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Thread: $ Mark Up?

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    VIP Member Chief Big Daddy's Avatar
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    $ Mark Up?

    Hey everyone. Just joined the forum. Great site... In the market for a new ride. Wondering if anyone knows what mark-up dealers go on? Not looking for a steal - just looking for a fair deal.

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    NOT a weight weenie Hunter's Avatar
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    I will never tell and neither should anyone else. go ask your neighborhood grocery store the same thing and bargain with them.

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    Pure Joy Rider
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    It depends upon brand and model, as well as how much product a dealer moves and what their monthly rent amounts to.

    People who get "good deals" from their local shops generally either buy an older model on special, or have put in their time (and money...) with the shop over the years. But most importantly, markup on bikes is perhaps the lowest markup of anything in the store in terms of percentage.

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    Senior Member Brian's Avatar
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    We have a huge markup on the bikes we sell. Huge! Just yesterday, I sold a pair of Giant Sedona comfort bikes to a very nice couple. Because they were buying 2 on sale for $30 off, I gave them an extra $5 off each bike. Huge markup, I'm telling ya. Bikes do have pretty much the lowest markup of anything in the shop. You want a deal? Buy some accessories, and maybe negotiate upgrades or something. There's no room for a dealer to bargain on just a bike, and if it's a current model, he/she shouldn't have to. I work at this shop 8 hours/week. Yesterday was a typical Saturday - I sold 5 bikes in 5 hours. Why should we take a cut in profit, when we can barely keep the bikes in stock?

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    Approaching Nirvana megaman's Avatar
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    Quote Originally Posted by Hunter
    I will never tell and neither should anyone else. go ask your neighborhood grocery store the same thing and bargain with them.
    When I was in the grocery business, I was not afraid to tell my margins. It usually stunned people as to how little we actually made. It was always humerous to watch new hires' reactions when you put out a dollar in assorted coins and had them pick out how much you made on every dollar. Gave them a real persceptive of just how important every penny was.

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    www.getafolder.com wpflem's Avatar
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    Quote Originally Posted by Chief Big Daddy
    Hey everyone. Just joined the forum. Great site... In the market for a new ride. Wondering if anyone knows what mark-up dealers go on? Not looking for a steal - just looking for a fair deal.
    Markup is typically about 1/3 on bikes in the US market, but labor costs for assembing and tuning up the bikes often eat into that margin so there is not much room if any for discounting.

    I am surprised to hear that the markup in Australia is "huge."
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    Senior Member Brian's Avatar
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    Quote Originally Posted by wpflem
    I am surprised to hear that the markup in Australia is "huge."
    Everything is more expensive here, but the bikes don't get marked up as much. For everything else, there's an importer/distributor that needs his cut, with the gov't getting 10% of each transaction. By the time the consumer gets the item, it's easily double the US price. But some bikes don't seem to have a lot of markup compared to everything else.

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    Life is good RonH's Avatar
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    Quote Originally Posted by Chief Big Daddy
    ...just looking for a fair deal.
    Any decent bike shop will give you a "fair" deal, especially if you make purchases from that shop on a regular basis.
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    Senior Member slagjumper's Avatar
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    I think that the mark up is around 30%. The mark up on shoes is 300%. I buy stuff from 2 LBSs all the time. Don't begrudge them the money. Most bike shops need that / count on bike sales to pay for all fixed costs. If you buy stuff all the time and get to know the owner, they might cut you some slack. Especially if you know just what you want and you dont seem like the type to come back later and be a pain.

    The real money maker in the bike business is the importer. Its only one guy for like 90-95% of the whole damn US market. He basically specs the bikes in china, gets them to put it together in accordence with what folks will buy and us saftey regs.

    If you really want to save, buy used.

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    Bike shops make very little on bikes and parts. They make most of their money on service - they hire an enthusiastic student for $7/hr and charge the customer $30/hr. Check the online stores for their prices and expect to pay a bit more at the local shop, for the convenience of touch and feel.

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    Senior Member Brian's Avatar
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    Quote Originally Posted by AndrewP
    Bike shops make very little on bikes and parts. They make most of their money on service - they hire an enthusiastic student for $7/hr and charge the customer $30/hr. Check the online stores for their prices and expect to pay a bit more at the local shop, for the convenience of touch and feel.
    Are you sure? I work at a shop 8 hours a week, just for the retail experience. I get paid about $18/hr. I'm sure our mechanics get paid at least that.

