How much does a top end road bike really cost?

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eagle34
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by eagle34

As we all know top end bikes tend be very expensive and with the same money you can probably buy a new low end car, but I've wondered for quite awhile how much a bike costs in terms of its constitute materials and engineering. What is the mark up for these bikes?

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53x12
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by 53x12

That is too hard to answer. However most shops markup 35-45% over what they get it for. Obviously that has to cover the shops overhead but that is a discussion for another thread. This doesn't take into account special pricing or deals the shop might get based on how many bikes or frames they order a year. Their volume and partnership will dictate that.

Now if there is a distributor they will take their % cut.

The bike manufacturer has various costs in R&D, manufacturing, advertising...etc. that varies from company to company. If you think that a top end frame lasts 3-5 years before the comoanyniodatesnir, the cost of the molds needs to be made up during that time period. Same with wind tunnel time. You can look online and see how much a roll of carbon fiber costs. The price of a bike is more than just the raw material it is made of.
"Marginal gains are the only gains when all that's left to gain is in the margins."

davidalone
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by davidalone

Material cost of the carbon fiber and resin for a top of the line frame will probably run you somewhere around 200-300 USD ( only if you are buying plys and plys of it, where you benefit from economies of scale).

The cost of a mould for a carbon monocoque mould for the layup runs anywhere from 20,000 and upward, depending on how complex your mould is and what material processes/it goes through. a mould is only good for a production run of around 1-3000 frames ( more if you are using better quality molds , also less if your standards are strict.) industrial ovens and curing process equipment will probably run you a few hundred k, but can be reused many ,many, times.

For high end steel/titanium frames, tubes are relatively cheap, you could probably buy the material for a single frame at less than a hundred dollars if manufacturing on a large scale. a CNC machine costs around 700-800k, with individual machining tools costing anywhere from a dollar to a few hundred dollars. machining tools wear out and you probably have to change them every 3-5 frames, especially if you machine aggressively. if you're hydroforming.... that machine costs upwards of a million. Welding equipment is relatively cheap. if you need to heat treat metals, those are also pretty expensive equipment, most companies probably outsource it.

painting equipment isnt that expenssive, but the fume hoods and filters and maintaining of these are.
testing equipment is also expensive- an electrohydraulic tester costs slightly less than a million, depending on how large scale testing you need. upkeep costs of those machines are around 10k a year.

R and D costs- wind tunnel time costs around $600-1000 per hour, depending on quality of the tunnel. if doing aero frame research you might spend somewhere around 10-20 hours in the tunnel. CFD and FEA licenses run around 10-20k a year, deending on who exactly you buy from. prototyping costs, add in 10-20k

labour costs: factory workers are cheap, but the time taken into producing a real top of the line frame isnt. top of the line frames like say, colnago C60s, you probably make 3-5 a day in a large factory.
a good engineer costs say $70k a year, and you probably need 2 or 3 to design your frame.
marketing: a major advertising push ( say like the 5 minutes run by specialized) can run into millions, especially if it's a worldwide thing. marketing includes sponsorship of pro eams, which is automatically at least a million dollars.

add all these factors up, and amoritze it over how large your production run is. the materials themselves are quite cheap, it''s usually the enormous sucnk costs that make up a large deal of your costs. I would estimate that a top of the line CF frame with proper testing, R and D, gorgeous paint, UCI licensing, would run close to around 1k USD all in just to manufacture it. add in marketing, distribution, assembly, and transport... and you probably have the rest. profit margins on top of the line frames ARE larger than other frames ( e.g. C60 vs colnago CLX) but for good reason- they are the first ones new technologyand designs is tested on.

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zappafile123
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by zappafile123

53x12 wrote:That is too hard to answer. However most shops markup 35-45% over what they get it for.


The Giant world I used to work for marked up bikes ~80-100% depending upon the kind of bike e.g. a TCR advanced SL1 would cost the shop $3400ish and they'd sell it for $6500.

