Old 04-26-07, 02:13 AM
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Zinn-X
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Join Date: Jul 2006
Location: UCSC
Posts: 885

Bikes: 2006 Masi Gran Corsa Premio custom build: Full 105, Easton EC70 fork, Easton Circuit Wheelset // 2007 Specialized Stumpjumper (stock for now)

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any product or service provider will tell you that the money is with the higher-ticket items. profit margins on low end goods are lower. additionally there is a certain amount of administrative overhead that goes into selling any bike; this is a flat opportunity cost which eats into margins even more on cheaper items (employee time, retail space, accounting, orders, people who walk in wanting free adjustments on a bike they bought a year ago).

another reason high end prices are flexible is because of your typical customer:

if someone walks in saying "i want to spend $3000 on a bike" chances are good that you can sell them on a bike and $600 worth of accessories.

someone comes in saying "i've got $200 and some change in my pocket" they are probably going to waste your time. even if a shop owner can sell them on a cheap (low-margin) bike, there will be no left over money for high-profit accessories.

additionally, bike shops assume a certain amount of risk by selling bikes. namely, the risk that their customers might be jackasses, mess up their bikes and bring them back in demanding either free service or just wasting a lot of time. and time is money, especially in the warm season.

it's basic economics.

Last edited by Zinn-X; 04-26-07 at 02:20 AM.
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