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  1. #26
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    No doubt Stalk! When the first thing you hear is "Now, I'm not going to lie to you.."

    When the first thing I think is "Lie, Lies, Lies..."

    Here's a pic a took of my "local bike shop" last night.
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  2. #27
    Cleavage Of The Tetons
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    Quote Originally Posted by rensho View Post
    I'm with Cohenfive on this one. I want/do support the LBS, but I hate it when they mark the price up above retail. It seems like the majority of my shops do.
    Funny, I rarely EVER actually see this, usually it's just anecdotal.
    At my shop, everything was marked 5% below retail (at least) but people still thought that.
    Just for fun, would ANYONE please post a pic of an item marked above MSRP?

    I'll give you an e-beer.

    Or just cite an example.
    I challenge you!
    "We LOVE cows! They make trails for us.....

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  3. #28
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    Quote Originally Posted by rideit View Post
    Funny, I rarely EVER actually see this, usually it's just anecdotal.
    At my shop, everything was marked 5% below retail (at least) but people still thought that.
    Just for fun, would ANYONE please post a pic of an item marked above MSRP?

    I'll give you an e-beer.

    Or just cite an example.
    I challenge you!
    Not sure where to get an official MSRP.

    For one part I just bought: Universal lists MSRP for Shimano ZEE M640 Rear Derailleur at $109.99. They list it for $102.

    Local shop - Mike's Bikes lists it online at $111.99. $2 above MSRP, but still.

    I bought it online for under $70.

  4. #29
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    Quote Originally Posted by twowheelmotion View Post
    When all else fails. Bring your LBS beer.

    When that fails, bring better beer....
    Beer is good, but it doesn't keep the lights on.
    Before my favorite LBS closed down, I would drop off a case of home brew a couple times a year.
    However, whenever a mechanic was going above and beyond, I handed them $10-20.


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  5. #30
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    Quote Originally Posted by paulney View Post
    Probably not. What I meant is that if there's a bulk purchasing cost of X, online retailer sells at X + Y, and LBS sells at X + Y + $40 - $50.

    Of course I can't calculate their overhead and wholesale costs, but to the end consumer what's of importance to me is the end price. I can see that the end price is $40-$50 then the best deal available to me.

    So, the question is: when is added cost becomes too much to support your LBS.
    That's the biggest difference, that X for a LBS is not equal to X for an online retailer.

    Example: I was recently looking at a set of pedals, and the retail price at a large online seller was equivalent to what the local shop paid for it at cost.

    As much as shops rely on Shimano/SRAM/other big manufacturers, they really don't support the little guy by selling to online sellers at such an enormous volume discount. If we assume that the percentage margins on that set of pedals are the same for both retailer, then the online seller is paying roughly half of what the LBS does. Ridiculous.

    The other factor worth considering is that local shops order from distributors, which adds a middleman and drives up costs as well. For a lot of brands, it's pretty much the only option. However, the distributors offer perks too - so there are some benefits.

  6. #31
    Cleavage Of The Tetons
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    Quote Originally Posted by twowheelmotion View Post
    No doubt Stalk! When the first thing you hear is "Now, I'm not going to lie to you.."

    When the first thing I think is "Lie, Lies, Lies..."

    Here's a pic a took of my "local bike shop" last night.
    Be careful, two wheel!

    I ended up buying a shop because my garage looked like that!
    I just wanted to buy **** at cost...but not 300k's worth a season!
    "We LOVE cows! They make trails for us.....

    And then we eat them."

  7. #32
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    This is where a little knowledge hurts.

    While I never bought into the argument of "Would you haggle over the price of milk at Safeway?", the markup of an item is none of a customer's business.

    I understand if the price of an item is higher than you want to pay, or you can get it somewhere else for cheaper, than by all means negotiate the price.

    But what a shop makes for markup is none of your business. The profit is not something a shop deserves: it is the only reason why they are there.

