General Cycling Discussion - "Real" Bicycle Prices....

I wonder how come some of these bikes cost so much, like the madone series.
I have a Yamaha VSTAR Classic motorcycle that I paid $7500.00 for. The nicer Madones are around $11,000, 10,000, 9,000. I'm pretty sure they aren't more complicated then a motorcycle that takes oil, gas, and all that stuff.

Don't get me wrong I'm not complaining, just wondering what actually drives the cost of these things? I wouldn't think that the most complicated derailleur and frame would be as as complicated cost that of a Harley Sportster ($8000) or a jet ski or a decent used vehicle. These things all take electricity, gas, oil, engines (timing of pistons, etc..) to use.

Anyone know what drives the cost of these? Again, don't take it a complaint just a newbie wondering.

Components.

An economist would probably tell you this is a good example of diminishing marginal returns. For each unit of money you put into a bike past a certain price point, you get less and less back from your dollar (and least that's the way it seems to me). I bought an LCD TV that works just fine for $400- I could have spent as much as $3,000 or more for a TV of the same size- but to tell the truth the $400 model isn't that far off in picture quality from the others. When you start pushing the envelope of technology the price jumps quickly, which is why I would never buy a $10,000 bike (besides the fact that I couldn't afford one).

Anyone know what drives the cost of these? Again, don't take it a complaint just a newbie wondering.

There are enough people willing to pay that much for said bikes, so bike manufacturers and component manufacturers make stuff that retails for that much.

I was looking at cassettes yesterday and found it funny that 11 speed cassettes cost about twice as much as 10 speed cassettes, at similar levels. It's no wonder they keep adding more cogs!

Oh, I should add that over in MTB land, I get my 8-speed cassettes for $25. Guess how much a Sram XX cassette is? Damn near $400 !!!!

In a word__P R O F I T !

- Slim :)

Anyone know what drives the cost of these? Again, don't take it a complaint just a newbie wondering.

america is a ridiculously rich country and people are itching to spend their money. greed and the free enterprise system encourages people ask as much as they can get for anything they are selling. it's the way it works.

i'm stating this as a fact i have come to terms with, not a criticism.

for all those that can afford it there are many that can't.

however, there are 2 reasons for this kind of pricing,

1. people will pay it - if they didn't the prices would soon drop. but they won't because somewhere someone WILL pay it.

2. if you take 3 prices, low middle and high, you will find there are 3 types of buyer.
budget concious/thrifty - who will pay as little as possible.
bargain hunters/gullible - who will take the middle price because no matter the difference between l,m, & h, the middles specs are closer to high so they think they are getting a bargain even if they are not.
elitest/quality hunters/more money than sense - people who will pay as much as they are asked, just so they have something unique or supposedly the best.

You're paying for three things; features, performance, and cachet. As you go up the price scale, features and performance first increase then start to level off. Cachet starts off increasing slowly then starts increasing very rapidly at the high end. The value of these things is not determined by the manufacture but by the market.

The USA may indeed by ridiculously rich, but it is only a fraction of the market for high-end bikes.

Because something in some peoples psyche tells them that the more they spend for something the better it must be.

After working with high-end automobiles for decades, I believe some people can't enjoy something unless it is expensive. They have less respect for what the item is, than how much it cost.

I wonder how come some of these bikes cost so much, like the madone series.
I have a Yamaha VSTAR Classic motorcycle that I paid $7500.00 for. The nicer Madones are around $11,000, 10,000, 9,000. I'm pretty sure they aren't more complicated then a motorcycle that takes oil, gas, and all that stuff.



Anyone know what drives the cost of these? Again, don't take it a complaint just a newbie wondering.

High end bikes are generally hand built/custom made through the whole production process, plus the number of bikes built are lower(not mass produced), adding to the production costs which are spread out over the lower number of bikes being built, just price out a custom built motorcycle/automobile for a comparison.

