How Much is Too Much?
08-26-18, 07:51 PM
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The recent thread, Side-Job??, touches on a subject I've lived and worked with for 45 years, How much margin, no I mean how much profit is enough for a transaction to be acceptable? When a reseller decides what price they will set for their product at what point is the buyer agreeable to/willing to, or not, pay.
08-26-18, 07:52 PM
#27
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If the LBS owner also works in the store/shop a salary should be included before we talk about profit. Because otherwise an employee/manager would have to be hired and paid.
that is if the "boss" is not one of the types that actually make the day less efficient when he is present.... whoever saw "the Office" knows what i mean
that is if the "boss" is not one of the types that actually make the day less efficient when he is present.... whoever saw "the Office" knows what i mean
08-26-18, 08:00 PM
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Your inquiry seemed to ask something different than what your intent really was.
it just so happens that others that choose to give there feelings towards a global answer unknowingly exposed what you were wanting to ask.
Those that directly answered the initial post were some how offbeat with there response.
Remember that customer satisfaction plays a large role when interacting with prospective buyers.
it just so happens that others that choose to give there feelings towards a global answer unknowingly exposed what you were wanting to ask.
Those that directly answered the initial post were some how offbeat with there response.
Remember that customer satisfaction plays a large role when interacting with prospective buyers.
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08-26-18, 09:18 PM
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Yes, this whole thread begs the question of intent.
The OP's question seems to draw a conflict between agreement and acceptance, where there is none. If the parties agree then whatever profit (and anything else) in the price is acceptable. Agreement is implicit in the transaction.
Maybe this thread is really about an internal dissonance due to the common indoctrination: "profit is bad." If so, just take a slightly closer look at those who promote that philosophy and how they live. You'll soon conclude that their actual philosophy is "do as I say because I say so, or else" and you will be a lot happier about your earnings.
The OP's question seems to draw a conflict between agreement and acceptance, where there is none. If the parties agree then whatever profit (and anything else) in the price is acceptable. Agreement is implicit in the transaction.
Maybe this thread is really about an internal dissonance due to the common indoctrination: "profit is bad." If so, just take a slightly closer look at those who promote that philosophy and how they live. You'll soon conclude that their actual philosophy is "do as I say because I say so, or else" and you will be a lot happier about your earnings.
Last edited by AnkleWork; 08-26-18 at 09:25 PM.
08-26-18, 10:00 PM
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It's supply and demand. It's ALWAYS supply and demand. Anything in great demand... and very limited in supply is most often auctioned. An auction is supply and demand in it's purest most visible form.
Grail bikes and rare cars.... both perform their tasks almost identically to more common, less desirable vehicles. But demand for the rare (low supply) item can drive prices and profits through the roof. Whereas similar mass-produced items (large supply) can have customers waiting (low demand) for a big sale before jumping on a purchase.
Grail bikes and rare cars.... both perform their tasks almost identically to more common, less desirable vehicles. But demand for the rare (low supply) item can drive prices and profits through the roof. Whereas similar mass-produced items (large supply) can have customers waiting (low demand) for a big sale before jumping on a purchase.
08-26-18, 11:03 PM
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The recent thread, Side-Job??, touches on a subject I've lived and worked with for 45 years, How much margin, no I mean how much profit is enough for a transaction to be acceptable? When a reseller decides what price they will set for their product at what point is the buyer agreeable to/willing to, or not, pay. Be it new or used product the equation and valuation perceptions are the same.Every person survives by taking in more then they give out. Somehow someway the person must come away from their interactions, often enough, to not wither away. (Dieters know this even if they can't/won't put it into words).There are a few ways to determine what a product must sell for so the seller keeps their head above water, as there are ways that the buyer decides whether the value of said product is valid enough to agree to pay what's being asked.
The most common method talked about for the seller goes something like this- The seller's initial cost of the product plus the overheads to bring that product to the buyer plus any profit that the seller deems needed. (Note I separate the profit from the cost of doing business, their combined amount is what we call margin). At your typical LBS the cost of doing business is around 40% of the retail price. Add in the needed profit and you see why retailers margin is what it is.
Another method is to determine what the market will bare and subtract the profit and the cost of doing business to end up with what the reseller has to pay for the product to, again, stay afloat. This method is what's going on when some say "I make my money when I buy" (a backwards view in some peoples' minds but perfectly valid a method). I think this method is what many non taxed resellers (non retailers rarely claim their businesses on their taxes) use.
For the buyer it's a bit less formulaic. Here emotion/ego can enter in a greater degree and these aspects are very hard to quantify buy do affect the buyer's views just the same. Can the buyer pay the reseller the price and feel they got fair value for their money? So in the end the buyer's process is much the same as the sellers, perhaps less structurally considered but it's still an assessment of cost VS value.
For as long as humans worked in social communities these issues have existed in one form or another.
