New Bike Prices Are Insane (Bike Economics)
#276
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There probably isn't much. However, we should be happy that there's rich people willing to spend $15k on a bike, because it's effectively subsidizing the bikes at the price points the rest of us buy at. Those $15k bikes are mostly pure profit for the manufacturer (not completely, they spend some on marketing and stuff which isn't spread over as many units as the cheaper models) and help pay for stuff like R&D costs for the bikes the rest of us buy. The new technologies found on those $15k bikes ends up being common on the cheaper bikes a few years later. The new technologies in Shimano's Dura-Ace line, for instance, end up being put into their Ultegra and lower lines in subsequent product generations.
#277
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Personally I understand that there will always be high and low price points but I'm most interested in where the sweet spot in value is. I don't think anyone would claim entry level bikes are overall good value as they have weak components that do not operate that well or last very long so definitely a false economy and the high end bikes certainly aren't good value. I suspect for a road bike the debatable point of maximum value is probably somewhere between $400-2000 where you can achieve a good quality bike of decent performance, reliability and safety. I guess you'd have to compare groupsets, frame materials, brake types and other components to really work out which is best. I personally don't want carbon forks or a carbon frame so higher end models are undesirable for me. I also don't want low end freewheels and tourney gearing so the bottom end is unacceptable. I'm also never going to be a competitive cyclist and don't care if I'm overtaken by younger fitter cyclists. In fact I'd get really annoyed if I spent stupidly high money on a bike only to be overtaken by a younger rider on a walmart bike but wouldn't mind if I was riding a more budget bike myself. I guess in my mind if I spend $15,000 on a bike I need to be beating everyone else in speed which is completely unrealistic. In fact knowing how my mind works I would be protective of a £15,000 bike and likely treat it too well and go slower than a cheap bike. I also wouldn't ever ride anywhere except for loop journeys that came straight home as I would be worried about it being stolen.
#278
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One more time, for those who still haven't grasped it ... Value ... Is .... Subjective.
#279
Banned
Here we have someone looking at the high end , and like staring into the sun
are dazzled by the bling..
and not any of the many lower price point levels companies build to
just so the customer gets A bike at a level they are comfortable with ..
are dazzled by the bling..
and not any of the many lower price point levels companies build to
just so the customer gets A bike at a level they are comfortable with ..
#280
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I'm personally always amazed how little people think bikes should cost. Bikes are full of complicated machining and construction techniques that require lots of hand work. To make a bike strong, light and reliable involves lots of expensive materials and thoughtful engineering. High quality bikes also are produced in small quantities and don't benefit from economies of scale.
And yet, I see a lot of threads with new cyclists here asking about sub $500 bikes for serious riding. Your average hybrid buyer at the bike store balks at anything over $400. A lot of these same people will gladly spend the same amount on a single golf driver or a multiple of that amount on a rarely used, mass produced kitchen appliance. I think this stems from people grow up riding $150 POS department store BMX bikes that last one year. That becomes their benchmark.
I'm not saying $15K for a bike is in any way required or practical. At that price, you're getting into esoteric/conspicuous consumption fetish properties sold to rabid enthusiasts. However, something like $2,500 on a bike you plan to ride thousands of miles a year seems completely reasonable to me. After all, lots of people spend that on gym memberships they never use every year.
And yet, I see a lot of threads with new cyclists here asking about sub $500 bikes for serious riding. Your average hybrid buyer at the bike store balks at anything over $400. A lot of these same people will gladly spend the same amount on a single golf driver or a multiple of that amount on a rarely used, mass produced kitchen appliance. I think this stems from people grow up riding $150 POS department store BMX bikes that last one year. That becomes their benchmark.
I'm not saying $15K for a bike is in any way required or practical. At that price, you're getting into esoteric/conspicuous consumption fetish properties sold to rabid enthusiasts. However, something like $2,500 on a bike you plan to ride thousands of miles a year seems completely reasonable to me. After all, lots of people spend that on gym memberships they never use every year.
#282
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And as for everyone ... you do not speak for everyone. Nor do you know what "bang" and "buck" mean to anyone else.
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#284
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Ok, so I'm still fairly new here, and also fairly new to the sport/hobby (I've always ridden bikes here and there, and grew up on them as a kid, but never this much as an adult). When getting into bikes, I've taken the classic and vintage route for several reasons, and while price was one of them, it wasn't a major factor.
So recently I've been curious about more modern bikes, and taking a look around at what people are selling.
And, well, OH MY GOD.
So, seriously, how in the world can they justify these bike prices? .
So recently I've been curious about more modern bikes, and taking a look around at what people are selling.
And, well, OH MY GOD.
So, seriously, how in the world can they justify these bike prices? .
#285
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#286
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Frankly, I'm not sure I want to ride with someone who bangs their bike.