I wonder how come some of these bikes cost so much, like the madone series.
I have a Yamaha VSTAR Classic motorcycle that I paid $7500.00 for. The nicer Madones are around $11,000, 10,000, 9,000. I'm pretty sure they aren't more complicated then a motorcycle that takes oil, gas, and all that stuff.

Don't get me wrong I'm not complaining, just wondering what actually drives the cost of these things? I wouldn't think that the most complicated derailleur and frame would be as as complicated cost that of a Harley Sportster ($8000) or a jet ski or a decent used vehicle. These things all take electricity, gas, oil, engines (timing of pistons, etc..) to use.

Anyone know what drives the cost of these? Again, don't take it a complaint just a newbie wondering.

You are comparing a bike that is a pro level race machine to an enthusiast's machine. If you want a better comparison, compare the Sportster to a Trek 2 or Trek 1 series. The Sportster is a low end motorcycle from what I can tell (not a motorcyclist:rolleyes:) and would compare more favorably with the Trek 1.2 or 1.1 ($960 and $730).

You'd have to compare the Madone to a very high end super car or to a professional level race car or racing motorcycle to have a valid comparison. That's one of the very coolest things about bicycles. You can purchase a bicycle that is the exact match to the elite of the elite whether it's a mountain bike or a road bike. You can't do that with cars or motorcycles or, probably, jet skis because the elite level motorsports vehicles aren't available, aren't street legal, and are far to delicate for the average joe to wrench in his garage.

Madones are hand made Carbon Fiber frames, for Pro level racing,
made in Wisconsin USA.

perhaps if you look at the FIM, Moto GP bikes like this guy races http://www.valentinorossi.com/
you will have a different perspective.

Those Madones and such are as much a "real" bicycle for most people as a Wally World bike is.

If you want to play with the big boys(or pretend you are one) it cost money.If you want a top fuel car,I'll build you one.....make sure your limping when you come in...because you won't be when you leave...:)

No average joe is going to be working on a $12,000 Madone.....Unless they are a filthy rich average joe? Cost you $1000 to put brakes,chain and cluster on it.

Money. There are always people willing to spend above and beyond their means. There are people who has it and willing to spend it. Then there are people who are willing to take it from them. You put them all together and you have a great dynamic of money changing hands. Analyzing why people spend the way they do is the holy grail of marketing and ad makers.

An economist would probably tell you this is a good example of diminishing marginal returns. For each unit of money you put into a bike past a certain price point, you get less and less back from your dollar (and least that's the way it seems to me). I bought an LCD TV that works just fine for $400- I could have spent as much as $3,000 or more for a TV of the same size- but to tell the truth the $400 model isn't that far off in picture quality from the others. When you start pushing the envelope of technology the price jumps quickly, which is why I would never buy a $10,000 bike (besides the fact that I couldn't afford one).

Agreed.

Comparative gains in performance become smaller as the price increases. For hobbyists such as ourselves, there is a threshold to pass which practically becomes spending money just to spend. No reason to look down on this. Those who need the best help fuel the companies that make products "for the rest of us".

All that being said, I would still ride the **** out of this.

http://www.bianchiusa.com/bikes/hors-categorie/oltre-super-record/

You are comparing a bike that is a pro level race machine to an enthusiast's machine. If you want a better comparison, compare the Sportster to a Trek 2 or Trek 1 series. The Sportster is a low end motorcycle from what I can tell (not a motorcyclist:rolleyes:) and would compare more favorably with the Trek 1.2 or 1.1 ($960 and $730).

You'd have to compare the Madone to a very high end super car or to a professional level race car or racing motorcycle to have a valid comparison. That's one of the very coolest things about bicycles. You can purchase a bicycle that is the exact match to the elite of the elite whether it's a mountain bike or a road bike. You can't do that with cars or motorcycles or, probably, jet skis because the elite level motorsports vehicles aren't available, aren't street legal, and are far to delicate for the average joe to wrench in his garage.