My 45 years, the different shops I've worked in or owned (Bike One in Cleveland for 15 years), have given me quite the opportunity to watch how these competing groups (resellers and buyers) work together (or not). I feel that the perception of value has shifted a bit over these years, certainly the advent of international communication and distribution (first it was mail order and now on line) has added to the mix to a degree that wasn't present when I started this work back in 1973. I find vastly more reseller/buyer situations these days where the value/price is questioned then was the case back then. This isn't right or wrong, just what we have "evolved" to. So the question as to how much cost is too much is one we, as resellers, deal with daily.
So I put this out here. How much profit is acceptable to agree to? As buyers we make this judgement all the time. Is that mocha, egg mic whatever, micro brew. What's your idea of what profit (not margin) that's Ok to you for your reseller to earn when dealing with you? Andy
I might have titled this thread as "How Much is Enough" or "Will You Let Me Eat".
The most common method talked about for the seller goes something like this- The seller's initial cost of the product plus the overheads to bring that product to the buyer plus any profit that the seller deems needed. (Note I separate the profit from the cost of doing business, their combined amount is what we call margin). At your typical LBS the cost of doing business is around 40% of the retail price. Add in the needed profit and you see why retailers margin is what it is.
Another method is to determine what the market will bare and subtract the profit and the cost of doing business to end up with what the reseller has to pay for the product to, again, stay afloat. This method is what's going on when some say "I make my money when I buy" (a backwards view in some peoples' minds but perfectly valid a method). I think this method is what many non taxed resellers (non retailers rarely claim their businesses on their taxes) use.
For the buyer it's a bit less formulaic. Here emotion/ego can enter in a greater degree and these aspects are very hard to quantify buy do affect the buyer's views just the same. Can the buyer pay the reseller the price and feel they got fair value for their money? So in the end the buyer's process is much the same as the sellers, perhaps less structurally considered but it's still an assessment of cost VS value.
For as long as humans worked in social communities these issues have existed in one form or another.
My 45 years, the different shops I've worked in or owned (Bike One in Cleveland for 15 years), have given me quite the opportunity to watch how these competing groups (resellers and buyers) work together (or not). I feel that the perception of value has shifted a bit over these years, certainly the advent of international communication and distribution (first it was mail order and now on line) has added to the mix to a degree that wasn't present when I started this work back in 1973. I find vastly more reseller/buyer situations these days where the value/price is questioned then was the case back then. This isn't right or wrong, just what we have "evolved" to. So the question as to how much cost is too much is one we, as resellers, deal with daily.
So I put this out here. How much profit is acceptable to agree to? As buyers we make this judgement all the time. Is that mocha, egg mic whatever, micro brew. What's your idea of what profit (not margin) that's Ok to you for your reseller to earn when dealing with you? Andy
I might have titled this thread as "How Much is Enough" or "Will You Let Me Eat".
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08-26-18, 11:52 PM
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I have no idea on the profit margins of bike shops. I suspect there is never "too much" profit especially when dealing with different bicycle companies that place certain demands on the retailer.
Obviously profit needs to be high enough to maintain decent employees and provide the owner with a wage that us greater than working at Costco.
I understand the buyer-seller relationship, supply and demand economics, but the store isn't in business for the customers, it is in business to make money for the owner and provide wages for the employees. If it is not possible to maintain customers/sales and provide for the owner/employees, the continuation if the business needs to be re-evaluated; as sad as that might be.
In this day and age small business retail sales has to be one toughest environments to be successful. Close to where I live there is a bicycle mechanic that works out of a small industrial unit. He has a mechanic helping him from time to time. He can get parts, but will install customer parts. He is reasonable and seems to be busy. I have to think his low overhead and lack of inventory go a long way to keep his costs down; and he doesn't have to make enough to offset bicycle sales.
John
Obviously profit needs to be high enough to maintain decent employees and provide the owner with a wage that us greater than working at Costco.
I understand the buyer-seller relationship, supply and demand economics, but the store isn't in business for the customers, it is in business to make money for the owner and provide wages for the employees. If it is not possible to maintain customers/sales and provide for the owner/employees, the continuation if the business needs to be re-evaluated; as sad as that might be.
In this day and age small business retail sales has to be one toughest environments to be successful. Close to where I live there is a bicycle mechanic that works out of a small industrial unit. He has a mechanic helping him from time to time. He can get parts, but will install customer parts. He is reasonable and seems to be busy. I have to think his low overhead and lack of inventory go a long way to keep his costs down; and he doesn't have to make enough to offset bicycle sales.
John
08-27-18, 05:38 AM
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It's supply and demand. It's ALWAYS supply and demand. Anything in great demand... and very limited in supply is most often auctioned. An auction is supply and demand in it's purest most visible form.
Grail bikes and rare cars.... both perform their tasks almost identically to more common, less desirable vehicles. But demand for the rare (low supply) item can drive prices and profits through the roof. Whereas similar mass-produced items (large supply) can have customers waiting (low demand) for a big sale before jumping on a purchase.
