how much does a big manufacture sell carbon frame to bike company

Discuss light weight issues concerning road bikes & parts.
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by wwnick

I am trying to figure out cost of a carbon frame value in relation to hours and standard markups.
seeing as there are 2 big companies that make almost everything a good bike could be produced with zero R&D.

how much is hours and raw material? 5 hours hands on @ $10USD and $50 worth of carbon.
Manufacteres mark up... 100%?
Then bike companies markup? 100%
Then reatilers markup? 60%

so that leaves about $640rrp which is probably about right for cheap carbon when you can buy a complete bike for $1000
and then more expensive bikes would have , well , just more profit for everyone with minimal extra hours or material quality.

would be nice to hear comments, but I must say in regards to R&D, my opinion is that, there are 2 companies making for the whole industry so at this scale of economy, this cost would/could be spread very thin

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by jobvisser

Don't forget the marketing :smartass:

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by 2lo8

There's a lot of factory capital besides just molds you have to be paid for one way or another. Just because the reseller doesn't have to do any R&D doesn't mean there's no R&D. At the very least the reputable factories will put it through a few basic tests. It's not like the R&D is learning how to make things out of carbon. New design means new, even if limited, R&D. There's also a lot more than 2 companies and I haven't seen any reliable market share data for OEMs. At the very least for the D part of R&D, that's spread over a frame model, and frame sizes. It's not all something that can just be spread over every frame.
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by davidalone

Cost of manufacture of a carbon frame for a decent (but not top end like say, topkey) factory is somewhere in the neighbourhood of $300 - this is raw materials, labour, overheads, packaging. painting would be extra.

Then you have mold costs. A high quality machined mold for a bike frame costs anywhere between $10-20k per size, depending on the complexity. you might need more molds if you are doing mass production. a mold will last you only a certain number of production runs, so it is a recurring cost. Of course, if you are doing tube to tube construction, you won't need molds.

Research and Development costs are another thing.
I interviewed Mark Cote a couple of years ago. He said a top of the line TT frame- something that is 'in the conversation' costs about a million dollars of development time- software, wind tunnels, prototypes. That does not even include the tooling required to start production. you can extrapolate development costs from there.

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by sugarkane

60% markup to the retailers is optimistic. there are very few products in the bike industry where you are afforded over 30% markup let alone 60%

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by michaelmartin

depends on scale of production and also on export costs (raw costs vs landed costs)

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by Lewn777

I'm sure this all depends.
What grade of carbon do you want?
Where do want the bike to have been manufactured?
Many of the big players are switching production from Taiwan to China to save labour costs, I know Giant/Trek are, but I'm not so sure about Merida/Specialized. There are many other smaller players but they mostly manufacture for themselves.

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by tarmackev

Retailers take 30% to 40% depending on how many bikes they buyer.
Manufacturers sell to the shop making 15% to 25%.

I was talking to a rep about a Di2 and non Di2 bike, the extra for the Di2 bike was £800.
I said you could buy the non Di2 bike + a Di2 groupset for that, I was then told the margins they sell to us at, the non Di2 bike came to us with them making 16% (hence no staff deal on this bike) and the Di2 bike came to us with them making over 20%.

When you see what goes in to a carbon frame and all the different stages of assembly, treatments etc the cost must be WAY above $50, whenever I see the manufacturing on cycle parts it's always far more labour intensive than I would have expected.

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by wwnick

a foxconn worker (maker of the iPhone) makes $17 a day ( ... kers-make/ )
so this would be similar in the bike industry, maybe more, maybe less
i have also seen how much detail is involved in parts of carbon frames that need attention but in a factory line process, a single frame would not require 8 hours of continuous attention.

High Modulus CF @ 15$ a square meter, so 30$ in carbon fibre costs: ... 0.0.S5xzBJ

so at most , labour, materials, overheads = 100 bucks for High Modulus / Good Quality Frame costs
Last edited by wwnick on Tue May 23, 2017 6:25 pm, edited 1 time in total.

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by Butcher

There is a mark called 'because I can'.

If there is a demand, then the sky is the limit on what you could charge.

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by dj97223

I assume there are several people/entities in the chain from concept to customer -- designer, laborer, brand/importer, distributor, retailer. Every one needs to make a buck. And probably none of them are getting rich.
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by wwnick

my objective is not attacking the retail price but in discovering the cost of a frame.
I understand these companies spend a lot of money on sponsorship and ummm, other things, so I am not saying that these bikes should be sold at cost.
it seems it is a very closely guarded secret as nobody really knows and this drives my curiosity.

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by glepore

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by kwakekeham

There are always a few assumptions people have to make. A lot of the companies (RE: almost all) are private which means there is no public reporting. However, if you dig and dig and look up recalls (a great source of information) you'll see the volume of some frames is low. Some high end ones, the top teir, might sell only 1 - 2k in a year, and assuming a 3 year market life, you might be amortizing 5 mold sizes over 3 - 6k frames.

Factor in a concept designer, an engineer, simulation software, a CF expert for layup, and basic frame testing along with manufacturing those molds and that's a lot of cost to recoup in < 10k frames. Now jump up to these "open mold" frames. They don't have the specific layups (several articles on fake specialized compared to the real deal highlights this) with variable modulus used and highly engineered thickness choices.

Like most products, the actual part is cheap and some of these estimates already posted could be on the nose for labour and materials, but you are amortizing a lot of hardware over relatively few products.

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