Well part of that though is my point. If a Madone (the elite of cycles) is nowhere near as complicated as a low end motorcycle how can a Madone's price be more than that?

Good answers on the board I've been reading.

Well part of that though is my point. If a Madone (the elite of cycles) is nowhere near as complicated as a low end motorcycle how can a Madone's price be more than that?

Good answers on the board I've been reading.

Who says they aren't as complicated? The Dura Ace Di2 derailers that the $11,600 version comes with is a very complicated and expensive bit of kit. The frames are handmade and optimized for racing just like you'd find on elite level racecars. It also contains some exotic materials that aren't all the cheap. All that comes at a price. And you can buy it off the shelf. Try buying a Formula 1, Indy car or NASCAR stock car at your local dealer. Ain't gonna happen for nearly any amount of money.

hmm possibly the materials theyre made out of? seems like its all carbon fiber and titanium. whats the average low end motorcycle? steel, alu, and such? all inexpensive materials and the machines to make them are cheap too(relatively) checked out the madone 6.9 leopard and wow i want one just not 11k bad :D

As far as mechanical things go,bicycles are not complicated,that's what makes them great.There not even as complicated as the machines that build them.The machine that bends the handlebars is more complicated than a bicycle.

There are plenty of people that can build you a competitive car if you show up to their shop with a sack full of money,they'll build you whatever you want.Many top teams do not build their cars,engines and such,they have other shops do it.Teams make the pieces work together.

I could teach a monkey to do what I do,it's not that hard if your mechanically inclined,but you only get one shot at it,and it isn't cheap if you make mistakes.

Madone team isn't going to build a bike for anyone either,but the people that build it will.Same goes with any other fancy cars.

If you have enough money,Ferrari will build you an F1 if you want one.

perhaps the fred threshold goes up with the price-point of the bike ..
you need to be a fast rider, or that 10K bike will doom you to be labeled

Have to admit that the cost of a higher end bike seems very high when you compare them to other more complex machines in the same price range and a lot of it comes down to what the market will bear.

Your production level motorcycle is a mass produced object that comes off an assembly line so should compared to a bicycle that is produced in a similar manner.

The markup on bicycle components is also rather ridiculous when you know how much they cost to make vs what they sell for... the steps needed to make a middle of the road derailleur and a high end derailleur are almost identical and the material costs do not justify the huge difference in prices.

And there is always greed.

There seems to be some confusion between the aparent complexity of a machine and the amount of detail and precision that went into it's production. No bicycle is anywhere near as complex of a machine as a motor vehicle. However in incredible amount of time and effort can be put into the selection and grade of materials, the processes by which the parts are made, how light weight and how perfect the parts and pieces can be made. As has already been stated a Sportster (which I have owned) is not built with anywhere near the level of effort and attention to detail as a very high end bicyle.

Due to their emphasis on performance over versatility I actually dislike most sport oriented road bikes, even more basic ones. I constantly tell people to be careful about buying a skinny tire road bike. However I can completely understand why bikes are priced the way that they are. The amount of money you spend does determine just how precisely a machine is focused toward it's intended function. Some of the high end bikes are interesting from a technological standpoint, but I'd never, ever buy one.

The markup on bicycle components is also rather ridiculous when you know how much they cost to make vs what they sell for... the steps needed to make a middle of the road derailleur and a high end derailleur are almost identical and the material costs do not justify the huge difference in prices.

The same could be said of just about any manufactured product. There's not $20000 (roughly) of materials in a car.