    Just because you can figure out the margin means very little to the small business owner.

  8. #33
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    Quote Originally Posted by paulney View Post
    This will probably get flamed to hell, but still. I went to a very reputable LBS, which has been mentioned numerous times on these boards. Wasn't looking for anything specific, but never been there before, so wanted to just check it out.

    The shop is indeed very nice, and I've read on the boards that it's famous for parts. I asked them for their price on XT brakes. Their margin is $40-50 depending on the best deal from Jensen's. Hmmm.... Then I try a few shorts on, and like one particular pair. Guess what? Their margin is again $40-45.

    I understand they need to pay higher rent fees, pay their sales people, maintain inventory, yada-yada. But isn't a $40-50 margin too much?
    The way bike shops work, and the way they have worked for a long time, is that cheaper items are marked up well above their retail cost, sometimes well in excess of 400%. More expensive items like top end bikes may only get marked up 30-20% above their cost. They have a suggested pricing guideline, in addition to the manufacturer suggested retail prices. Cassettes and derailers often come out very near 175-200% (so almost double the wholesale), and this is normal.

    Jenson and others get pricing that the LBS can not, due to bulk buys and OEM takeoffs. If Giant was planning on needing a certain number of derailers, but in the end they have 500 left, Jenson can often buy them for cheaper than wholesale, and mark them up well below the normal retail. An LBS can not do this of course. The big stores can also offer "promotional" pricing when a new product comes out too.
    "It's only when you stand over it, you know, when you physically stand over the bike, that then you say 'hey, I don't have much stand over height', you know"-T. Ellsworth

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  9. #34
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    Nope! Been there done that. Garage looks like that because of the bike shop that was. It went out of business becuase we didnt charge enough for XT derailuers.
    - .... . / .. -.. .. --- - ... / .... .- ...- . / - .- -.- . -. / --- ...- . .-.

  10. #35
    just another bleepin SSer
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    somewhat insider view

    Quote Originally Posted by rideit View Post
    Just so you know, oftentimes shops can't even BUY stuff at wholesale as cheaply as you can find it at the internet distributors.
    I can give some data on this. I am connected with a bike shop as an investor (helped a friend open a shop). One example that comes to mind is Clif Bars. Because the shop buys in small quantities (boxes per order, not cases), their price per bar to buy them from the wholesaler is higher than CostCo and Trader Joes sells them to consumers at.

    Bikes and bike parts are not as bad, but most have different wholesale prices based on volume. More than a 10% difference between the highest and lowest price.
    Last edited by singlespeed.org; 01-17-2013 at 03:52 PM.
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  11. #36
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    If you figure out that the store overall margin is 30%, and the average sales volume per shop is $500k to $1m, that leaves only $150 to $300k per year to pay the rent, insurance, salaries, etc. Sounds to me like a tough way to make a living. I support my LBS, but I'm not sure how that business model will survive. I would think that the future will be a few megastores with crappy service and a few repair only shops where the owner will work by him/herself. Hopefully, I'm wrong.
    Faster is not always better, but it's always more fun

  12. #37
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    Quote Originally Posted by zorg View Post
    If you figure out that the store overall margin is 30%, and the average sales volume per shop is $500k to $1m, that leaves only $150 to $300k per year to pay the rent, insurance, salaries, etc. Sounds to me like a tough way to make a living. I support my LBS, but I'm not sure how that business model will survive. I would think that the future will be a few megastores with crappy service and a few repair only shops where the owner will work by him/herself. Hopefully, I'm wrong.
    Small shops (on average)are lucky to see a total profit of 6-8% at the end of the year.
    It is a labor of love, mostly.
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    And then we eat them."

