Inpd

Hi,

I've always been curious why those $3000 frames cost $3000. Is it *mainly* due to the large cost of R&D to work out the exact geometry and tube thickness that gives a good ride or is it *mainly* due to the manufacturing cost since air cooled, triple butted frames are much more expensive to make.


Thanks!

RJM

Mark up.

rpenmanparker 

Neither kind of cost is the principal driver. My belief is that the bike companies practice what is known as "value pricing", another way of saying what the market will bear. In other words what the buying public will agree that the bike is worth. So features play a huge role in establishing that price as does the competitive landscape. With a specialty item like a top-of-the-line bike the costs should not be much of a factor.

rms13

Driving factor is what people are willing to pay

bbbean 

Why does it matter?

rpenmanparker 

I can't say why it actually matters to the OP, but here is a possibility why it could. Supposing OP is trying to decide whether a Chinese CF bike COULD actually be well made. If it costs $2,000 to actually do it right in the USA or Taiwan, even with lower labor costs in China it isn't very likely that a frame that SELLS for $450 delivered is well made. Some shortcuts must have been taken. But if it only costs $500 to do it right in the USA or Taiwan, then it is reasonable that with lower labor costs it could be done cheaply enough in China to sell it for $450. If you can know that the big name sellers in the USA are simply giving the public the price they expect and think appropriate for the best-of-the-best, but it really doesn't cost all that much to make the frame, you can be a bit more confident about buying such an inexpensive frame from China. Or at least that is one way to look at it.

I'm taking no sides here, just saying what I think could be a reason for caring.

TrojanHorse

Dunno, he's been on a convoluted quest to rationalize his bikes direct purchase and dog so-called "halo bikes" for months.

Seems pretty simple. if you like your bike, ride it. If you don't, get a different one. I know people who ride BD bikes and you never get this level of teeth gnashing out of them. It's crazy.

69chevy

Marketing

verdugist

I honestly think most bikes are overpriced. e.g. Pivot Mach series with Shimano electronic shifting system ($10k). But that is using a new technology where (supposedly) the shifting system accounts for $4k of the cost (which is absolutely, horribly ridiculous).

What are the actual manufacturer's costs to make the frame that are sold to consumers for $3k? I bet it's lower than $1.5k if you factor in all R&D, staff payroll, marketing/advertising, etc. And that's why if you don't care about warranty, buy used.

Yeah, out of curiosity, what are the profit margins for mountain bike manufacturers?

"The average store maintains a 36 percent profit margin on bicycle sales"

https://www.bicycleretailer.com/opini...it-bike-stores

bbbean 

Maybe its just because I trade commodities for a living, but anything is worth what someone will pay for it. All my bikes have been well worth what I paid for them. If they hadn't been, I wouldn't have bought them. The profit the manufacturer made or didn't make is irrelevant. I've gotten tens of thousands of dollars worth of entertainment, utility, and health benefits from bikes that only cost a few thousand. Seems fair to me.

BB

RPK79

Manufacturing cost is really not a major driver for any consumer product.

Inpd

I think your crazy! You have this morbid fascination with the company and see it in every post. Did your wife/mother/girlfriend/sister run off with Jeff (or who ever is the owner of BD)!

Inpd

So then why don't Shimano do it?

What got me thinking is that a frame can cost $3000 but the entire amazing 105 groupset (cranks, STIs, cassette, FD, RD etc.) can be had for $350.

rpenmanparker 

That is a ridiculous comparison. A $3000 frame doesn't compare to 105. It compares to Dura Ace or Red or Record/Super Record. There is no discrepency there. 105 normally goes on a $300 frame, not a $3000 frame.

Inpd

Good point. But my point was that the 105 groupset is pretty darn good and cost $350. But most $350 frames are pretty average.

TobinH

My frames usually cost around $1500. When I think about the material cost, and the labour for welding, machining and cutting, it seems about right. So the cost of my frames are obviously driven by manufacturing cost. Of course, they're steel.

Inpd

So I was looking at this frame Pinarello Dogma 60.1 Frameset. As well as being made of CF it also has some pretty unique properties like being asymmetrical. Surely that must make manufacturing more expensive.

rpenmanparker 

Competition won't let Shimano dumb it down any further even at that price point. Maybe $350 frames are actually better than you think. Lots of elitist BS going on out there.

Wilfred Laurier

105 is fantastic stuff, but almost mediocre compared to Dura Ace or Ultegra. I doubt DA is anywhere near the 3 or 4X more expensive to manufacture than 105, but it costs that much more.
And Di2... and I bet the Di2 stuff is no more expensive (or possibly less expensive) to manufacture than equivalent mechanical stuff.

Inpd

Lets make this more grounded in an area I know a little about. Steel frames.

I've been eyeing a nice steel bike for a while. With respect to steel frames $350 will only get you a Breezer Venturi which is cheap since its discontinued. Just about every other decent steel frame is $1000+

I suspect very good frames are bit more expensive to produce that what we think or would like them to cost!

rpenmanparker 

I still disagree. Fine steel frames are at this point in history exotic. They are quite cheap to produce, but command a premium due to their specialness. Steel frames can easily be produced robotically for very little. If it costs a little more to do it by hand, it is only done that way because of the perceived value it brings. If an artsan custom builder is self employed, you could raise the nominal manufacturing cost by defining the entire profit as his salary. But in fact the same frame could be made in Asia by a big company for pennies on the dollar...if there were any demand for that...and all the profit would be just that, not the builder's salary.

hueyhoolihan

yep.

those european and us marketing vp's must have a multi-million dollar home (plus a condo in Aspen) and there are usually more a few in every big name bike manufacturer.

if you don't believe it, create a product, start your own business, then sit down with a few people that you feel are knowledgeable WRT the business and discuss the product's pricing. the discussion will always center on the best markup that can be obtained, never on whether or not it's commensurate with costs.

as mentioned, what the market will bear rules.

Inpd

In other words we are all bafoons?

At least my explanations left us with some pride ...

dksix

I saw a listing on eBay for one of the tube sets (Reynolds 531) and the asking price surprised me Reynolds 531 Butted Road Bike Steel Tube Set 11 Piece Retro Lugged Braze | eBay . Butting or hydroforming tube sets is probably costly due to the limited manufactures. That 531 tube set is one of the lower level sets based on a custom builders site (forget which one, seems like it was English, the prices were in £). Some of the other tube set raised the price 300-400 £.

In general I do think it's consumer driven. When $3000 frames don't sale there won't be any being made and as long as $3000 frames sale someone will try to get $3250 out of the next one. Another thing driving high end bike prices are high end wheels, often a high end wheel set can be $2K+. Brands that have presence in the US have to have a large marketing and legal budget.

In the end, it's what something is worth to you. So many things I break down into usage cost. If I ride my bike 5000 miles at 15 miles/hours that's 330 hours, if the bike cost $1000 that's $3/ hour. If I'm willing to pay that I do, if not I don't, how that $1000 is broken down by everyone in the line that brings the bike to me is really none of my concern.

hueyhoolihan

i'm not sure my post leads directly to buffoonery...

and i'm sure i didn't read all the posts. just the ones with which i agreed.