There's not really all the much different in the way that a Hyundai Accent and a Bugatti Veyron are made either. There's certainly not $2389300 difference in materials costs. But there's a large difference in technology and performance. Same for bicycles and bicycle parts. To continue the Trek example, the 1.1 is the Hyundai...an excellent bike for a very good price... but the Madone is the Bugatti. It's a stupidly beautiful bike for a stupidly ridiculous price. It's also going to perform better than the 1.1. Maybe not on the par of a Bugatti compared to a Hyundai but at elite racing levels, a rider on a Madone would mop the floor with a rider on a 1.1 .

actually driven well and in the right circumstances i can see a accent beating a bugatti same can be said with the madone vs the 1.1. but thats pretty much only if a total newb was driving the bugatti and to a lesser extent the madone. more realistically if the drivers were pretty much the same skillwise the bugatti and madone would win easily. its kind of like burgers. you can buy a 1 dollar burger from bk and its decent or you can spend 6(or more) and get a great burger

Hey Man,If the Veyron gets a flat you need to send the wheel to France, that is class.....this thread is like comparing apples to Oranges, 10G's for a bike? whatever, not for me, thats all. How about resale? 10G's, then goes on CL 2 Years late for 3K and wont budge for a while... that is the beauty of high end bicycles..

I wonder how come some of these bikes cost so much, like the madone series.


They cost that much because providing products at those price points maximizes profit for the manufacturers in terms of profit per unit multiplied by units sold.

The cost of production is completely irrelevant.



Don't get me wrong I'm not complaining, just wondering what actually drives the cost of these things?


Marketing.

They cost that much because providing products at those price points maximizes profit for the manufacturers in terms of profit per unit multiplied by units sold.

The cost of production is completely irrelevant.


Marketing.

So very true. And for those that are concerned with what it cost as opposed to that it cost to make, a Rembrandt cost the artist no more than it would cost me to paint it. It is the skill of the artist you pay for.
I am not into paintings but I do have a few real Navajo, Zuni, Hopi and Laguna pots. Anyone can make a beautiful $40.00 pot. Few can make a beautiful $400.00 pot. But are they not both just pots?:D

Not just marketing, desire.;)

like the saying. beauty is in the eye of the beholder. though concerning bikes theres also the functional element too.considering the madone is, actually even to my nonroadie eyes, a beautiful work of art. and to be honest for a beautiful work of art i can actually ride and not just look at 12k is a bargain. people pay millions for paintings and all they can do is look so if you look at it as functional art the price isnt that bad :D

I definitely feel the OP.

My nicest mountain bike, a Niner RIP 9, costs more than my BMW motorcycle. But I love riding my mtb more than my mowersickle so it's all good.

Another comparison:

Some chef's knives cost WAY more than an entry level food processor.

My friend is a chef and he has several knives that he's paid about $300 apiece to obtain and they're much simpler than a food processor.

OMG, a google search has returned a knife that goes for 31000 euros. OK that makes the motorcycle to bicycle comparo to be practically nothing...
http://experiencedelux.blogspot.com/2009/03/nesmuk-knife-sharpest-and-most.html

That one's kinda crazy though. But I went to the site of the knife maker and they have some pretty expensive knives, like this beauty for 1870 euros:

http://www.nesmuk-shop.de/user_html/1263995050/pix/a/g/nesmuk_volldamast_bog_oak.jpg

They cost that much because providing products at those price points maximizes profit for the manufacturers in terms of profit per unit multiplied by units sold.

The cost of production is completely irrelevant.


I think you have it backwards. An $11,000 bike probably loses money. They aren't selling that many units so they aren't capturing their R&D money back. The bikes are made in a very labor intensive way, their cost of manufacture is high. I'm not saying that they aren't making a little money on the bikes but as a percentage of sales, Trek probably makes more money on the Trek 1.1 It's a lot cheaper to manufacture 100,000 of those then a handful of the Madones.

I think you have it backwards. An $11,000 probably loses money. They aren't selling that many units so they aren't capturing their R&D money back. The bikes are made in a very labor intensive way, their cost of manufacture is high. I'm not saying that they aren't making a little money on the bikes but as a percentage of sales, Trek probably makes more money on the Trek 1.1 It's a lot cheaper to manufacture 100,000 of those then a handful of the Madones.

