Bike pricing
 

As some of you may have seen, I'm in the market for my first road bike, and since the weather is not yet conducive to taking test rides I've been narrowing my shopping list by looking at features, specs, reviews etc.

One thing that I've noticed is that the major bicycle brands - Specialized, Trek, Giant, Cannondale - appear to have tight control over their distribution networks. Everywhere I go, everyone seems to be offering the same bikes for the same MSRP, only discounting the last of the prior-year models. This is a good thing IMO as it allows retailers to compete on factors other than pricing.

I was very surprised to see one of the models I have on my list - the Cannondale Alloy Synapse 6 - offered by REI at $180 less than the MSRP - and it's specifically the 2013 model!

Have I mis-read how pricing works in this industry, or is there something else going on here?

I suspect you've probably got it about right. I think the big retailer buying power factor is at work here.

Huge retailers can negotiate with sellers for very favorable terms in return for buying huge numbers of bikes. Sales people cut their commissions and manufacturers cut their percentage margin and make up the difference with big volume. WalMart is known for doing that. Sometimes, it doesn't work so well in subsequent years. Sales quotas tend to be based on last year's sales so, the manufacturer's rep gets put in a real bind. If he doesn't grant even more concessions, he risks not getting the huge order and, consequently, failing to meet his sales quota.

Bike pricing is little different than any other major product. That is - retailers, as part of their dealer agreement will display or advertise what is known as MAP, Manufacturer Approved Pricing. Noone is allowed to advertise below this level. Yet, everyone can discount below it.

Most of the bikes I 've bought have been bought at discounts of 15 to 20% off MAP. All were current year models. The way to go about this is to zone in on exactly what you want then shop it to different dealers. If you want to do this right you will need to ride several bikes. I bought my last road bike in 2005. I rode at least a dozen different bikes over a two month period to nail it down. When I found a winner, I then shopped that bike and got a $400 discount on a $2500 list price bike.

As for REI, i'm not a big fan. Local knowledge counts big here as results from store to store may vary. They are not experts in fit and the two REI stores in my area are manned by outdoorsy types who know little about bikes. They screwed up a bar tape job I gave them to do. Tape was a mess after less than 100 miles. Beyond that, even with all the membership mumbo jumbo, their prices are high.

It's good to look around and get the facts on all that are available... Most here will tell you that it is just as good and probably better to put that same effort into finding a good LBS and building a relationship with them.

In my own case, my LBS has helped me to get a 20 year old Cannondale running like it was a teenager and then helped me find and build a hybrid to work really really well for me. He has repeatidly bent over backwards to help me and without him I can very honestly say that he has kept me riding...

He takes pride in building a cyclist. He also looks out for my wallet by finding the best products at the best prices for me. True, he gets a markup. But I get the right thing and the right price.

And, when I walk in the door, he not only knows my name, he knows what I ride, how I ride, where I ride and how often and how far. So, when I ask a question I always get the answer that is right for ME.

Other's have similar stories of their LBS...

REI is better than Dick's or WallyWorld -- but it's still a box store...
... So even though they may sell at the lowest cost, you have to ask yourself if you can afford it?

One other thought - ride bikes in different price ranges. Go high, ride the most expensive bikes you can find. Also go low, bikes you believe are beneath your target range. THis will give you much experience in evalutaing the rides that become top contenders.

REI is a co-op, slightly different business model. Although I agree prices are often higher, I bought Merrill Trail Glove running shoes yesterday, $40 lower than the price at Zappos. So, deals can be had...and deals that don't seem to be offered elsewhere.

If you have a LBS that you want to support, buy there. If not, REI is a fine choice.

Also keep in mind, in addition to the ability to negotiate lower prices because of volume, REI has a much broader range of products than any LBS I know. Hence, they don't have to make as much off of every item they sell. Than can have some things priced lower if that item gets you into the store and encourages you to become a member.

If you need service after sale, a LBS would be a wise choice for you. If you do your own then price shopping will be your advantage. Not sure what your budget is on a new bike but $180 is not much difference on a $2500 bike. A general rule of thumb that I've been told was, that a $2000 bike will be nearly twice as good as a $1000 bike but anything above $2000 is really just more bling or fashion and no more quality. Not sure about that though as I find you can get just about as good a bike as you will ever find for just over $1000.

