

    Also, while a cheap helmet might only require two molds (two shell
    sizes, with a third produced via thick pads), a higher-end helmet will
    have three or maybe four molds. Since the cheaper helmets cost less to
    produce initially and require much less R&D time and are made in vastly
    higher numbers, the economies of scale are amazing. Cheap helmets
    spread lower costs over more helmets. Expensive helmets spread higher
    costs over fewer helmets, which helps explain the amazing price deltas.

    That's not to say that all helmets are reasonably priced. I've found
    that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    $189 Giro. My only point is that one should not confuse incremental
    cost with total cost.

    Jason

    * That was about a decade ago. Helmet mold costs may have come down due
    to better, cheaper rapid prototyping technologies and 5-axis CNC
    machines. Even so, helmet molds are expensive.
     
  10. Well I got the quote _almost right_. People have informed me that the
    customer actually said :

    "I'd pay anything for a cool helmet"

    And in fact, he was asking for a helmet with better ventilation. But
    the Italian marketing rep thought he was looking for a helmet that
    "Looks cool", and this is why so many helmets cost $125-$225 rather
    than $50 any more ??

    - Don "grin" Gillies
    San Diego, CA
     
  11. <[email protected]> wrote in message
    news:[email protected]
    >
    > Ozark Bicycle wrote:
    >
    >> Werehatrack wrote:
    >> > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    >> > <[email protected]> wrote:
    >> >
    >> > > Donald Gillies wrote:
    >> > >>
    >> > >> You mean retail for $125. They sure don't cost that much!
    >> > >>
    >> > >
    >> > >Just move that decimal one place to the left. :)
    >> >
    >> > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    >> > manufacturing/retail ratios, but the disparity goes way up for fashion
    >> > items. I don't think there's much chance that a $225-retail Giro
    >> > helmet really costs ten times as much to make as a $20 Bell.

    >>
    >> Yep, I would guess the cost of manufacture of a ~$190 (retail price)
    >> helmet to be in the $4-6 range (i.e., buying one is a confirmation that
    >> Barnum was correct!).

    >
    > Well, yes and no. While the *incremental* cost of a high-end helmet is
    > certainly within this range, the molds to make the helmets are not
    > cheap. When I worked as a reporter for a bicycle trade magazine,
    > someone at Giro once told me that a typical helmet mold (CNC'd from
    > aluminum) cost on the order of $100,000.*
    >
    > Since a separate mold is needed for each size, a set of three molds
    > (S,M,L) is around $300K. The FEA software required to simulate impacts
    > (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    > significant investments to be amortized over the helmet's lifetime.
    >
    > Giro's top-end helmet used to be the Pneumo. Then they introduced the
    > Atmos. They've kept the Pneumo around because once they've paid off the
    > helmet molds, Giro's margins go through the roof--there's no reason to
    > retire a perfectly good $100K mold. But the huge costs to be amortized
    > should not be ignored just because the post-amortization margins are so
    > good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    > retail, $99 dealer cost) before they break even. They've certainly
    > broken even on the Atmos.
    >
    > Also, while a cheap helmet might only require two molds (two shell
    > sizes, with a third produced via thick pads), a higher-end helmet will
    > have three or maybe four molds. Since the cheaper helmets cost less to
    > produce initially and require much less R&D time and are made in vastly
    > higher numbers, the economies of scale are amazing. Cheap helmets
    > spread lower costs over more helmets. Expensive helmets spread higher
    > costs over fewer helmets, which helps explain the amazing price deltas.
    >
    > That's not to say that all helmets are reasonably priced. I've found
    > that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    > $189 Giro. My only point is that one should not confuse incremental
    > cost with total cost.
    >
    > Jason
    >
    > * That was about a decade ago. Helmet mold costs may have come down due
    > to better, cheaper rapid prototyping technologies and 5-axis CNC
    > machines. Even so, helmet molds are expensive.


    Wow. A well reasoned, non-reactionary anti-establishment, business savvy
    answer. What the hell is it doing on RBT?
     
  12. On 26 Apr 2006 15:05:08 -0700, "Ozark Bicycle"
    <[email protected]> wrote:

    >


    >
    >All aimed, with great financial reward, at the stupid.


