What is the major driver of frame cost? R&D or Manufacturing Cost
10-09-15, 03:37 PM
#77
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Sure, but it is significant that no insider has ever given real cost data to us. All they have told us is that the high
-mark-up-by-manufacturers proponents are wrong for various reasons. But no actual cost data. All reasonable stuff like R&D, liability, advertising, warranties, but no real facts. Isn't that significant?
We are continually told we don't know what we are talking about, but where is the proof?
-mark-up-by-manufacturers proponents are wrong for various reasons. But no actual cost data. All reasonable stuff like R&D, liability, advertising, warranties, but no real facts. Isn't that significant?
We are continually told we don't know what we are talking about, but where is the proof?
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Formerly fastest rider in the grupetto, currently slowest guy in the peloton
Formerly fastest rider in the grupetto, currently slowest guy in the peloton
10-09-15, 04:30 PM
#78
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I spent three decades in technology for a Fortune 50 company, and yes I knew to the penny what our products cost to make and sell. No I couldn't divulge the information.
10-09-15, 05:23 PM
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What sets prices are competition (lots with bicycles), cost of production including distribution and sales, and anticipated value customers see in your features. Most companies have very elaborate ways of computing all this but this is the essence.
10-10-15, 10:08 AM
#80
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The major driver is consumers.
1.There are those that love to pay too much for everything. Keeps them exclusive. 2.Those that will pay more when they sense value. 3. Those that can't pay as much but are still demanding. 4. Those that stretch a nickel into an oval.
Every market has a lifespan. Every company has a business model. If you can sell to group 1 and make a living - you're golden. But start to expect competition.
You work to sell to group 2. Advertising, warranties, extra amenities(finishing, tuning,perquisites),and competition to demonstrate performance are ways to build up market perception.
By now, your competition is getting investment by showing they can do the same thing as you for less cost. Investors like that. This is also what opens the market to groups 3 and 4. But no one wants a race to the bottom. (maybe Walmart)
An example: Ford built the Explorer on a cheap pickup truck - the Ranger. They did market studies. They priced the new Explorer higher based on those studies and made huge profits compared to the Ranger. Later they made a four door pickup truck. They did market studies. They found that if they called it a Ranger it could sell for a little more than a 2 door Ranger. If they called it an Explorer, they could sell it for MUCH more. So they did. Less investment (time, money, resources) made more money. That is what every business wants.
1.There are those that love to pay too much for everything. Keeps them exclusive. 2.Those that will pay more when they sense value. 3. Those that can't pay as much but are still demanding. 4. Those that stretch a nickel into an oval.
Every market has a lifespan. Every company has a business model. If you can sell to group 1 and make a living - you're golden. But start to expect competition.
You work to sell to group 2. Advertising, warranties, extra amenities(finishing, tuning,perquisites),and competition to demonstrate performance are ways to build up market perception.
By now, your competition is getting investment by showing they can do the same thing as you for less cost. Investors like that. This is also what opens the market to groups 3 and 4. But no one wants a race to the bottom. (maybe Walmart)
An example: Ford built the Explorer on a cheap pickup truck - the Ranger. They did market studies. They priced the new Explorer higher based on those studies and made huge profits compared to the Ranger. Later they made a four door pickup truck. They did market studies. They found that if they called it a Ranger it could sell for a little more than a 2 door Ranger. If they called it an Explorer, they could sell it for MUCH more. So they did. Less investment (time, money, resources) made more money. That is what every business wants.
10-10-15, 01:41 PM
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10-10-15, 01:47 PM
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Thing is, you could say that about most 3rd level frames too.
10-10-15, 03:05 PM
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and, after all, there are those that WOULD pay an extra 800 dollars for some extra bling and a little less weight.
10-10-15, 04:00 PM
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