I wouldn't sweat not making your purchases from an LBS. Most the stuff they sell is made in China anyway. As a blue collared worker I look at it in a very generalized way... If they are not giving me their business why should I give them mine? Might as well benefit from the whole arbitrage thingy yourself.
Originally Posted by lamb
Killing it with close inspection.
I was at a LBS in my area a few weeks ago looking at the Trek 3900. The 2011 Trek 3900 was around 539$ i believe and when she was on the computer looking on the Dealers Website about ordering one or seeing if they was gonna get anymore in stock i saw the pricing of the 2011 that they get it for which was if i remember correct was around 280$ and they sell them for 539$. When i saw the 280$ she quickly changed screens lol, i was paying attention at first but as soon as i looked at the screen that 280$ stood out so much it was hard not to notice even for the few seconds that screen was up
Define your terms
What is always silly about these bike cost discussions is that everyone thinks they know what they're talking but and that everyone knows what these terms mean but I don't think that's the case. Also how are manufacturer incentives factored in, interest rates etc?
I agree, but I do try to put things into perspective. Like I can buy an S-Works 29er for $10,000 or a new motorcycle LOL! Hell you can buy a new car for $10,000 that has A/C and heat, cup holders, windshield wipers, and a gas pedal. Its just amazing how something we have to make move with our bodies can be so damn expensive haha. Just perspective!
Originally Posted by customfab
Tie two birds together and though they have four wings, they cannot fly!
If some here don't understand markup, they need to take business 101. Or, go open a shop, and they'll figure it out real quick.
if i remember correct was around 280$ and they sell them for 539$.
Even flipping stuff on craigslist, I find I have to just about double my price to get 20% net profit. Fee pay and pay pal take theirs, as does Fed-X, USPS and UPS. There is also gas, my time, etc. And I don't even have to pay rent for a shop, or have a payroll.
I did a business plan once for a bike shop. In order to make 60K a year for myself, I'd have to gross 1/4 million a year. Think about it, that's over a thousand bucks a day. Even if I charge 75/hr for labor, that's 14 hours, every day. If I'm just selling bikes at a 40% margin, that's a $3000 dollar bike every single day.
I ALWAYS try to support my LBSs (as many as are willing to deliver good customer support). It takes time to develop a relationship at your LBS... MOST people go in and use it as a catalog... They look at the LBS and buy somewhere else... I DON'T do this...
I am just now getting back to riding, but I am visiting at least 3 shops in the area about once a week... I'm developing a relationship at each... I am honest with all of them that I HAVE my MTB bike and will be doing a few upgrades... until I'm ready to buy a new one. I let them all know that I WILL be buying a tri-bike within the next 12 months and what my budget is...
When the time comes, I will spec the bike to each shop and the best shop gets the sale...
Running a bike shop as a PROFITABLE business is likely one of the hardest local business deals around... Huge overhead, lots of labor, lots of fixed costs... lots of money tied up in inventory that begins to lose its value the second it hits the shelves...
Only for love...
The bike shop business model is problematic. It's not the consumer's fault.
Originally Posted by Mr. Blonde
My primary complaint/disillusionment with shops is with regards to how fairly they compensate their employees. I've worked at a dozen shops and they all pay shlt, and offer no job security unless you're the manager. We're all living in a competitive economy, so by those rules, its fair to shop online and ask questions at the shop and it's fair to pay employees low wages if they'll work for 'em.
We have 4 bike shops in my medium-small town. All the owners appear to be living the American dream, nice cars, homeownership, wives that stay at home. They do work hard and put varying amounts of their lives into it(For some it's clearly become just a source of income, no longer a passion). And it's all fine and fair by me.
The business model needs some tweaking. If I start my own shop some day, the markup on parts will be small, but the customer will pay for labor and the primary relationship will be between the customer and the mechanic, not the customer and the markup on parts somebody far away made.
I am a manager at a local, family owned outdoor store, we do not carry MTB. The way any retail business works is to purchase an item, in this case a bike, from a manufacturer and then sell that item to the consumer at a higher price in order to make a profit. These businesses have to pay employees, pay a mortgage or lease, pay bills etc... You will almost always be able to purchase that same item on the internet for a lower price. The consequences of making those purchases online, is that the next time you want to purchase a new bike, you may not have an lbs available to test ride one, or you may have to drive hours to do so. If the markup on bikes does not permit someone to own an lbs, and make a comfortable living doing so, no one will want to own an lbs. If you think that the owners of your lbs are getting rich selling you a bike for $539 that they paid $280 for, You are sadly mistaken. And to pay employees more, would mean charging even higher prices for goods and services. A 50% margin is fairly common in the retail world. And it is important to understand that profit margin and markup are not the same thing
haha, suckered in by a resurrected thread dredged up by a spammer
If a business model depends on people paying more than they would if they went somewhere else, that business can get in trouble fast. Basic economic principles predict that low-cost firms do the best. Mail order bike repair companies don't do well but mail order bike retail clearly does well. Compete where you have low costs.