    It's funny to hear someone who takes pleasure in old junky cars
    mocking people for buying stuff that's eye candy.

    JT

    ****************************
    Remove "remove" to reply
    Visit http://www.jt10000.com
    ****************************
     
  13. The large-mouth, small-brain bass rises to the bait:


    John Forrest Tomlinson wrote:
    > On 26 Apr 2006 15:05:08 -0700, "Ozark Bicycle"
    > <[email protected]> wrote:
    >
    > >

    >
    > >
    > >All aimed, with great financial reward, at the stupid.

    >
    > It's funny to hear someone who takes pleasure in old junky cars
    > mocking people for buying stuff that's eye candy.
    >
    >


    Tell me about my junky old cars, buffoon.
     
  14. [email protected] wrote:
    > Ozark Bicycle wrote:
    >
    > > Werehatrack wrote:
    > > > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    > > > <[email protected]> wrote:
    > > >
    > > > > Donald Gillies wrote:
    > > > >>
    > > > >> You mean retail for $125. They sure don't cost that much!
    > > > >>
    > > > >
    > > > >Just move that decimal one place to the left. :)
    > > >
    > > > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    > > > manufacturing/retail ratios, but the disparity goes way up for fashion
    > > > items. I don't think there's much chance that a $225-retail Giro
    > > > helmet really costs ten times as much to make as a $20 Bell.

    > >
    > > Yep, I would guess the cost of manufacture of a ~$190 (retail price)
    > > helmet to be in the $4-6 range (i.e., buying one is a confirmation that
    > > Barnum was correct!).

    >
    > Well, yes and no. While the *incremental* cost of a high-end helmet is
    > certainly within this range, the molds to make the helmets are not
    > cheap. When I worked as a reporter for a bicycle trade magazine,
    > someone at Giro once told me that a typical helmet mold (CNC'd from
    > aluminum) cost on the order of $100,000.*
    >
    > Since a separate mold is needed for each size, a set of three molds
    > (S,M,L) is around $300K. The FEA software required to simulate impacts
    > (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    > significant investments to be amortized over the helmet's lifetime.
    >
    > Giro's top-end helmet used to be the Pneumo. Then they introduced the
    > Atmos. They've kept the Pneumo around because once they've paid off the
    > helmet molds, Giro's margins go through the roof--there's no reason to
    > retire a perfectly good $100K mold. But the huge costs to be amortized
    > should not be ignored just because the post-amortization margins are so
    > good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    > retail, $99 dealer cost) before they break even. They've certainly
    > broken even on the Atmos.
    >
    > Also, while a cheap helmet might only require two molds (two shell
    > sizes, with a third produced via thick pads), a higher-end helmet will
    > have three or maybe four molds. Since the cheaper helmets cost less to
    > produce initially and require much less R&D time and are made in vastly
    > higher numbers, the economies of scale are amazing. Cheap helmets
    > spread lower costs over more helmets. Expensive helmets spread higher
    > costs over fewer helmets, which helps explain the amazing price deltas.
    >
    > That's not to say that all helmets are reasonably priced. I've found
    > that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    > $189 Giro. My only point is that one should not confuse incremental
    > cost with total cost.
    >
    > Jason
    >
    > * That was about a decade ago. Helmet mold costs may have come down due
    > to better, cheaper rapid prototyping technologies and 5-axis CNC
    > machines. Even so, helmet molds are expensive.



    All this is pretty much true of any manufacturing endevour, Jason. The
    classic saw that "the first one costs $1,500,075 and all the others
    cost $75", etc., etc.

    The point with the high end helmet biz is that there is a *very* steep
    upside once the costs are paid off. And what drives this end of the
    helmet biz? Better "protection"? No. Meaningfully better function in
    any discernable way? Guess again. It's "fashion" and consumerism, plain
    and simple. The helmet makers spend money to make (even more) money,
    while the buyers spend stupid amounts of it to be "cool". The helmet
    makers are betting that Barnum was right, and they usually win that
    bet.
     
