Bicycle Accounting
There was a thread here a few days ago regarding cost per mile of cycling. This got me to thinking. In addition to a training diary, I also keep track of when I replace parts (particularly consumables like chains and brake pads) in order to give me some idea of how long various parts and brands last.
So I set up an Excel spreadsheet and transcribed data for my fixed gear rain/winter bike to get an idea of just what is the operating cost of a bicycle. The bottom line is that over the past five years, I have put in about 31,500 km on the fixed gear bike, spending around $1,100 Canadian on various parts, for an average operating cost of about $0.04 per kilometer.
Details: this includes 9 chains (the cheapest 1/8" chains I can find, since I'm using a 1/8" track cog in back to provide better seating and wear) at $7.50 each (I probably actuall spent less), 8 rear brake pads @ $8, 21 front brake pads @ $5 (probably another overestimate), two saddles to replace two that broke over the five years, one front rim, two bottom brackets, two 42t chainrings, two SPD pedals, and 21 tires (5 front, 16 rear). Some of these numbers are estimates; for example, I haven't been tracking new tires because this bike can use one of two sets of wheels, and it's difficult to get mileage records on tires that may or may not be used at a given time.
I have also not factored in the capital cost of the bike itself. I usually buy the frame separately and attach whatever components I have. The fixed gear bike usually inherits parts from my good bike; for example, I recently put Tektro carbon fiber brakes on my c/f Trek, so the fixie acquired a set of Ultegra dual-pivot calipers which I have not factored into operating cost. But if I were to assess the cost of the bike at $2000 (not unrealistic), then spread over 31,500 km, I have got about $0.06/km out of the bike so far, for a total cost of $0.10/km. Frame price is a fixed cost, so the longer I can make the frame last, the lower the overall cost.
I can also annualize the cost, and this is where accounting tricks can come in. If I straightline the depreciation of the bike over the last five years, I'm still at $0.10/km. But next year, my total cost is back to the $0.04 operating cost only since I've completely written off the bike. I can also depreciate the bike by 20% per year (declining balance), so in year one it costs me $400, but in year two, it costs only $320 (20% of the remaining $1600) or $0.05/km. By year five, the bike costs $164 and I'm down to $0.03/km, or a total cost of $0.07/km.
Of course, this completely ignores fuel cost, which is probably the biggest component of operating expense, but how do you determine what percentage of dinner gets allocated to riding the bike the next day? I remember there was some bike courier a few years back who successfully convinced the Canada Revenue Agency that his lunch should be deductible as a business expense (you can't write off the entire business lunch in Canada) because it counted as fuel, but I forget the details. Well, enough math for today.
- L. Bernhardt, MBA,CMA