  13. #38
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    Quote Originally Posted by zorg View Post
    If you figure out that the store overall margin is 30%, and the average sales volume per shop is $500k to $1m, that leaves only $150 to $300k per year to pay the rent, insurance, salaries, etc. Sounds to me like a tough way to make a living. I support my LBS, but I'm not sure how that business model will survive. I would think that the future will be a few megastores with crappy service and a few repair only shops where the owner will work by him/herself. Hopefully, I'm wrong.
    Like many businesses and industries that are involved in both the sale and implementation on commodities - the onus is on the bike shop to provide the extra value to the consumer to drive the sale.

    I could end there.

    LBS's need to provide something extra. Selling commodities is just that.

    But what sets them apart can never be provided by the internet or big box suppliers.

    Custom fits, custom advice, service. Repair. Warranty. Group ridies. Good advice. Etc.

    LBS's need to focus on service and pull through hardware sales.

    Those that dont will die.

    Such is life.
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  14. #39
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    I've done the same a few times:
    - Swapped the links and bearings on my Blur, they had the pro pack in-stock
    - Solved a knock on my fork, it took a couple trips
    - Installed a new fork the same day, snuck it in before closing



    Quote Originally Posted by Brewtality View Post
    However, whenever a mechanic was going above and beyond, I handed them $10-20.

  15. #40
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    Quote Originally Posted by iheartbicycles View Post
    Like many businesses and industries that are involved in both the sale and implementation on commodities - the onus is on the bike shop to provide the extra value to the consumer to drive the sale.

    I could end there.

    LBS's need to provide something extra. Selling commodities is just that.

    But what sets them apart can never be provided by the internet or big box suppliers.

    Custom fits, custom advice, service. Repair. Warranty. Group ridies. Good advice. Etc.

    LBS's need to focus on service and pull through hardware sales.

    Those that dont will die.

    Such is life.
    I don't disagree, but my point is that I don't see how that model will make anybody any money over the long run. I think that the only reason the model is still around is because the big bike companies don't sell to large sporting goods stores and mostly refuse to allow online sales. The day one of the big three decides to let it happen is when LBS will start really hurting.
    Faster is not always better, but it's always more fun

  16. #41
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    Quote Originally Posted by zorg View Post
    I don't disagree, but my point is that I don't see how that model will make anybody any money over the long run. I think that the only reason the model is still around is because the big bike companies don't sell to large sporting goods stores and mostly refuse to allow online sales. The day one of the big three decides to let it happen is when LBS will start really hurting.
    Reputable bike companies dont sell through big box suppliers because it still takes expertise to build and tune modern, high tech bikes.

    You arent going to find many walmart employees that know how to build, fit and tune nice bikes.

    I know many shop owners who are making $200k/year running solid bike shops. You have to focus on service. You have to stay up to date. You have to hire the best. You have to be passionate. You have to develop a following.

    If you think just having a retail space and a passing knowledge of bikes is enough- you aint gunna last long.
    Stupid, but sometimes witty. Occasionally brilliant. Slow and fat though.

    Specialized sucks dong

  17. #42
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    Quote Originally Posted by iheartbicycles View Post
    You arent going to find many walmart employees that know how to build, fit and tune nice bikes.
    But I have seen those in REI, or Sports Basement store nearby. Probably as much qualification as anybody using a retail bike shop needs.

  18. #43
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    Quote Originally Posted by Axe View Post
    But I have seen those in REI, or Sports Basement store nearby. Probably as much qualification as anybody using a retail bike shop needs.
    Being an ex-bike mechanic I have high standards. I cant think of but a couple mechanics I would let touch my bike. And they dont work for REI or Sports Basement.

    Seriously.

    Look at Robinson Wheel Works in San Leandro. Chris Robinson was the mechanic for the the 7/11 team and has been in the industry for decades.

    He knows his ****, and it's worked for him. I happen to have an idea how much he makes - and it aint bad.

    Tim at Encina Bikes in Walnut Creek. He's been doing it for decades and has 2 good shops. I was involved in a possible buy out of his shop and know what he makes.