  15. > > Well, yes and no. While the *incremental* cost of a high-end helmet is
    > > certainly within this range, the molds to make the helmets are not
    > > cheap. When I worked as a reporter for a bicycle trade magazine,
    > > someone at Giro once told me that a typical helmet mold (CNC'd from
    > > aluminum) cost on the order of $100,000.*
    > >
    > > Since a separate mold is needed for each size, a set of three molds
    > > (S,M,L) is around $300K. The FEA software required to simulate impacts
    > > (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    > > significant investments to be amortized over the helmet's lifetime.
    > >
    > > Giro's top-end helmet used to be the Pneumo. Then they introduced the
    > > Atmos. They've kept the Pneumo around because once they've paid off the
    > > helmet molds, Giro's margins go through the roof--there's no reason to
    > > retire a perfectly good $100K mold. But the huge costs to be amortized
    > > should not be ignored just because the post-amortization margins are so
    > > good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    > > retail, $99 dealer cost) before they break even. They've certainly
    > > broken even on the Atmos.
    > >
    > > Also, while a cheap helmet might only require two molds (two shell
    > > sizes, with a third produced via thick pads), a higher-end helmet will
    > > have three or maybe four molds. Since the cheaper helmets cost less to
    > > produce initially and require much less R&D time and are made in vastly
    > > higher numbers, the economies of scale are amazing. Cheap helmets
    > > spread lower costs over more helmets. Expensive helmets spread higher
    > > costs over fewer helmets, which helps explain the amazing price deltas.
    > >
    > > That's not to say that all helmets are reasonably priced. I've found
    > > that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    > > $189 Giro. My only point is that one should not confuse incremental
    > > cost with total cost.
    > >
    > > Jason
    > >
    > > * That was about a decade ago. Helmet mold costs may have come down due
    > > to better, cheaper rapid prototyping technologies and 5-axis CNC
    > > machines. Even so, helmet molds are expensive.

    >
    >
    > All this is pretty much true of any manufacturing endevour, Jason. The
    > classic saw that "the first one costs $1,500,075 and all the others
    > cost $75", etc., etc.
    >
    > The point with the high end helmet biz is that there is a *very* steep
    > upside once the costs are paid off. And what drives this end of the
    > helmet biz? Better "protection"? No. Meaningfully better function in
    > any discernable way? Guess again. It's "fashion" and consumerism, plain
    > and simple. The helmet makers spend money to make (even more) money,
    > while the buyers spend stupid amounts of it to be "cool". The helmet
    > makers are betting that Barnum was right, and they usually win that
    > bet.


    Those are excellent points. The
    high-initial-investment-low-incremental-cost phenomenon *is* true (to
    a greater or lesser extent) for almost any manufacturing endeavor.

    The CNC phenomenon of the mid-90s is one example; by its very nature,
    the CNC-machining process is expensive on a per-part basis. Forging,
    however, costs a lot up front but the incremental costs are low. That's
    why Sugino can make a crank so much cheaper than, say, Topline.

    While CNC'd parts cost about the same no matter how many you make,
    helmets benefit from economies of scale much more than most parts--that
    is, more than most manufacturing endeavors. Of course, the same is true
    of almost anything molded or forged. My only point was that helmet
    manufacturing requires high sunk costs and incurs low incremental
    costs.

    Now, as a consumer, I agree with you--Giro sells a lot of $189 helmets
    because "that's what Lance uses." Giro also likely sinks more R&D
    resources into designing those helmets (especially because high-end
    helmets push the limits with regard to weight and vent hole
    area/volume). If the Atmos passed the relevant ANSI test with a 40%
    margin, I'd bet the farm that it would be sent back for a redesign.

    Is the Atmos worth $189? Well, economics says that a good is worth the
    price a buyer and seller agree upon. By that metric, the Atmos is worth
    it for the people who bought it. Does that make them P.T. Barnum's
    suckers? Maybe, maybe not. Either way, you and I are free to buy less
    expensive helmets.

    Cheers,

    Jason

    P.S. Bestesthandsander, you flatter me.
     
