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Old 07-31-16, 08:04 PM
  #42  
rpenmanparker 
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Location: Houston, TX
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Bikes: 1990 Romic Reynolds 531 custom build, Merlin Works CR Ti custom build, super light Workswell 066 custom build

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Originally Posted by RoadGuy
A shop that holds onto a 2013 model year bike to try to get $1100 on a $1300 bike will never get back what they have invested in the bike, no matter how long they wait for that "dream" customer.

That bike is almost four years old. By now, the shop owns that bike, regardless of whether they originally received it using "flooring" (someone else paid for the bike initially to get it into the shop, and would have been paid for the bike when it sold), or paid for it outright when it was delivered or on a Net-Account. That means that for the past four years, the shop has lost the cost of Interest on the money that the bike cost when it was brought in.

I don't know how much they paid for it. But let's assume 40% discount. $1300 X 40% = $520. Net cost at time of delivery $780, plus freight. What do you think about the cost of money? On a credit card, you might be paying $17%-20%. Let's say the shop gets a business loan at 10%, and let's figure simple Interest to make it easier to calculate and round-off. Age the loan four years. That's $78 + 8, $86 + 9, $94 + 10, and $104 + $11 OR $400.

So the cost of getting that bike into the shop and holding it for four years is about $1180. That's $80 more that the shop just sold it for. And that's not considering the cost of processing the payment for the bike (credit card 3% = $35, cash is 1%-2% = $12-$24).

As I wrote at the beginning of this post, a Loser for the Shop no matter what it does now.
Shop may use a factor to buy the merchandise, but there is no way they are carrying the credit for years. That loan is paid off very fast.
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Originally Posted by LAJ
No matter where I go, here I am...
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