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    www.getafolder.com wpflem's Avatar
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    Quote Originally Posted by Expatriate
    Are you sure? I work at a shop 8 hours a week, just for the retail experience. I get paid about $18/hr. I'm sure our mechanics get paid at least that.

    In the USA the median national salary for a bike mechnic is $19,425. This information is from salary.com.

    That works out to about $9.33 per hour.
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    Airborne Titanium EricDJ's Avatar
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    Why do people ask this. Why do people feel so special about themselves that they feel they deserve cost on an item. Who cares that the shop has employees salaries, health insurance, other business insurance, taxes, power bills, etc. Screw all that, as long as you get an item at cost. The cost price doesn't mean anything, its the operating percentage thats left at the end of the month that matters.

    People used to ask me when i was in the electonics bussiness for a deal. One guy I remember told me he knows the stuff there has a double mark up and he was willing to pay half. I asked what he did for a living, he sold cars. I told him i'd sell him any computer in the place for half price, but in return I wanted a car for half price. He left. Fat margin days are over in any retail business. Breaking even is a hard goal sometimes. We ran 20-30% margins before expenses. Sadly I saw that company on the news going out of business currently.

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    Many people think that the markup is how much the bike shop actually makes on a bike. They think that if the shop sells the bike for $50 more than they paid for it that the shop made $50.

    NOT !

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    You need a new bike supcom's Avatar
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    I suspect that bike shops are much like computer stores. The big ticket items (computers/bikes) are marked up a small amount to be competitive. The consumer looks at these prices when deciding where to shop. But the accessories (printer cables/jerseys) are marked up a huge amount because nobody drives around town comparing prices on a cable.

    Someone used a grocery store as an example. However, a grocery store has a different buisness model. Grocery stores are very high volume operations. I have read that the typical grocery store turns over virtually their entire stock every TWO days! You can run pretty small markups when the goods are flying off the shelves. I suspect the typical LBS owner would dance a jig if he turned over his stock every two months. Product sitting on the shelves is tied up capital, probably borrowed with interest payments due.

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    Airborne Titanium EricDJ's Avatar
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    I'd spend a lot of time ringing up accessories, small items are what pay the bills.

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    I drink your MILKSHAKE Raiyn's Avatar
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    Quote Originally Posted by EricDJ
    Why do people ask this. Why do people feel so special about themselves that they feel they deserve cost on an item. Who cares that the shop has employees salaries, health insurance, other business insurance, taxes, power bills, etc. Screw all that, as long as you get an item at cost. The cost price doesn't mean anything, its the operating percentage thats left at the end of the month that matters.

    People used to ask me when i was in the electonics bussiness for a deal. One guy I remember told me he knows the stuff there has a double mark up and he was willing to pay half. I asked what he did for a living, he sold cars. I told him i'd sell him any computer in the place for half price, but in return I wanted a car for half price. He left. Fat margin days are over in any retail business. Breaking even is a hard goal sometimes. We ran 20-30% margins before expenses. Sadly I saw that company on the news going out of business currently.
    Thanks for the post. I couldn't agree more

  18. #18
    cs1
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    Quote Originally Posted by 2manybikes
    Many people think that the markup is how much the bike shop actually makes on a bike. They think that if the shop sells the bike for $50 more than they paid for it that the shop made $50.

    NOT !
    Finally, somebody gets it. Markup does not equal profit! That $50 you said after deducting fixed and variable cost is probably closer to $10 profit. Consumers or ELO's have no idea of how much it costs to run a business. I learned the hard way.

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    totally louche Bekologist's Avatar
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    I think there's large variability in prices, even among brick and mortar retailers, especially on accessories. One product I see great discrepancies on is Brooks Saddles, one nationally reccommended shops sells one, for example, at 195 dollars. Another store, lesser well known, sells the identical product, for 135 dollars. This is a brick and mortar store and not an internet company in Tunisia.

    A price difference of 30% is significant. I see similar price discrepancies at some of the highfalutin bike shops hereabouts. Some, not all, small shops charge big markups. I still try to frequent the independants though. No single shop seems to have better prices across the board, its very hit and miss.