I'm sure Trek's marketing division has done its homework. To maximize contribution margin, market analysis provides a MSRP that would yield the highest amount in sales, while still be optimally profitable, covering costs such as overhead and R&D.

You're right, they probably do not produce too many of these super bikes. I can almost guarantee that most of their profit is generated from the sales of their most popular, more modestly priced models. But there is no way they are selling a bike that they are losing money from.

Put simply, it is priced the way it is because of how much the people are willing to pay for it. Sure, the cost of production is an important factor, but in no way an overall price determinant.

I think we miss another point about the real price of bicycles. Very few bicycles get sold for 10 to 20k. They are the halo market, Porsche, Corvette, Ferrari style. The majority is far less expensive and no one tends to pay MSRP. In all honesty I think the manufacturers do a pretty good job of providing a bicycle in the price range most people can afford. Even at a LBS you can walk in and buy a bicycle for $350.00 for a bike like the Giant Cypress. The fact that a road bike starts higher isn’t any different that the fact a sports car tends to cost more than a compact commuter.

The major manufacturers also do a reasonable job of making an entry level road bike that isn’t dependability wise that far below a mid range or higher end road bike. The rider doesn’t need to move up to a higher end bike until they are experienced enough to know what they want. For the average club rider or cat 5 racer 1500 to $2000.00 will work pretty well. Only when their skill level is closer to those they ride with do they tend to consider the ultra light weight high end bikes as a necessity, even if it might be more of a want.

I think the real price of bikes is about what should be expected. I can’t complain about those who can afford and want a $15,000 to $20,000 bike if they can afford it. It isn’t my place to question their concept of need any more than I question someone with Rolex when I a wear Pulsar.

I'm sure Trek's marketing division has done its homework. To maximize contribution margin, market analysis provides a MSRP that would yield the highest amount in sales, while still be optimally profitable, covering costs such as overhead and R&D.

You're right, they probably do not produce too many of these super bikes. I can almost guarantee that most of their profit is generated from the sales of their most popular, more modestly priced models. But there is no way they are selling a bike that they are losing money from.

Put simply, it is priced the way it is because of how much the people are willing to pay for it. Sure, the cost of production is an important factor, but in no way an overall price determinant.

I agree that they probably aren't losing money on the Madones but the mark up on bikes is pretty low. Trek makes enough to keep in business and make a profit but bikes have traditionally not been the best money maker. The profit margins are pretty tight. And the profit margin on a $11k bike is probably even tighter...and there are fewer units that can be sold.

Often its not so much what something costs to make, but how much it cost to develop. At an IT job I had, now and then I'd have to write documentation as part of a project. Getting billed out to the client at $100/hr, I generated plenty of multi-thousand dollar Word documents.

I think you have it backwards. An $11,000 probably loses money.

Nope.

At $11K it's nearly all profit especially where identical parts are bought in bulk from whomever with great OEM deals.

My current bike was built to spec for $2200 for in 1996, with $900 of that for a frame welded from titanium by Dave Lynskey and friends in Tennessee.

The next one will be built on a custom frame which runs around $1300 (with 400 of profit for the US distributor and something for the guys making it in China) or $1800 which covers shop space in San Francisco (which isn't cheap) and profit for Dan Nelson. Components are harder to figure since they seem to breed when left alone in my workshop although a few thousand wouldn't be out of line without an OEM discount (Shimano's is steep enough that you can buy complete bikes for less than the price of group and wheels).



They aren't selling that many units so they aren't capturing their R&D money back.
Everything but frame, fork, and seat mast are off-the-shelf items.

Those are simple mechanical engineering and industrial design problems and with profit total $3700 for a Madone 6.9 SSL frameset.



The bikes are made in a very labor intensive way, their cost of manufacture is high.
Molding plastic bike frames is less work than welding them from metal and you can do that with room for profit at $750 with American labor (Tsunami aluminum with custom geometry).