  16. [email protected] wrote:
    > Ozark Bicycle wrote:
    >
    > > Werehatrack wrote:
    > > > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    > > > <[email protected]> wrote:
    > > >
    > > > > Donald Gillies wrote:
    > > > >>
    > > > >> You mean retail for $125. They sure don't cost that much!
    > > > >>
    > > > >
    > > > >Just move that decimal one place to the left. :)
    > > >
    > > > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    > > > manufacturing/retail ratios, but the disparity goes way up for fashion
    > > > items. I don't think there's much chance that a $225-retail Giro
    > > > helmet really costs ten times as much to make as a $20 Bell.

    > >
    > > Yep, I would guess the cost of manufacture of a ~$190 (retail price)
    > > helmet to be in the $4-6 range (i.e., buying one is a confirmation that
    > > Barnum was correct!).

    >
    > Well, yes and no. While the *incremental* cost of a high-end helmet is
    > certainly within this range, the molds to make the helmets are not
    > cheap. When I worked as a reporter for a bicycle trade magazine,
    > someone at Giro once told me that a typical helmet mold (CNC'd from
    > aluminum) cost on the order of $100,000.*
    >
    > Since a separate mold is needed for each size, a set of three molds
    > (S,M,L) is around $300K. The FEA software required to simulate impacts
    > (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    > significant investments to be amortized over the helmet's lifetime.
    >
    > Giro's top-end helmet used to be the Pneumo. Then they introduced the
    > Atmos. They've kept the Pneumo around because once they've paid off the
    > helmet molds, Giro's margins go through the roof--there's no reason to
    > retire a perfectly good $100K mold. But the huge costs to be amortized
    > should not be ignored just because the post-amortization margins are so
    > good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    > retail, $99 dealer cost) before they break even. They've certainly
    > broken even on the Atmos.
    >
    > Also, while a cheap helmet might only require two molds (two shell
    > sizes, with a third produced via thick pads), a higher-end helmet will
    > have three or maybe four molds. Since the cheaper helmets cost less to
    > produce initially and require much less R&D time and are made in vastly
    > higher numbers, the economies of scale are amazing. Cheap helmets
    > spread lower costs over more helmets. Expensive helmets spread higher
    > costs over fewer helmets, which helps explain the amazing price deltas.
    >
    > That's not to say that all helmets are reasonably priced. I've found
    > that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    > $189 Giro. My only point is that one should not confuse incremental
    > cost with total cost.
    >
    > Jason
    >
    > * That was about a decade ago. Helmet mold costs may have come down due
    > to better, cheaper rapid prototyping technologies and 5-axis CNC
    > machines. Even so, helmet molds are expensive.



    All this is pretty much true of any manufacturing endevour, Jason. The
    classic saw that "the first one costs $1,500,075 and all the others
    cost $75", etc., etc.

    The point with the high end helmet biz is that there is a *very* steep
    upside once the costs are paid off. And what drives this end of the
    helmet biz? Better "protection"? No. Meaningfully better function in
    any discernable way? Guess again. It's "fashion" and consumerism, plain
    and simple. The helmet makers spend money to make (even more) money,
    while the buyers spend stupid amounts of it to be "cool". The helmet
    makers are betting that Barnum was right, and they usually win that
    bet.
     
