How much does a top end road bike really cost?

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RyanH
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by RyanH

As suggested above, markup does not equal profit, which is confused by many. A product with a wholesale price of $1000 (price the store pays) may have a markup of 50% which means retail would be $1,500. Gross margin for the retailer, if sold at $1,500, is $500 (that's $1,500 less cost of $1,000). $500/$1500 = 0.333% gross margin. I'm fuzzy on the accounting of this, but sales commission may be part of COGs so actual GM may be lower after paying the sales person.

In a normal manufacturer/distributor/retailer model, I think a rough rule of thumb is at least a 50% markup on each hand in the supply chain. Unless I was moving huge volumes, I wouldn't want to touch a business with less than a 50% gross margin (meaning they are doing a 100% markup). The higher the volume, the smaller the GM can generally be while maintaining profitability.

Just as an example, Wal-Mart, which would represent the super high volume segment (read, low GM and low markup) is still operating on a 24.7% GM based on their latest filing. If a bike shop is only operating on a 33% GM, what a terrible business.

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RChevalier
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by RChevalier

zappafile123 wrote:... mark up for the shop I worked at was double the cost of the item...


That does sound quite a lot but quite possible. From the conversations I've had with shop owners, the uber "boutique" ones do have a higher markup (say a top end bianchi with SR EPS). They also operate with less space with less inventory and mostly order the frames when a customer makes the purchase, fully customized down to the paintjob. The larger chain stores with 100+ bikes on the floor that come in tiered groupset/price usually have a lower markup. This is just hearsay, and for all I know they could be full of hot air, but the few that I've talked to have said that they don't make much on the bikes. 15-20% at most. All of them however did say that most of their profits came from clothing and shoes.

stormur
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by stormur

RyanH wrote: A product with a wholesale price of $1000 (price the store pays) may have a markup of 50% which means retail would be $1,500. Gross margin for the retailer, if sold at $1,500, is $500 (that's $1,500 less cost of $1,000). $500/$1500 = 0.333% gross margin.



Very interesting math :)

I see this other way : Dogma f8 + DA Di2+ Shimano C50 cost around 10.000€ . New VW Polo in Spain cost 9.000€ . New BMW motorbike around same .

Explain me please, now R&D costs, adverts, labour, factory build, materials, distribution.... are so much more expensive for Pinarello than for any motor/ automotive company .

Margin on bikes is HUGE. Have proof for one of "premium" frame manufacturers : Retail price of frameset : 2720€, price paid by big dealer ( not biggest ) : 1050€, cost of manufacturing frame, incl import to EU, taxes ... 300€.

Not biggest in sale volume bike makers. Not at all. I would say even it's 2nd 10 in volume/value. Rich enough to have own team.

Same way you can compare ( same prices ) :

Sram Red levers = 40-45" LCD TV set or highest model of newest cell phone or newest tablet, or Olympus PEN camera with lens..... now take some tools and look at Sram Red levers and explain to yourself ( you can't to me... ) that price is justified ...

And compare cost/ amount/ agressivness of adverts for bike components and all other mentioned products ;)

Or maybe in bike frames/parts is some kind of extraordinary extremely expensive technology not known for other businesses ? :mrgreen:

BTW compare bicycle and professional sailing carbon parts costs - will be big surprise for you :welcome:

Bikes/ components prices is possibly biggest scam ever. Bigger than "leica" , medium format camera lenses.... and few others known for ridiculous pricing.

people are eager to pay, so bike companies owners ROTFL... .
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by Andrew69

stormur wrote:I see this other way : Dogma f8 + DA Di2+ Shimano C50 cost around 10.000€ . New VW Polo in Spain cost 9.000€ . New BMW motorbike around same .

This.
Bikes are well and truly overpriced compared to other consumer products, even ones that are far, far more complicated

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by BugsBunny7788

In my case USD$4000 got me a light and great handling bike circa 6.4kg ready to ride.

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by BugsBunny7788

oops! Misread the question. Doh!

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by audiojan

Part of it is economy of scale… I bet VW sells a whole lot more Polo's then Pinarello sell F8's.
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by 53x12

eagle34 wrote:There's also the supply and demand aspect. High end frames are more sought after and are generally in much lower quantities.


That is false. High end frames don't have a higher demand than the lower range. Cervelo sells way more R2/R3 bikes than Rca (regardless of production limits). Same with Cannondale selling more CAAD 8 and CAAD 10 that they do of the SuperSix Evo Black Inc. Cervelo P2/P3 sell way more than the P5.

Don't confuse the high end taste of this forum for the real world.
"Marginal gains are the only gains when all that's left to gain is in the margins."

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by mattr

We all getting confused between shop mark up, wholesaler mark up and manufacturer mark up?

All very different things.

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53x12
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by 53x12

No markup is easy. It is the difference between what it cost the company to make and what they sell it for (to distributor or shop) and what a shop buys it for and sells it for. Markup exists along the whole timeline from production to end customer taking their bike home.

Now if people want to talk about profit, then you need to know the overhead of each shop and how good they are at limiting wasteful spending.
"Marginal gains are the only gains when all that's left to gain is in the margins."

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by mattr

Yes, and everyone seems to think that the dealer mark up is the only important one. Except for some brands it'll be the largest part of the mark up, for others it might well be one of the smallest......

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by AJS914

I see this other way : Dogma f8 + DA Di2+ Shimano C50 cost around 10.000€ . New VW Polo in Spain cost 9.000€ . New BMW motorbike around same .


The comparison is flawed. Compare a $10k road bike to a Ferrari or even an F1 car. Compare a $3k carbon road bike with ultegra to bmw. And compare a $350 bicycle to your $10k Polo.

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by spartan

in the can/am market the price escalation is due to lack of competition from dealer direct online companies.

fyi you can buy a top of the line 9070 di2 bike for 5k USD.. only problem only ships to mexico..

https://www.canyon.com/en-mx/road/ultim ... m-kat.html

when canyon finally enter na market we will see prices of high end bikes finally DROP..
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wheelsONfire
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by wheelsONfire

I think pending on whom you ask in the business you'll hear different numbers talking mark up.
A small dealer vs a huge dealer for instance.

One so called premium frame i know of, takes 28 labour hours. It is made in EU.

Try to figure what the labour cost is for those hours.
If you want more bike for less money, perhaps those bikes that are sold with less middle men is best bang for buck (Canyon is one of them)?
It pends on how we see it. Is a mass produced bike worth less than a small number made bike is?
If they cost the same in retail, or very close, i guess i would say that the mass produced asian made frame is less worth (retail price) as that amount that the bike actually cost to build was much less. The huge cost is all middle men.

Problem is, if the expensive frame/ bike is really better are just cost more to build/ manufacture.
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by Weenie


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stormur
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by stormur

AJS914 wrote:
I see this other way : Dogma f8 + DA Di2+ Shimano C50 cost around 10.000€ . New VW Polo in Spain cost 9.000€ . New BMW motorbike around same .


The comparison is flawed. Compare a $10k road bike to a Ferrari or even an F1 car. Compare a $3k carbon road bike with ultegra to bmw. And compare a $350 bicycle to your $10k Polo.



WHY should I ?

I see ( example ) Pina Dogma f8 and Piaggio MP3 ( same price, both best in class, both Italian, both from market leaders....bla bla ) and I wonder why they cost same ?

Explain, why Dogma should cost same as MP3, please.
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I can be wrong, and have plenty of examples for that ;)

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