#287
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I use my credit card everywhere; it gives me cash back, and I pay it off daily. Sometimes several times a day, if I'm buying a lot of stuff. If someone offered you a 1% raise, would you refuse? I even use it to pay any bill that doesn't surcharge for plastic.
Koyote also pointed out the math involved in low interest rates. If your interest on a loan is lower than a conservative estimate on rate of return for an investment, than you are being foolish avoiding the loan. My father made a serious amount of money simply observing this 'napkin arbitrage.' My father is also a rocket scientist. For real.
To answer the OP's question about intrinsic value, you need to consider economies of scale. Companies that sell $3k bikes don't have the volume to where they maximize cost efficiencies. Whereas a company selling millions of $25k automobiles does. This is why chocolate at the boutique place costs $20 a pound (or more), but Whitman's samplers come cheap. Because the overhead of any company is fixed, to a degree, and the smaller the enterprise, the greater the cost of sales.
Koyote also pointed out the math involved in low interest rates. If your interest on a loan is lower than a conservative estimate on rate of return for an investment, than you are being foolish avoiding the loan. My father made a serious amount of money simply observing this 'napkin arbitrage.' My father is also a rocket scientist. For real.
To answer the OP's question about intrinsic value, you need to consider economies of scale. Companies that sell $3k bikes don't have the volume to where they maximize cost efficiencies. Whereas a company selling millions of $25k automobiles does. This is why chocolate at the boutique place costs $20 a pound (or more), but Whitman's samplers come cheap. Because the overhead of any company is fixed, to a degree, and the smaller the enterprise, the greater the cost of sales.
#288
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I use my credit card everywhere; it gives me cash back, and I pay it off daily. Sometimes several times a day, if I'm buying a lot of stuff. If someone offered you a 1% raise, would you refuse? I even use it to pay any bill that doesn't surcharge for plastic.
Koyote also pointed out the math involved in low interest rates. If your interest on a loan is lower than a conservative estimate on rate of return for an investment, than you are being foolish avoiding the loan. My father made a serious amount of money simply observing this 'napkin arbitrage.' My father is also a rocket scientist. For real.
To answer the OP's question about intrinsic value, you need to consider economies of scale. Companies that sell $3k bikes don't have the volume to where they maximize cost efficiencies. Whereas a company selling millions of $25k automobiles does. This is why chocolate at the boutique place costs $20 a pound (or more), but Whitman's samplers come cheap. Because the overhead of any company is fixed, to a degree, and the smaller the enterprise, the greater the cost of sales.
Koyote also pointed out the math involved in low interest rates. If your interest on a loan is lower than a conservative estimate on rate of return for an investment, than you are being foolish avoiding the loan. My father made a serious amount of money simply observing this 'napkin arbitrage.' My father is also a rocket scientist. For real.
To answer the OP's question about intrinsic value, you need to consider economies of scale. Companies that sell $3k bikes don't have the volume to where they maximize cost efficiencies. Whereas a company selling millions of $25k automobiles does. This is why chocolate at the boutique place costs $20 a pound (or more), but Whitman's samplers come cheap. Because the overhead of any company is fixed, to a degree, and the smaller the enterprise, the greater the cost of sales.
On our recent home purchase, we went with a 30-year mortgage even though we could easily pay it off in 15 years. The interest rate is only 4%, which is well below the stock market's historical average rate of return. So, smaller house payment = more cash in the market.
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@Koyote I'm a math teacher, and one of my capstone lessons when I taught Algebra II was doing the math on why you don't buy a car with a credit card. Of course, we assumed making payments, not paying it off.
Basically, if you are cash-rich, reward cards are legal money laundering. Bank of America recently 'improved' my cash-back card to a travel points card, and I think it was because they were getting sick of all the money I was getting. I'm in the process of switching it back, which is amusing (if I'm successful) or potentially frustrating if I'm not.
Mortgages really can be a source of unexpected deals, too. For having a combo of qualifiers that were as simple as direct-deposit, a 700 FICO score, and $2,000 in checking, BoA gave me a 3.875 mortgage with 10% down (I bought in '08, and did NOT want to sink money into real estate, regardless of whether I lived in it). That saved me about $40k, when all is said and done.
Re: bikes, there is no way to make small-volume goods to compete with the price of mass production. Not trying to be a jerk, but that's kind of high school economics, right? The $150 worth of welding done on a $4k bike isn't done on a part-time basis by the welder; you need to keep him employed, pay benefits, etc. "Overhead" and "Cost of Sales" are two very misunderstood concepts for many people.
Basically, if you are cash-rich, reward cards are legal money laundering. Bank of America recently 'improved' my cash-back card to a travel points card, and I think it was because they were getting sick of all the money I was getting. I'm in the process of switching it back, which is amusing (if I'm successful) or potentially frustrating if I'm not.