Originally Posted by cwakefld
Bike shops clearly are not homogeneous. I've worked at a lot of family oriented bike shops with few high end bikes on the floor. More recently I've worked at high end road/tri bike shops, so that influences my views. I think there are people out there who are willing to pay over $100/hr for a mechanic who can fix any problem on their bike, but they won't pay that much for their bike to be worked on by one of several mechanics with wildly varying competence.
I would like to open a shop where customers hire the mechanic, who works more like a contractor. The mechanic sets his own prices based on demand and the mechanic works to attract her own clients. An anesthesiologist who is riding a $10k bike is likely to have no problem with an arrangement where she can walk into the shop and say, "hey my thingie is clicking", and the mechanic has a deal with her where she pays him $150/hr to have problems fixed that same day, regardless. Another customer might have been there first, but they only pay $60/hr and know they might have to wait a few days or longer depending on how busy it is. Another idea is to have a maintenance subscription. Pay $200/mo during the season and receive unlimited tune-ups, for example. With all of these ideas, the parts would be marked up maybe 20%, while the labor is more expensive. markup on part is higher if they are in stock and lower if they are special ordered. It always blows my mind that markup on special order parts is essentially always identical to parts on the floor. I can imagine reasons, but it doesn't seem efficient.
I think there are some alternative business models that can preserve the bike shop without requiring the big showroom packed full of expensive, high mark-up, depreciating bikes.
Dealer Cost vs Retail Price
You totally miss my point. I will clarify later, on my way to work now. Short version is, it's not about local business charging more for a service or item. It's about people with no overhead that sell on amazon out of their garage charging much less.
A very well run bike shop will make a 35% average margin. That is, $65 out of every $100 pays to restock shelves. Then one takes that remaining $35 and pays rent, payroll, insurance, utilities etc.
What's left over is sweet sweet profit.
I think I got much of your point: Bike shops are a high cost business when it comes to selling goods that can be easily shipped.
Originally Posted by cwakefld
Not sure if you got my point: online retailers have very high costs for shipping labor. Does Performance even offer a mail order tune-up?
And the point an economist would make: high cost businesses exit the industry and low cost businesses remain. I repeat, does Performance offer a mail order tune-up?
I don't think there's much hope for the traditional retail business model for most bike shops, especially for entry-level to mid-level bikes, where people know enough to feel confident buying online but they care enough about cost that they are deterred by the price differences they see between online and brick and mortar.
A lot of online retailers drop ship their products. They never touch the actual product. They are glorified order takers. However in the manufacturers eyes a buck is a buck and if Online Harry can sell 100k a year he gets a better price.
I frequent the LBS for the camaraderie and the ability to actually touch a product before I ship it. Case in point, I have been looking at Gopro`s. Looked on line on eBay Amazon and the like. Last weekend I borrowed one from a friend of mine. Having never seen one up close I didn't realize how small they actually were. All of the pics I have seen are zoomed in. Now that I have actually operated a unit I will probably buy one eventually.
Back to the LBS. When I call and ask a question I either get an answer or they ask me to bring it in and "we" can look at it. There is usually a discussion about the problem and possible solutions. They have taken it in the back and tweaked it a few times for no charge because I have been in several times looking. I never actually bought anything until last weekend. They know now that I will purchase from them and likely a bike sale or three on the horizon. They DONT hammer me about my bike not being worthy of an upgrade even though it is a few years old.
They are after those guys who drop off their bikes for service, who don't blink twice about dropping 3k on a bike, then bring that bike in for routing service. These are the guys that have a stable in their garage rather than a bike on a hook.
However they also know guys like me who buy parts develop an attachment to their machinery. We talk about local trails and events, new stuff coming out etc. We are also the guys who will help a customer get a bike in the door when the phones are ringing off of the hook and the showroom is full. I have played with kids while the counterman is closing a deal on a bike. I have loaded and unloaded bikes for people while I am out in the parking lot loading or unloading my bike. But you know what, I like doing that for people because they are bike people and the LBS is our oasis. I have seen people on the trail and at the bike shop. Conversation starter right there. That same rider would be the one who stopped and helped me on the trail or vice versa. Might give a hint on technique or need a hint while out riding.
Its about making my world a little smaller.
The bike doesn't make you go fast.
You make the bike go fast.
I live in a smaller community and there is no way in hell that I'd buy anywhere else except at our local bike store.. It's the only one around... And we need them in town.. For anyone that has a bike...I don't have time to wrench on all of our bikes..
2014 X Cal 7
2008 Shelby GT 500 875 HP
both are too much fun...
I buy locally if I can, but each bike purchase has required more searching than the last.