Grail bikes and rare cars.... both perform their tasks almost identically to more common, less desirable vehicles. But demand for the rare (low supply) item can drive prices and profits through the roof. Whereas similar mass-produced items (large supply) can have customers waiting (low demand) for a big sale before jumping on a purchase.
The customer may be willing to wait & pay slightly more to procure the item elsewhere rather then "deal" with the broken promises & shady business that does have it currently available & for less cost.
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08-27-18, 08:59 AM
#34
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I've noticed the B&M stores will charge more for the very same item that can be bought at the tap/click of a button in the comfort of one's home, & should you still decide to toss the B&M business the bone to make a sale, the biggest let down is they too will need to order it for you, for that same item costing you more from the B&M store. I'd much rather save myself some hassle & the transportation logistics by ordering it myself online, especially if it is also saving some money & I wouldnt even need to put pants on.
Would I be wrong to think; having the product readily available could greatly impact the sale when it comes to being an average consumer?
Would I be wrong to think; having the product readily available could greatly impact the sale when it comes to being an average consumer?
08-27-18, 11:11 AM
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Not agreeing to your logic. You are telling me that you would go to a retailer that you've had nothing but trouble with in the past instead of waiting on a different vendor's order?
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08-27-18, 11:23 AM
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Where on Earth are you from? Yes! In large areas of this planet.... buyers might be stuck with dealing with vendors they don't like and maybe don't trust. And I mean... "you go with a friend and weapons.... don't trust". You assume a market place so limited as to be unrelatable. It is all about need/desire and availability.... supply and demand.
08-27-18, 12:05 PM
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If I've gone thus far without it, maybe I really do not even want to proceed demanding it.
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Last edited by Troul; 08-27-18 at 12:13 PM.
08-27-18, 12:11 PM
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08-27-18, 04:21 PM
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It's not cut & dry as you'd like it to be.
The demand can remain, the source of supply can fluctuate based on the consumer's retailer choice.
too many variables you're choosing to be oblivious to.
The demand can remain, the source of supply can fluctuate based on the consumer's retailer choice.
too many variables you're choosing to be oblivious to.
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08-27-18, 04:24 PM
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If someone were to walk in to a store with an identified weapon in order to purchase a bicycle or parts, the outcome may not be favorable to the person with the weapon.
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08-27-18, 04:36 PM
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No I am not. Often in retail there are large cycles of various sale prices. But when a "hot" or large demand item presents itself... that item will be made exempt from all sales... raking in full price through normal periods of reduced pricing (until the supply is gone).
08-27-18, 04:42 PM
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No. Once again.... half the bikes on this planet are "push bikes" no-longer suitable for pedaling but great for hauling wood and/or jugs of water. When you go to trade some live chickens and a knife for a push bike... you might want to take a friend along. YOUR store may be a different situation.... but supply and demand, the basics of all sales... remain the same in all nations and with all people.
08-27-18, 04:45 PM
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I was told by a local LBS owner that Bianchi is requiring both brick and mortar and on sales (in the US anyway) follow MSRP, and sign agreements to that effect otherwise Bianchi will not sell to them. Not sure how discounts, year end sales etc are handled
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08-27-18, 05:03 PM
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Not a lawyer here! But I thought that was called "price fixing" and was strictly regulated. At least in America.
08-27-18, 05:44 PM
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or too manufactures cannot agreed to sell their top end carbon, di2 road bikes for the same price....that is price fixing
a dealer is free to set their own prices ...over or above msrp, but if they do and the manufacturer does not approve, the manufacturer can stop distribution.
from the ftc
https://www.ftc.gov/tips-advice/comp...cturer-imposed
Reasonable price, territory, and customer restrictions on dealers are legal. Manufacturer-imposed requirements can benefit consumers by increasing competition among different brands (interbrand competition) even while reducing competition among dealers in the same brand (intrabrand competition). For instance, an agreement between a manufacturer and dealer to set maximum (or "ceiling") prices prevents dealers from charging a non-competitive price. Or an agreement to set minimum (or "floor") prices or to limit territories may encourage dealers to provide a level of service that the manufacturer wants to offer to consumers when they buy the product. These benefits must be weighed against any reduction in competition from the restrictions.
If a manufacturer, on its own, adopts a policy regarding a desired level of prices, the law allows the manufacturer to deal only with retailers who agree to that policy. A manufacturer also may stop dealing with a retailer that does not follow its resale price policy. That is, a manufacturer can implement a dealer policy on a "take it or leave it" basis.
Limitations on how or where a dealer may sell a product (that is, customer or territory restrictions) are generally legal — if they are imposed by a manufacturer acting on its own. These agreements may result in better sales efforts and service in the dealer's assigned area, and, as a result, more competition with other brands.
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08-27-18, 08:33 PM
#49
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Bicycles are relatively simple and quite reliable, so you don't need a a lot of equipment to repair them (ala cars). That makes life harder for shops, in that they don't have huge supply of customers (like dealerships), but they have similar labor costs.
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