    I know a few others as well - if you know what you're doing, and run it right, the business model works.
    Stupid, but sometimes witty. Occasionally brilliant. Slow and fat though.

    Specialized sucks dong

  19. #44
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    Quote Originally Posted by rideit View Post
    Funny, I rarely EVER actually see this, usually it's just anecdotal.
    At my shop, everything was marked 5% below retail (at least) but people still thought that.
    Just for fun, would ANYONE please post a pic of an item marked above MSRP?

    I'll give you an e-beer.

    Or just cite an example.
    I challenge you!
    Does this count? Tri-Flow and REI sell it for $5.00.



    **Disclaimer: I don't care about the price and would still be shopping at that particular LBS if I still lived near it. I also don't want a free e-beer as I'm about to crack open some Lagunitas.**

  20. #45
    Axe
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    Quote Originally Posted by iheartbicycles View Post
    Being an ex-bike mechanic I have high standards. I cant think of but a couple mechanics I would let touch my bike. And they dont work for REI or Sports Basement.

    Seriously.
    I was not talking about you (or me). I was talking about a typical LBS service customer. Most of them will be served probably just as well by what a large chain store of the REI type can provide.

    Thinking of it - those few high end mechanics probably would be making more money if they just work on their own as a service only - would not they? You do not need showroom, huge bike inventory etc. Just some place with tools. And they can order bikes and parts for you off the internet...

  21. #46
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    By local from your LBS!!

  22. #47
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    Shops

    Owning a bike shop is a seriously tough way to make a living. There are some shops out there that do extremely well, have high paid employees, and make a very good profit. Those shops are rare.

    Like a few other posters have mentioned, most shops are lucky to pull in a yearly profit of 6 to 8% after expenses, payroll, rent, inventory and everything else. Now take that number and figure that a great shop owner works an easy 80 hour work week with very few days off. Owning a shop will not make you rich.

    Shops have to prioritize where they are going to earn profits, bikes make a shop almost no profit. Accessories are where the profits have to come from, the difficulty in that is most shops do not have the volume to purchase goods to get major discounts. Warehouse / Online shops have much more purchasing power and therefore their "sales" prices are usually what it costs the smaller local shops just to purchase the goods to resale.

    At the end of the day, you don't visit a local shop to get the best deals. You visit a shop for outstanding service, going on local group rides, attending a skills seminar, working on trail days, fixing that creaking sound coming from your bike you can't find, or just hanging out with like minded riders. You would have to ask yourself what that is really worth to you.

  23. #48
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    I have customers come in and scan things with amazon shopper etc and say i can buy it for x online are you gonna match it? I tell them sure plus a shipping charge and you can come back in two days to pick it up.
    Please find a shop you like and support it, being in business is tough.
    Remember all of you price shoppers are usually the same people who hate walmart and dont even realize that you are the reason walmart thrives and everything is made in china now.

  24. #49
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    it's complicated..

    Recent experiences with two bike builds:

    1) My most current full suspension. Niner Jet9 RDO - I was originally contemplating this and a Rocky Mountain Element 950 (there is a fair difference in the price). When I started looking, it was towards model year end. Only a few shops in the bay area carried the Rocky, fewer had a medium in stock. All wanted list or more on the bike, even if I asked about "bike only, no need for service follow ups, etc". Niner builds, tend to be custom. A local, to me, shop offered a fairly generic XT spec'd build, tubed tires, etc and was about $800+ over what I ended up getting for a X0 spec'd build w/ tubeless, tires of my choice, etc. This $800 difference didn't account for any additional "savings" due to sales tax, which I didn't/won't factor in.

    That said, the bike arrived in the mail, easy to setup, mostly worked and soon developed some kinks. I worked those out myself for awhile and then had one of the internally routed housing crap out at the ferrule. I took it to my local shop that I do a lot of small parts biz (and have bought two other bikes from), their service guys fixed it up, but after a week it wasn't quite right.

