FlashBazbo

I think this thread misses the key ingredients that establish price. A few key facts:

1. Almost nobody (relatively speaking) shops their local LBS against a European online shop. Very few do . . . and if their LBS finds out, they will eventually burn their houses down. 99% of U.S. cyclists don't know about a price differential. It has never occurred to them to buy bike components from Europe. For 99% of the market (or more), this isolates the two markets.

2. In any market, the retailer is going to sell the product at as high a price as they can get away with while still selling the volumes they want/need to sell. It's a supply and demand thing. If I can sell groupsets for $2300, I mark them at $2300. If they don't sell at $2300, I mark them down to whatever price will make them move out the door. In the U.S., it appears cyclists have a tolerance for higher prices on SRAM than cyclists in Europe do. Maybe it's a patriotism thing. Maybe it's a perception-of-quality thing. Whatever it is, the European bike shops can't get the European audience to buy SRAM groupsets at the higher U.S. prices, or they would. European SRAM prices aren't cheap because SRAM feels generous.

So . . . is SRAM out to gouge the U.S. market? No. They are out to sell their product everywhere at the best price they can get in each location. That's what keeps them in business. It would be stupid for them to do otherwise.

But what gets me (and the explanation is exactly the same) . . . why do mid- to high-end bikes cost as much as motorcycles????

In other words, SRAM prices are higher in the U.S. because U.S. cyclists will pay those prices. European SRAM prices are lower because European cyclists don't think the product is worth a higher price. It's not a conspiracy. It's just reality.

Sy Reene

So you seem to be a mind that SRAM is pocketing the price differential, not QBP or some other middleman?

RShantz

Forgot the fly to London option.

evan326

So that wasn't sarcastic? I should get a part time job just to buy something for a fair price?
Glad I'm not in the market for any sram parts, other than maybe a cassette which I've found on ebay for a COMPETITIVE price.
OP: try bikewagon or just be patient with ebay.

PepeM

'Fair.'

noodle soup

No sarcasm at all. I was telling the OP how he could buy the groupset he wants at a far better price than what any retailer can offer.

I know many cyclists that "work" at a LBS just to get employee prices.

Seattle Forrest

If you don't like what something costs, you can choose to not buy it, or you can figure out how to get it cheaper. You got some advice about how to get it cheaper. If that's too much effort, print this post out and bring it to LBS, they'll give you two free groupsets for it.

I've known several people who worked minimal part time jobs at REI and other stores for the employee discounts. A lady I used to work with, she's a computer programmer, she also works in the camping department, and every summer she has the newest and lightest gear.

FlashBazbo

I didn't address that topic at all. It's not relevant. Why not? Because the retail price is determined by what a buyer is willing to pay at the retail transaction. Contrary to what the news media thinks, a retailer cannot automatically pass along every added cost that comes into the supply chain. If the total cost of the product to the LBS (counting middleman, taxes, utilities, rent) is higher than the price his customer is willing to pay, the LBS is out of luck. If he sells it, he's going to sell it at a loss. Money out of his pocket for the privilege of selling the product. Customers don't care what additional costs their LBS has. They just know what the LBS is asking for the product. If the customer thinks it's a reasonable price, they buy it. If the customer thinks it's too high, they don't. They buy something else or somewhere else. But it's the retail interaction that determines the retail price.


Individual customers don't determine the U.S. price of SRAM components. But customers, as a group, absolutely determine that price. If the price is too high, they don't buy. If they don't buy, SRAM makes sure the retail price drops until they do.

noodle soup

I agree with you 100%.

If you can't afford the luxury stuff you want, why not work a job that will allow you to purchase those products at a discount, and earn a little extra money to buy those goods at the same time?

Sy Reene

You said that that "they are out to sell their product.. at the best price they can get.." Who is "they" in your sentence?
I'd love a breakdown of where the $1500 (100%+) cost difference between US and Anywhere Else is going. Not sure anybody knows.

PepeM

Has that '$1500' difference been confirmed? All I could find was the pack that comes with FD, RD, and the shifters. The difference between Merlin and Clever Training was more like $300.

FlashBazbo

This ought to be self-evident, but none of the parties involved -- not SRAM, not QBP, not the LBS, not the tax man, not the landlord -- is in this for charity. Every one of them is out to sell their product at the best price they can get. If you work for a living, you probably sell your time and effort for the best price you can get, too. That's your product. Ever turn down a raise to do the same work at the same workplace? No? Then you're normal. You're selling for the best price you can get.


Where the differential goes is irrelevant. If the U.S. bike shop can get $1500 more for a product -- any product -- they're going to charge that for the product. If they could charge and get $1500 more in Europe, you can be certain that they would. If workers in China, doing what you do for a living, are doing it for $3 a day, would you voluntarily reduce your wage to $3 a day? Of course not. Well . . . the SRAM / QBP / LBS chain wouldn't do that, either. It would be foolish.