Mortgages really can be a source of unexpected deals, too. For having a combo of qualifiers that were as simple as direct-deposit, a 700 FICO score, and $2,000 in checking, BoA gave me a 3.875 mortgage with 10% down (I bought in '08, and did NOT want to sink money into real estate, regardless of whether I lived in it). That saved me about $40k, when all is said and done.
Re: bikes, there is no way to make small-volume goods to compete with the price of mass production. Not trying to be a jerk, but that's kind of high school economics, right? The $150 worth of welding done on a $4k bike isn't done on a part-time basis by the welder; you need to keep him employed, pay benefits, etc. "Overhead" and "Cost of Sales" are two very misunderstood concepts for many people.
#291
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@Koyote I'm a math teacher, and one of my capstone lessons when I taught Algebra II was doing the math on why you don't buy a car with a credit card. Of course, we assumed making payments, not paying it off.
Basically, if you are cash-rich, reward cards are legal money laundering. Bank of America recently 'improved' my cash-back card to a travel points card, and I think it was because they were getting sick of all the money I was getting. I'm in the process of switching it back, which is amusing (if I'm successful) or potentially frustrating if I'm not.
Mortgages really can be a source of unexpected deals, too. For having a combo of qualifiers that were as simple as direct-deposit, a 700 FICO score, and $2,000 in checking, BoA gave me a 3.875 mortgage with 10% down (I bought in '08, and did NOT want to sink money into real estate, regardless of whether I lived in it). That saved me about $40k, when all is said and done.
Re: bikes, there is no way to make small-volume goods to compete with the price of mass production. Not trying to be a jerk, but that's kind of high school economics, right? The $150 worth of welding done on a $4k bike isn't done on a part-time basis by the welder; you need to keep him employed, pay benefits, etc. "Overhead" and "Cost of Sales" are two very misunderstood concepts for many people.
Basically, if you are cash-rich, reward cards are legal money laundering. Bank of America recently 'improved' my cash-back card to a travel points card, and I think it was because they were getting sick of all the money I was getting. I'm in the process of switching it back, which is amusing (if I'm successful) or potentially frustrating if I'm not.
Mortgages really can be a source of unexpected deals, too. For having a combo of qualifiers that were as simple as direct-deposit, a 700 FICO score, and $2,000 in checking, BoA gave me a 3.875 mortgage with 10% down (I bought in '08, and did NOT want to sink money into real estate, regardless of whether I lived in it). That saved me about $40k, when all is said and done.
Re: bikes, there is no way to make small-volume goods to compete with the price of mass production. Not trying to be a jerk, but that's kind of high school economics, right? The $150 worth of welding done on a $4k bike isn't done on a part-time basis by the welder; you need to keep him employed, pay benefits, etc. "Overhead" and "Cost of Sales" are two very misunderstood concepts for many people.
I always weigh the interest rate on debt against the potential gains from putting my money elsewhere. Every few years, my wife talks about paying off (early) her student loan debt, which is now mostly 20+ years old; I always balk at this, since the interest rate on the loans is lower than the rate we typically get from our 403(b) and IRA investments. Hell, in grad school, I borrowed money just because I could - I didn't need it to pay bills. But if they weren't going to charge interest until six months after I left school, it seemed foolish to NOT take the money.
#292
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#293
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#294
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Money laundering was me being half poetic, half lazy.
It's a rinse with vig being taken. You really wish people knew this stuff. HOLY ****, Jerry Remy is on TV!!!!! Gotta run ...
It's a rinse with vig being taken. You really wish people knew this stuff. HOLY ****, Jerry Remy is on TV!!!!! Gotta run ...
#295
Member
Airbus A380;
Price: $375300000
Weight: 562000 kg
Price per weight: $667.8/kg
Trek Madone SLR 9 Disc eTap;
Price: $12299.99
Weight: 7.69 kg
Price per weight: $1690.5/kg
Modern bicycles are really really extremely expensive.
Price: $375300000
Weight: 562000 kg
Price per weight: $667.8/kg
Trek Madone SLR 9 Disc eTap;
Price: $12299.99
Weight: 7.69 kg
Price per weight: $1690.5/kg
Modern bicycles are really really extremely expensive.
#296
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Got to tell you, that is one of the dumbest uses of statistics I have ever seen--you're paying for the bike to be ultra-light, so of course the price per kilo is going to be high.
You're also picking a really expensive bike and figuring out it's really expensive. Wow!
A Learjet 60 weighs 6670 kilos and costs $14,674,000. Price per kilo $2200. It's a really expensive plane. By your logic, modern planes are really expensive.
#297
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Clearly what we really want to know is what bike lube is the best for a $15K bike.
#298
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#299
Banned.
Always remember: value is subjective, we're told. Reason or logic has nothing to do with it. Now, how can I locate these "subjects" and sell them "subjective" trash in exchange for their money... hmmm