Most recent bike purchase was from a brick-and-mortar store run by the bike manufacturer, not sure if that counts as an LBS or not. It's close enough to qualify as local and they do service. They had a much better selection of bikes for small riders than any of the LBS's I visited.
Used to have a great LBS, bought two bikes and all accessories there for years. The owner died and it got sold. Not so good anymore. Looking for a new LBS.
I do not doubt that running an LBS is a difficult business, more likely to be a labor of love than a road to riches. Presuming that this is the case, transparency is a good thing. We already know the online prices either before we enter the store or we look them up on our smartphone while we are there, even if we have no intention of buying online.
I can't resist commenting on this old thread. The mentality of buying cheaper verses supporting small local business is one of the reasons Americas economy is struggling. It's no longer about helping and supporting each other, it's about me, me, me. I will support my local shop always. I recently bought three bikes from them and now I get 20% off all accessories for life. We look out for each other.
I live in a fairly large city, and we have a good number of LBS's.
My wife and I stopped in at one I hadn't been in for a long while the other night.
The guy was working on a bike. We showed up about 10 minutes before close.
We looked about and waited for a greeting... nothing. We kind of looked at each other and walked out without the guy saying a word. I understand it was close to closing and he was with another customer, but not even a hello?
Next day I was on my way to appointment, stopped a new LBS. The person helping me was the owners wife. They had a fairly large selection of a very obscure product I have been looking for. I told her I was browsing a bit on my way to appointment. We talked about the product she had and she answered a bunch of my questions. Their prices were completely competitive, and I could see that she was a user as well as being a seller.
To be perfectly honest their prices were just a touch higher than the best prices I have found on-line, but close enough that when I do buy I will get it at the LBS, and happily pay a very small premium.
Care to guess which one is my new favorite LBS, probably of all time? It's sad too, because the first shop is a dealer for my addictions product of choice (he had 1 of the bike I am interested in...)...
Yes! Whenever bicycles are broken, or menaced by International Communism, Bicycle Repair Man is ready!
You may be right about there being alternative models that can preserve the shop, but unless you try them we won't know....
Originally Posted by PretendGentleman
The service subscription idea is interesting, but it is going to be tough. You have to find customers and they have to find you -- and be willing to pay in advance or pay for Availability. When I see a lbs in my area have a 3 week wait time for service--and they do-- then this has some merit, but who knows at what price?
On the service side the model would be competing with Youtube and with shops that don't require a subscription. In cities with horrific traffic and high retail rent there could be a niche market, e.g., SoCal.
Good luck with your ideas and getting a business started, hopefully you will get constructive feedback here.
I'm a physician. I support my local bike store and don't mind paying extra for the privilege of good service. But I'm not going to pay somebody $150/hr to fix a clicking thingy on my bike. It is true that some people have more money then sense and this includes some doctors but for the most part people with money are pretty smart about both making and keeping it and are not going to pay ten times the going rate for repair work to their bike.
Originally Posted by PretendGentleman
With that being said I don't think people value their LBS as much as they should.
Your shop idea relies on backward logic.
The person with the capability to develop the skill in one area is least likely to use a high priced bike mechanic. The one without the patience to have become an anesthesiologist will need to use a mechanic and be most likely to have a payment problem at the $150/hr level. Pricing based on ability to pay with a sliding scale isn't currently setup anywhere, although with the way technology is going it seems possible.
Originally Posted by Ailuropoda
eb1888, you're describing an oulier here. Most anesthesiologists hire bike and car mechanics, for example. They even go to other medical specialists when they need those services. Opportunity cost is the name of the game here. Why give up 1000/hr when you can pay 150/hr to have a more experienced person do the work?
Originally Posted by eb1888
I don't know if it would really work, but there are plenty of people who will pay a lot of money to have work well done. People regularly pay my old boss 250 for 2-3 hours of fitting time. I don't know what hourly rate will equilibrate supply and demand for a very experienced mechanic's service. I do know that I've seen a lot of customers come into a shop and ask for a specific mechanic to do the work. Typically, somebody else does the work because the guy who they asked for is just too busy. If a higher rate were an option to get the work done by somebody who knows what they're doing, then that's an option that can make everybody in this story better off.
I know this post is nearly a month old, but I am confused. If buying stuff from Chinese manufacturers is problematic for you, you need to quit cycling at all ASAP. a vast majority of bicycle products are made in China or Taiwan. in fact, stop purchasing everything altogether, unless you can afford to pay 10 times more for everything to buy American.
Originally Posted by FireLikeIYA
Dealer Cost vs Retail Price
It won't be 10 times more but pretty close. . The thing is most American don't really care but the others really do, especially Asian. They want the made in USA stamp on the products.
Originally Posted by mack_turtle
I support American companies, if it made in the US, good if not still ok more money for them, I hope. I don't balm Berger kings for moving their HQ to Canada, hey more money in the bank.
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