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    Quote Originally Posted by slagjumper
    I think that the mark up is around 30%. The mark up on shoes is 300%. I buy stuff from 2 LBSs all the time. Don't begrudge them the money. Most bike shops need that / count on bike sales to pay for all fixed costs. If you buy stuff all the time and get to know the owner, they might cut you some slack. Especially if you know just what you want and you dont seem like the type to come back later and be a pain.

    The real money maker in the bike business is the importer. Its only one guy for like 90-95% of the whole damn US market. He basically specs the bikes in china, gets them to put it together in accordence with what folks will buy and us saftey regs.

    If you really want to save, buy used.
    Are you sure it's only 30%? I heard it's more like 100% from several people who work at bike shops - their cost for a $700 bike is around $350. Bike parts are definitely at least 100% - I was given a wrong catalog once, and the prices listed there (I assume that was what the shop pays) were at most half of advertised prices. You can't really compare that to computer stores - margins on hardware are tiny, probably less than 10%. No wonder CompUSA always has those "cost + 5%" sales on hardware, you're essentially paying the full price.

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    Senior Member rule's Avatar
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    When in doubt, figure on 100% per my buddy with 25+ years in the wholesale bike parts business.

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    fmw
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    Quote Originally Posted by rule
    When in doubt, figure on 100% per my buddy with 25+ years in the wholesale bike parts business.
    In retail margins are figured by (sell-cost)/sell. That means that a "keystone margin" or one in which the selling price is twice the cost is 50%, not 100%. Just wanted to clear that up.

    I don't know what dealer bike margins are and don't care. I don't like being hosed on some items, though. A dealer recently charged me $20 for a package of Cinelli bar tape. Recommended sell is $11.95 and I assume cost is about 1/2 that or $6. Clothing has margins like that because of the need for end of season markdowns but not hardware that is not fashion oriented. The dealer wouldn't have been likely to lose my business on a bike but he lost it by hosing me that badly on bar tape. Common sense should prevail. If greed is required, then the dealer should find something else to do for a living. Personally, I build my own bikes and buy everything on-line, including bar tape. It is the best solution for me and I can afford any bike I want. Common sense, however, prevails with me.

  23. #23
    Zippy Engineer Waldo's Avatar
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    Quote Originally Posted by krezirussian
    Are you sure it's only 30%? I heard it's more like 100% from several people who work at bike shops - their cost for a $700 bike is around $350.
    Wrong. Speculation is not your friend. Speaking of which, find some new bike shop friends that can do math.

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    Senior Member Brian's Avatar
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    Quote Originally Posted by fmw
    [SNIP] A dealer recently charged me $20 for a package of Cinelli bar tape. Recommended sell is $11.95 and I assume cost is about 1/2 that or $6. Clothing has margins like that because of the need for end of season markdowns but not hardware that is not fashion oriented. The dealer wouldn't have been likely to lose my business on a bike but he lost it by hosing me that badly on bar tape. Common sense should prevail. [SNIP]
    I don't get it. That was the asking price, that's what you paid. Did he force you to buy it from him? Could you have gone to another shop?

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    The Red Lantern Rev.Chuck's Avatar
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    "We have a huge markup on the bikes we sell. Huge! Just yesterday" < Sarcasm, for those that missed it.

    "The mark up on shoes is 300%" ??, No where near. Not in these parts.

    "The real money maker in the bike business is the importer. Its only one guy for like 90-95% of the whole damn US market. He basically specs the bikes in china, gets them to put it together in accordence with what folks will buy and us saftey regs" No.

    "they hire an enthusiastic student for $7/hr and charge the customer $30/hr." Well I am a quasi enthusiastic 39 year old that gets $10 an hour and we charge $60 an hour.

    "In the USA the median national salary for a bike mechnic is $19,425. This information is from salary.com.
    That works out to about $9.33 per hour." Oh, I beat the curve.

    "Are you sure it's only 30%? I heard it's more like 100% from several people who work at bike shops - their cost for a $700 bike is around $350" Wrongo

    "Recommended sell is $11.95 and I assume cost is about 1/2 that or $6." Recommended where? Cost for cinelli is quite a bit higher than $6

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