This is the bike I have been riding for the last two years.

http://www.masibikes.com/bikes/perfo.../partenza-2013

I recently got a thirty mile test ride on one of theses

http://www.cannondale.com/2013/bikes...mpact-crankset.

The Evo was definitely a nice bike, (though I hated the color-not the same as in the link) I personally did not feel that there was $3500 difference. If I was a younger, stronger rider, I might have.

As a retailer I might point out that some manufacturers, primarily from the socialist leaning areas of Europe, attempt to have complete control over pricing. I have some such products that I not only can not advertise other than MAP, I could be fined $10,000 per day and possibly lose my entire store if I am ever caught discounting these products.

Thanks for all the great information, folks.

Just so everyone knows where I'm coming from, I plan on supporting my LBS if at all possible. There are plenty to choose from in my area, and I should be able to find one that I'll be happy doing business with over the long haul. As far as REI goes, I have to admit that I have been extremely impressed with the quality of their sales people. Every item I've bought from them, whether it's a bike accessory, a piece of apparel, camping or hiking gear, has been accompanied by an unsurpassed customer experience. I find their people to be extremely knowledgeable about the activity that the item is used with, the product line that REI carries - both what they stock in-store and what they have available for special order (particularly out-of-season stuff), and the individual products. I have no idea what their level of competence is w/regard to bicycles, and have suspected - what with cycling being such a complex and specialized field - that REI might fall short of my needs/expectations there.

My maximum price for the "whole package" is $1500. That includes the bike, the fitting, and any replacement parts needed soon after purchase; I've seen many complaints about seats, and I'm getting paranoid about flats and suspect that the stock tires might be less reliable than what I want to ride on. So with $100 for a seat, $100 for tires and $100 for fitting, I'm down to about $1200 for the bike, though I know I could get lucky and be happy with the standard tires and seat. I've identified five models in that range that I plan on test-riding before making a purchase - The aforementioned Cannondale, Secteur Elite, Giant Defy 1 or 2 and Trek 1.5.

My hope is to get the whole package on my preferred bike - based on the test ride - within, or maybe even below my budget. Now that I understand that the dealer agreement may apply only to the advertised price, and that the dealers do have some room to deal makes me feel a little more comfortable. I want the dealer to make money off of my purchase - it's part of being a good customer - but they may have more flexibility in pricing on the fitting, or on a seat than they do on the bike, and might be able to put together a package that will work for me.

And Tom - that suggestion about test-riding bikes above and below my price range is excellent, and something I hadn't considered. I recently bought a new Simon & Patrick guitar, and after playing all five models in that line from just below to quite a bit above my preferred price-point, I ended up buying the least expensive one of the bunch as it was my clearly my favorite - not the prettiest for sure, but it sounded and played like a dream. I can see something similar happening with a bike. You do indeed get what you pay for, but a bike is probably a lot like a musical instrument in that the personal relationship with the machine makes it important that I get the right one for me based on my experience with it, and not on the objective features and specs.

Flats are a way of life. I would recommend upgrading to a nicer tire after you have worn through he stock tires. I wore through two Vittoria Rubino's, on the rear at about 1500 mi each, now have a Continental Gatorskin that I got a deal on for "Small Buisness Saturday".

You will be much better off learning to fix flats, and practice doing it quickly.

If you have decided what you want and have several LBS's I would check with each. Recently bought my wife a Specialized bike. Closest LBS wanted list price and probably would have paid it but color was not right. Went to next closest dealer and they had bike she wanted at a much lower price.

Flats I can fix - been fixing flat tires since I was 6 :)

As to fast - yeah - that I need to work on!

I've been incredibly lucky - I haven't had a flat on the road. None. Zero. Zip. And I've probably just royally jinxed myself! Of course, I've been running with relatively fat low-pressure tires, both on the recumbent and the DF up to this point, and the DF has a set of Bontrager Hardcase tires.

I'm just spooked by those skinny road bike tires!! :D

REI has pros and cons. While their bike fitting and service/repair may be vary depending on the mgr of that particular store's bike department and the employees, you will get a 10% rebate on regularly priced items if you are a member (15% if you use an REI Visa card) and they'll take it back any time for any reason.