How much a bike costs to produce is probably relative to the size of the company producing the bike.
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mattr
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by mattr

Some of the open mold painters/assemblers are making an utter killing.
A mate bought one a couple of years ago, paid around €1800-2000 for it (got a deal according to him, premium brand).
Excluding the paint job, I could have put the bike together for well under €1200, just by visiting 3 or 4 websites. Unfortunately my mate would have had to manage without the OE tyres which he binned after his first wet ride, he'd also have had to have a known, quality brand for bars, stem, seatpin and saddle. All of which were exchanged from the premium brands OE/in house versions within a month.

Hey ho.
Just glad it's his money and not mine.

Oh, the paint started flaking off around the bottom bracket within 6 months. No warranty as he'd used "aggressive cleaning products".

cyclenutnz
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by cyclenutnz

Very little compared to the enjoyment I get from riding

Not that a bike has to be expensive - just well made, well fitted and carefully put together. But often that leads to a fairly high minimum build cost.

davidalone explained the monetary costs well - mostly it's things other than materials. R&D and mould costs on a really good frame (not necessarily the same thing as high MSRP) are pretty hefty. And it is very much a case of marginal gains - the tiny bit extra performance from advanced layups or aero shaping costs a lot extra to achieve.

mattr
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by mattr

And FWIW this particular manufacturer is all about open mold, their top model (€8000) is also available as a self build, with no paint. For about €5000-5500.

audiojan
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by audiojan

I would say that most shops operate with a 30-40% markup on high end bikes and frames. That's truly not that much if you start to think about the fixed and variable costs of a shop… Net profit is probably closer to 2-5%...
"Suddenly the thought struck me; my floor is someone elses ceiling" - Nils Ferlin

sawyer
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by sawyer

They would cost a lot less if there were fewer mouths to feed ...but otoh we have lots of choice
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Stiff, Light, Aero - Pick Three!! :thumbup:

mimason
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by mimason

Retail on an F8 is $5700US, cost to the bike shop is around $4200 from Giga so that's a 25% margin. Of course Giga marks it up too from Pina.
Last edited by mimason on Fri Aug 14, 2015 10:00 pm, edited 1 time in total.

eagle34
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by eagle34

Thanks for the responses... I guess it's a similar story with group sets, wheels and similar components.

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Martin.F
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by Martin.F

30-40%? Must be easy running a bike shop in your countries. From working in both a big-branch store that sells to the masses with the additonal top-end model AND from the LBS focusing on 105 and up type of bikes, 20-25% is the normal profit on bikes. A lot of times even below that, especially when you pass 4000€ or so. People tend to overestimate what a bike shop earns on a bike and use that to try to haggle it down 30%. By then most shops lose a lot of money

mimason
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by mimason

^ Mark up is not profit. A 35% mark up still has to cover labor,rent, utilities and supplies. A profit on the other hand is after said expenses. Audiojan is probably spot on with net margin but this could depend heavily on rent and labor differentials.
Last edited by mimason on Fri Aug 14, 2015 10:01 pm, edited 1 time in total.

eagle34
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by eagle34

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

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zappafile123
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by zappafile123

Martin.F wrote:30-40%? Must be easy running a bike shop in your countries. From working in both a big-branch store that sells to the masses with the additonal top-end model AND from the LBS focusing on 105 and up type of bikes, 20-25% is the normal profit on bikes. A lot of times even below that, especially when you pass 4000€ or so. People tend to overestimate what a bike shop earns on a bike and use that to try to haggle it down 30%. By then most shops lose a lot of money



I dont know about that - like I said, mark up for the shop I worked at was double the cost of the item, but nonetheless the 3 shop chain is apparently struggling these days. In fact, I heard that the shop made most of its money from servicing bikes as opposed to selling them. Overall I hear shop closures is pretty common here in Aus. Its probably all contingent upon the economic conditions of the country too. Especially when the dollar was strong not 18 months ago, it would have been impossible to compete with online sales.
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by Weenie


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