  17. > > Well, yes and no. While the *incremental* cost of a high-end helmet is
    > > certainly within this range, the molds to make the helmets are not
    > > cheap. When I worked as a reporter for a bicycle trade magazine,
    > > someone at Giro once told me that a typical helmet mold (CNC'd from
    > > aluminum) cost on the order of $100,000.*
    > >
    > > Since a separate mold is needed for each size, a set of three molds
    > > (S,M,L) is around $300K. The FEA software required to simulate impacts
    > > (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    > > significant investments to be amortized over the helmet's lifetime.
    > >
    > > Giro's top-end helmet used to be the Pneumo. Then they introduced the
    > > Atmos. They've kept the Pneumo around because once they've paid off the
    > > helmet molds, Giro's margins go through the roof--there's no reason to
    > > retire a perfectly good $100K mold. But the huge costs to be amortized
    > > should not be ignored just because the post-amortization margins are so
    > > good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    > > retail, $99 dealer cost) before they break even. They've certainly
    > > broken even on the Atmos.
    > >
    > > Also, while a cheap helmet might only require two molds (two shell
    > > sizes, with a third produced via thick pads), a higher-end helmet will
    > > have three or maybe four molds. Since the cheaper helmets cost less to
    > > produce initially and require much less R&D time and are made in vastly
    > > higher numbers, the economies of scale are amazing. Cheap helmets
    > > spread lower costs over more helmets. Expensive helmets spread higher
    > > costs over fewer helmets, which helps explain the amazing price deltas.
    > >
    > > That's not to say that all helmets are reasonably priced. I've found
    > > that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    > > $189 Giro. My only point is that one should not confuse incremental
    > > cost with total cost.
    > >
    > > Jason
    > >
    > > * That was about a decade ago. Helmet mold costs may have come down due
    > > to better, cheaper rapid prototyping technologies and 5-axis CNC
    > > machines. Even so, helmet molds are expensive.

    >
    >
    > All this is pretty much true of any manufacturing endevour, Jason. The
    > classic saw that "the first one costs $1,500,075 and all the others
    > cost $75", etc., etc.
    >
    > The point with the high end helmet biz is that there is a *very* steep
    > upside once the costs are paid off. And what drives this end of the
    > helmet biz? Better "protection"? No. Meaningfully better function in
    > any discernable way? Guess again. It's "fashion" and consumerism, plain
    > and simple. The helmet makers spend money to make (even more) money,
    > while the buyers spend stupid amounts of it to be "cool". The helmet
    > makers are betting that Barnum was right, and they usually win that
    > bet.


    Those are excellent points. The
    high-initial-investment-low-incremental-cost phenomenon *is* true (to
    a greater or lesser extent) for almost any manufacturing endeavor.

    The CNC phenomenon of the mid-90s is one example; by its very nature,
    the CNC-machining process is expensive on a per-part basis. Forging,
    however, costs a lot up front but the incremental costs are low. That's
    why Sugino can make a crank so much cheaper than, say, Topline.

    While CNC'd parts cost about the same no matter how many you make,
    helmets benefit from economies of scale much more than most parts--that
    is, more than most manufacturing endeavors. Of course, the same is true
    of almost anything molded or forged. My only point was that helmet
    manufacturing requires high sunk costs and incurs low incremental
    costs.

    Now, as a consumer, I agree with you--Giro sells a lot of $189 helmets
    because "that's what Lance uses." Giro also likely sinks more R&D
    resources into designing those helmets (especially because high-end
    helmets push the limits with regard to weight and vent hole
    area/volume). If the Atmos passed the relevant ANSI test with a 40%
    margin, I'd bet the farm that it would be sent back for a redesign.

    Is the Atmos worth $189? Well, economics says that a good is worth the
    price a buyer and seller agree upon. By that metric, the Atmos is worth
    it for the people who bought it. Does that make them P.T. Barnum's
    suckers? Maybe, maybe not. Either way, you and I are free to buy less
    expensive helmets.

    Cheers,

    Jason

    P.S. Bestesthandsander, you flatter me.
     
  18. Donald Gillies <[email protected]> wrote:

    > So is it true that at a bike show 15 years ago, a customer came up to
    > the Giro booth and said,
    >
    > "I need a cool helmet"
    >
    > And in fact, he was asking for a helmet with better ventilation. But
    > the Italian marketing rep


    Considering that Giro is 100% American...no. But if you tell it often
    enough, the lie will seem real to republicans.
     
  19. [email protected] wrote:

    <snipped>

    -on expensive styrofoam helmets-

    >
    > Is the Atmos worth $189? Well, economics says that a good is worth the
    > price a buyer and seller agree upon. By that metric, the Atmos is worth
    > it for the people who bought it. Does that make them P.T. Barnum's
    > suckers? Maybe, maybe not. Either way, you and I are free to buy less
    > expensive helmets.



    This brings us to an interesting chicken-and-egg question: which came
    first, the over-priced product or the fashionista suckers who will buy
    it?
     