    The Jet 9 RDO is a bit of a pain for getting setup right -- the Niner forum has some fun posts. This time around, I took it to Tread since they have been a Niner dealer and have had quantity come through there. Their mechanic mentioned it was his least favorite bike to wrench on when it comes to cable housings and walked me through the issues of the previous "repair". When I came back a couple of days later, we spent a bit of time getting it dialed in and noticing a couple of tweaks due to prior setup -- a couple of teeth on rear cogs weren't happy.

    Now the bike works like a dream.

    For a custom bike/setup, I will be budget conscious when we start talking savings in the hundreds of dollars, especially when it is a boutique brand not necessarily carried/in stock locally. However, I will seek out the best local shop if I experience problems. I can wrench on my own, but working fulltime, I'm happy if someone can get something done in the days I can't ride instead of me wasting my riding days wrenching.

    I tried both Santa Cruz and Ibis (26 and 29 -- well, only Santa Cruz 29ers) and the geometry and I just didn't work out.

    2) Bike two - the wife's Specialized Safire. A christmas present. Initially, I was contemplating the Rocky Element, since she rode one in Whistler last year, for her -- but the same above story plays out. So, I gave up on looking for awhile.

    Around Christmas, she wanted to try out a couple of bikes. We started with one shop, she tried a mix of Specialized and Santa Cruz (26 and 29) -- for the Safire there, they did a rough fit (weather sucked, so it was an asphalt spin) -- but were super attentive. She sorta liked the Specialized at that shop. We went to the local Trek dealer, the owner got her dialed in, she liked the bike feel but liked the esthetics of the Specialized a bit better (it's not all about fit).

    We went to a second Specialized/Santa Cruz dealer. They dialed her in a bit more on both the Spec. and the Santa Cruz. While I was playing with a moonlander, the wife was zipping around on both bikes. The Juliana was "the porsche" and the Safire (women's stumpy fsr) was "the prius".

    Both shops had deals on the Specialized, the Julianna was a 2013 and was "retail". Shop 1 had the better deal on the Safire, shop 2 was willing to match based on what we talked about when we went by. Prior to purchase, I called shop 1 again and asked what the best deal they could do on the bike was, and they gave a price I couldn't walk away from. We ended up getting a nicely fit Safire at shop 1.

    I would do business again with either shop, but when it comes to sales, if prices are equal, I will go with the shop that myself (or who I am with) feels more comfortable with. What I won't do is, if both shops are good, play one off the other to haggle price. We had a case where the first shop was lower than the second, and the second was willing to match (based on our talking about it on initial visit). That said, when the original shop, when asked (with out reference to any other shop) what there best deal was and came in with a good number, they had our business and we were up there within the hour to close the deal.

    ---

    I am rambling, but for me, the LBS seen is more complicated than just price. Service is important. The wrenches and what they are experienced with can play a factor. When you have a small local area with multiple shops carrying the same brands who are all excellent, the choice becomes a bit more complicated.

    For me, anything complicated that is Niner specific and I don't want to handle, the bike is going to Tread. For the Safire, I may take it to the nearest to me, I've bought a couple of bikes there, shop...or I may take it up the road a couple of miles to where we bought it.

    That Trek dealer I mentioned? They are my *goto* shop when I have an issue that needs addressing early on the weekend -- the fact that they open at 8am on weekends has saved my ass nearly as many times as CHUM or I have crashed while riding together.

  25. #50
    Axe
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    Quote Originally Posted by Daytripper63 View Post
    I tell them sure plus a shipping charge and you can come back in two days to pick it up.
    Quote Originally Posted by Daytripper63 View Post
    being in business is tough.
    Sure, tough when you are being a dick to your customers.

    We are all in some business. Why nobody feels like it is a charitable thing to support MY business? Why do you feel like I need to pay more than some goods are worth to support YOU?

    And where are the bikes you sell made?

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