A couple of years ago I was shopping for a bike for my wife and stopped in a number of shops carrying a specific make and model. The all offered me the exact same discount off list price, so it seemed to me that not only were the list prices dictated by the mfg, but so were the allowed discounts. One shop threw in a bunch of free stuff, so got our business.

I went through a similar experience getting my first bike last summer. We live in a small college town so there are five lbs to choose from. There are two trek dealers and one sold their bikes for a good 10to15% less than the other and had a good service shop so I picked up a trek hybrid to start. I didn't even have to ask for a better price. The first one is known for sticking to list price and perhaps has good service but I didn't get a chance to find out. I quickly got road bike fever and found myself shopping again. I ended up looking at a Synapse with 105 and eventually went with a 2012 Spec. Sectuer comp with Sram apex as Spec was closing that model out with a $300 discount. I feel lucky that I have such a good number of competent LBS's close by and my Spec. dealer has helped a lot after the purchase and I've chosen to get most of my after purchase gear there even though they cost more than online. As a newbie I value the after purchase service. I have bought some great clothing from Aerotech and a few other items online as well.

Just a comment:

It's not about "supporting [the] LBS" as a sort of a "buy local" philosophy where you are doing them a favor...

At a good LBS: These guys live and breath bikes. They know what works and what doesn't work. They know how to make it work better FOR YOU and they know how to fix it when breaks or do preventive work to keep it from breaking (or to keep it running like new).

For serious cyclists, the purchase is just the first step.

For experienced cyclists and mechanics, they can do most of that on their own. But as a novice, you are likely to need the support that a good LBS can give you -- not just for parts and service but a place to get mentoring and support. A place to go when you have a stupid question.

On the other hand, if you are looking to ride once a month with your grandma, the box store bikes can save you money that is better spent on other things... (And, while REI is a cut above most, it is still a box store.)

IMHO, I support the LBS not to do THEM a favor but to do a favor to myself. I have a place I can trust and depend on. To me that is worth more than a one time savings of a couple bucks.
... Conversely, not all LBS's are there for you. Some a are just little big-box stores out to sell product and services. Choose wisely and nurture the relationship.

Sorry - I can see how my comment may have been open to interpretation - no, it's not a "buy local" principle (though I can be guilty of that at times), but to support the local guy who can support ME as their customer.

We're 100% on the same page on this point.

Despite having ridden bikes as long as I have, I'm incredibly ignorant about bikes in general, and I need that support without any arrogant BS in the mix, or someone only trying to separate me from as much of my ca$h as possible.

By choice I am a recumbent rider. I own a LWB recumbent and a trike.

Before I have posted threads about bike prices. Two things come to mind. No mater what type of bike we are talking about, there are some basic parts they all need. Wheels, brakes, bottom brackets with a crank, chains a seat, shifting levers, and some form of a headset. So all bikes have a bottom line for a price. The more elaborate the frame tho will run the price of a bike sky high.

The one bike that is just as high priced as a frame with many tubes and welds is the "stick" frame SWB recumbent. It is nothing more than one tube with a fork welded at the back, and a fork for steering. I do not see how the mfg justify the price of these stick bikes. They have far fewer tubes, and far less build time.

My experience with REI has been excellent.

An example: I'm on my second Sierra Designs Lightning 2 tent. I had my first one for a little over 5 years when one of the carbon fiber poles split. It was a great light weight 3-season tent that had seen hard use snow camping, bike touring , and backpacking. I brought the pole into REI and asked if they had a replacement pole I could buy. After checking, the sales person found that Sierra Designs had changed their poles for that tent to aluminum on the newer models. While not as light a the carbon fiber poles they solved the splitting problem with light weight aluminum poles. He also said that they did not have any replacement poles in their catalog, but would see if he could find a set. After a fruitless search, he asked if I had the rest of the tent with me, which I did. When I returned with the old tent after retrieving it from my truck, there was a brand new Sierra Designs Lightning 2 tent sitting on the counter. That is the kind of service that I have always received at REI, but what came next really surprised me. He looked up my old purchase in their computer system to verify that I had indeed purchased it at REI and found out that when I purchased the tent 5 years earlier I had paid full price for it. He then told me they were on sale at this time and handed me a $75 cash voucher.