U.S. customers, as a whole, clearly think the exact same product is worth $1500 more than European customers do. That's the only reason U.S. customers pay more -- because we (as a group) will. Price is not determined by cost. Price is determined by what the buyer will pay. (You could argue that it's because U.S. component buyers are not nearly as smart as European component customers.)

RNAV

Yes, yes, economics 101.

In my case, when SRAM cutoff UK retailers from shipping to the US, my bottom line cost went up significantly. My pre-cutoff budget allowed me to buy two SRAM groups. Post cutoff, my budget could only buy 1 SRAM group. I can only speculate which was better for SRAM: selling one group at a higher price vs. two groups at lower prices.

At the end of the day, I've got two bikes with SRAM where I'd originally planned on 3. And now I'm considering jumping to a different brand entirely, after having ridden exclusively SRAM since the early 2000s. Pissing off your customer base doesn't sound like good business to me, but then I'm a sample size of one.

noodle soup

SRAM is trying to make sure that US retailers can make a reasonable profit, while selling their components.

Why do you hate America?

Sy Reene

So..unclear in all of this. Are the eg. UK LBS stores not making a reasonable profit, or are they actually also scrooed by their own country's online big boys (ribble, pbk etc..) and can't sell anything either and survive?

RNAV

Bwahahaha! That's the funniest thing I've heard all day.

Let's use easy numbers for an example:

A) SRAM sells Red22 Group to UK retailer for $900 USD. UK retails it for $1400USD. Retailer makes $500.

B) US LBS cost on same Red22 Group is $2000. LBS sells Red22 group for $2200. LBS makes $200.

If SRAM can sell the Red22 group to a UK retailer for $900 USD, why can they not also sell it to a US LBS for $900?

SRAM isn't trying to protect crap, and their cost to put groups into the hands of US LBS's can't possibly be anywhere near double what it costs them to put groups in the hands of foreign retailers.

If SRAM really wanted to protect LBS's, they'd get groups into their hands at the same cost that foreign retailers pay. Then LBS's can be competitive. As it is now, US LBS's cost is higher than UK retail prices.

So all this begs the question: are you a corporate shill for SRAM?

FlashBazbo

I don't know the answer to your question. Wholesale pricing and margin strategies vary and they depend on what the manufacturer is trying to accomplish at the time. But I work in manufacturing and I have a general idea how much it costs to make component parts. SRAM's break-even on these components is an obscenely small fraction of the retail price. If SRAM needs the Euro folks to make a reasonable margin on these products, SRAM's got room.

noodle soup

I'm glad you took it the right way.

WhyFi

I'm currently bike shopping and I've totally considered it.

noodle soup

Just for the sake of accuracy, use $1095 as the dealer cost for an eTap mini-groupset(that is the dealer cost from QBP).

BTW, asking if I'm a corporate shill for SRAM is the funniest thing I've heard all day. I think SRAM is garbage, but I left that out of this thread because my opinion of their product isn't relevant to this thread.

RNAV

[thread drift]Dang it, I had a typo. Don't you hate it when you have a typo, and then someone goes off and quotes your typo, and then you can't change it? Now my error is just stuck out there. Forever.[/thread drift]

I'm all for LBS's making a reasonable profit. I actually do travel to Europe for business and could have picked up two Sram groups there and stayed within my budget. But I didn't feel like waiting for another business trip, and my LBS was able to get their SRAM rep to lower their cost to the point where my final price was about $100 more than what I would've paid in the UK.

RNAV

Oh, I was referring to mechanical Red22. Of which I have no idea what dealer cost is.

Merlin's sale price on the mini-group is $1153.95.

FlashBazbo

Short answer: Because SRAM isn't a charity. They don't WANT to sell their products for less. They want to sell them for more. (Do you want to work for a lower wage or a higher wage? Huh? Think about it!)


Longer answer: Believe me when I say that SRAM isn't asking your question. SRAM is asking, "If we can sell the Red22 group to a US LBS for $2,000 USD, why can't we also sell it to a UK retailer for $2,000 USD?" There are people at SRAM whose entire JOB is to find a way to push up that selling price in the UK.


If you know you only have a market of 100,000 groupsets that anybody will buy this year, would you rather sell them for $900 or for $2000? There's only a finite number of these groupsets that are going to move. You're NOT going to sell double the number by cutting your price in half. You might sell 5% more -- MIGHT. What price do you want for those groupsets? (Hint: If you want to stay in business, maximize that price. You only get to sell it once!)

WhyFi

The PBK kit at $1273 seems to be a match for the R&A MiniGroup at $1680. A difference of $1500 sounds more dramatical, though, so let's just stick with that.

noodle soup

I highly recommend it. I'm sure you know more than the average PT shop employee, and if you don't it would be a learning experience.