  20. > Wow. A well reasoned, non-reactionary anti-establishment, business savvy
    > answer. What the hell is it doing on RBT?


    Is it in fact savvy and not reactionary?

    1. Since helmets can obviously be produced and sold at a profit at
    $20-$30 retail, are the arguments presented relevant and applicable
    $125 and $189 models? If the question was "Why does a freakin piece of
    styrafoam with a nylon chin strap cost $30???" then I would agree.
    2. In spite of my agreement stated above, nevertheless, a styrafoam
    ice chest has about as much foam as a helmet (I am guessing, I admit).
    Shape is a bit simpler but requires a lid too... and sells for what,
    $2? $5? And which sells more, and therefore pays for the mold quicker,
    bike helmets or styrafoam ice chests?
    3. The author is owner of a $100 Lance helmet. I use a $39 model
    myself. I like the looks of the more $$$ models but, not being a
    competitive racer, cannot justify the expense. Therefore I think that
    the author has a $60 vanity piece to protect and is reacting to defend
    that.

    dkl

    Bestest Handsander wrote:
    > <[email protected]> wrote in message
    > news:[email protected]
    > >
    > > Ozark Bicycle wrote:
    > >
    > >> Werehatrack wrote:
    > >> > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
    > >> > <[email protected]> wrote:
    > >> >
    > >> > > Donald Gillies wrote:
    > >> > >>
    > >> > >> You mean retail for $125. They sure don't cost that much!
    > >> > >>
    > >> > >
    > >> > >Just move that decimal one place to the left. :)
    > >> >
    > >> > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
    > >> > manufacturing/retail ratios, but the disparity goes way up for fashion
    > >> > items. I don't think there's much chance that a $225-retail Giro
    > >> > helmet really costs ten times as much to make as a $20 Bell.
    > >>
    > >> Yep, I would guess the cost of manufacture of a ~$190 (retail price)
    > >> helmet to be in the $4-6 range (i.e., buying one is a confirmation that
    > >> Barnum was correct!).

    > >
    > > Well, yes and no. While the *incremental* cost of a high-end helmet is
    > > certainly within this range, the molds to make the helmets are not
    > > cheap. When I worked as a reporter for a bicycle trade magazine,
    > > someone at Giro once told me that a typical helmet mold (CNC'd from
    > > aluminum) cost on the order of $100,000.*
    > >
    > > Since a separate mold is needed for each size, a set of three molds
    > > (S,M,L) is around $300K. The FEA software required to simulate impacts
    > > (e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
    > > significant investments to be amortized over the helmet's lifetime.
    > >
    > > Giro's top-end helmet used to be the Pneumo. Then they introduced the
    > > Atmos. They've kept the Pneumo around because once they've paid off the
    > > helmet molds, Giro's margins go through the roof--there's no reason to
    > > retire a perfectly good $100K mold. But the huge costs to be amortized
    > > should not be ignored just because the post-amortization margins are so
    > > good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
    > > retail, $99 dealer cost) before they break even. They've certainly
    > > broken even on the Atmos.
    > >
    > > Also, while a cheap helmet might only require two molds (two shell
    > > sizes, with a third produced via thick pads), a higher-end helmet will
    > > have three or maybe four molds. Since the cheaper helmets cost less to
    > > produce initially and require much less R&D time and are made in vastly
    > > higher numbers, the economies of scale are amazing. Cheap helmets
    > > spread lower costs over more helmets. Expensive helmets spread higher
    > > costs over fewer helmets, which helps explain the amazing price deltas.
    > >
    > > That's not to say that all helmets are reasonably priced. I've found
    > > that a $100 Giro ($75 on sale) has about 98% of the functionality of a
    > > $189 Giro. My only point is that one should not confuse incremental
    > > cost with total cost.
    > >
    > > Jason
    > >
    > > * That was about a decade ago. Helmet mold costs may have come down due
    > > to better, cheaper rapid prototyping technologies and 5-axis CNC
    > > machines. Even so, helmet molds are expensive.

    >
    > Wow. A well reasoned, non-reactionary anti-establishment, business savvy
    > answer. What the hell is it doing on RBT?
     
Loading...
Loading...