Bottom line-- I walked out of the store with a new tent, $75 in cash, and I got to keep the $30 I received as a dividend for the purchase of the original tent 5 years ago! Do they have a loyal customer- you bet!

Our REI stores are located in "biking towns" , and have pretty good mechanics.

Having said all that-- saving money on an ill-fitting bike is not a very good investment.

Really? That's fascinating.

A well-known practice, taught in any business school course dealing with distribution channel management.

One of the best-known practitioners are the rack manufacturers Yakima and Thule, and they illustrate that certain prerequisites exist for such strong channel management to work - the product cannot be a commodity, and must be of high quality (or at least perceived as premium by the market) so that premium pricing can succeed against lower-priced and inferior products filling the same need.

For the manufacturer, it allows them to maintain high quality standards and promotes loyalty amongst distributors as the manufacturer (if they are smart at implementing this distribution strategy) does not engage in "dumping" product on the grey market, and doesn't undercut their distributors by allowing more influential distributors to engage in price-based warfare, eroding distributor's profit margins and eventually leading to downward price-pressure on the manufacturer, leading eventually to compromises in quality leaving the manufacturer open to competition from other less quality-oriented product.

For the distributor, they can concentrate on doing a proper job of selling and servicing the customer in this product line, knowing that their efforts aren't wasted by customers "showrooming" at the local brick & mortar store, then buying at the big-box or online outlet to get a better price.

For the consumer, they reap the benefits of having a superior product, don't have to waste time comparison shopping for the best price, and can select a distributor based on the quality of their service.

The only downside to this distribution model is when it is used by manufacturers that also enjoy near-monopoly market dominance (think of a manufactured-good manufacturer with the market dominance of Ticketmaster).

If you're really looking for an example of a European manufacturer that also follows this distribution model, Festool is a good one. They also prove the underlying principles - their tools are ungodly expensive, but have no equal anywhere in the market. To give up that iron-fisted control over their selected distributors would only serve to eventually erode the extraordinary quality and unique features of their products.

Main thing to buy right now is the bike. Saddle and changing other parts will only be found by riding the thing and can be done in easy stages. I have even known stock saddles to be comfy after the settling in period so I would even stay with that. Tyres and wear out the ones that come with the bike unless they do not suit your style.

What you do need though is the Puncture repair kit in a wedge under the saddle two levers- repair kit and a spare tube is all you need to carry but one extra tube can also be a blessing. Pump and a good one that fits the frame and works. Cheap ones of unknown name do not. Water bottle and carrier and that is about it.

That is all I carry on most of my rides but I also have the capability of extra water in a camelback for the longer rides. (Two bottles and carriers also work) Clothing and helmet is a must. Gloves and Cycling glasses help aswell. Shorts and jersey could come later but most of us want those on any ride of length.

Most people around are looking to save money. Even my LBS knows this and I give them the chance to match the price I can get elsewhere. Most of the time they can and will or at least get somewhere near it. There is an advantage of buying from your LBS but if you can save plenty by shopping elsewhere then at least least you have given the shop the chance to make a sale.

Looks like I have all your bullet points covered at this point - except the pump I have probably won't handle high-pressure tires, at least not without a lot more pumping than I probably want to do. I've always carried a patch kit and extra tube, even though I've never needed them (better than the other way 'round...:)). I too like the camel backs for longer rides - I have a "bare" one and one built into a small backpack - both of which get used when the wife goes out with me on a long one. Beyond the capacity, the keep the water cold, even in 90+ degree temperatures! I have two pairs of bib shorts that still fit (the other two are way too baggy) and I'll probably pick up a new set of gloves for this season - the pair I have are pretty well worn out. I only have one jersey I picked up on a tour last year, but usually opt for t-shirts anyway. I'm thinking I might get a new helmet, as I found one that protects the back of the head, and I've been kinda concerned about that. Hate to get a serious head injury at my age...

It's encouraging to hear the advice to wear out the first set of tires - that suggests that most of them are reasonably durable enough to not need constant puncture repair.

It is very simple, because the mfg can find enough customers willing to pay the high price, and customers cannot find any mfg willing to sell the product at a lower price.