When I converted my first bike, I wanted to see how much it cost me, so I wrote down all the parts, their costs and where I got them from. Here is the breakdown of my latest bike, which is mostly the same parts as my first conversion:
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Frame
Frame:$10-Miyata 310 (Garage Sale)- Came with 1st gen shimano 105, bent fork, bars, stem, Sakae cranks, heliocomatic wheels and rusted stiff chain
Drivetrain
Cranks:$80- vintage Sugino Track (Ebay)
Chainring-Gipiemme 50t (Came with cranks)
BB:$5- Shimano cup and cone (Bike Church)
Cog:$21- Surly 19t (Bike Church)
Lockring:$4- Formula (Bike Church)
Chain:$14-SRAM PC1 (LBS)
Pedals:$10- MKS GR-9 (LBS)
Clips And Staps:$20 Generic Plastic clips and Soma singles (Parts Bin/LBS)
Wheelset
Wheels:$135-Formula hubs laced 3x to Mavic CXP22s (Greatdealsonbikes.com)
Tires:Front:~$18-Michelin Dynamic (LBS)
Rear:~$40-Continental Gatorskin (LBS)
Saddle and Post
Saddle:$0-Selle Italia Flite (from a bike I am flipping on CL)
Seatpost:$5-Generic Used post (Bike Church)
Brakes
Brake Levers:$5 Shimano Exage 600EX Aero (Bike Chruch)
Brake:$0-Cheapy Shimano sidepull (Came with frame)
Pads: $2-Some generic **** (Bike Church)
Steering
Stem:$0- SR (Came with frame)
Bars:$0- Sakae Road Champion drops (Came with frame)
Bar Tape:$8-Cork tape (Bike Church)
Labor:$25-5 hours at Bike Church installing bb and straightening fork blades
$1.55-Tecate tallboy and 2 hours at the house putting the rest together
TOTAL:~$403.55, unless I ****ed up the arithmatic
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If i tried to build this bike up without a bike coop like the Bike Church, I would have spent a lot more on parts and labor at the LBS. The BB for example was only $5 because someone donated a whole box of them. A comparable BB at an LBS would have been at least $25-30. Digging through used parts bins can also shave some $ off the final cost. Also, you can find quality bike parts in some unusual places, go dumpstering and look at thrift stores. I recently found a pair of beautiful 9 speed Campy Daytona deraileurs at a thrift store where you pay by the pound. I think I paid a dollar.