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New Bike Prices Are Insane (Bike Economics)

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New Bike Prices Are Insane (Bike Economics)

Old 04-03-18, 05:59 PM
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robertorolfo
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New Bike Prices Are Insane (Bike Economics)

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. But just now I followed a link to the Trek website where someone suggested a commuter bike for a poster in here, and I decided to click on the "Road Bikes" section to see what was going on.

And, well, OH MY GOD. Over $15K for a bicycle. For a freakin' bicycle! Yes, it's top of the line. Yes, it's carbon fiber. But seriously? Even the slightly lesser models were over $10k, while more "run of the mill" stuff is still around $5k.

What is this madness?

Now I should also add that I have a background in motorcycles, having owned a few and used them as my only source of transportation/commutting (no car, no bicycle, only public transport as an alternative) for few year stretch. So do you know what $15K will buy you in the motorcycle world? Something very, very decent. Something that will blow the doors off of just about any sports car on the road.

Maybe cars are more your speed? And you know what, there are quite a few entry level cars that come in around the $10K mark these days. Yes, the entire car... all four wheels of it.


So, seriously, how in the world can they justify these bike prices? I don't want to hear about R&D costs, because just as much money, if not more, is spent on designing a good motorcycle or even a basic car. And I don't want to hear about materials, because no way in heck 15lbs of whatever the heck they are using can cost more than hundreds of lbs of motorcycle material, or even more car material (no matter how cheap it is). Labor? Are you kidding me? Your hand-laid carbon fiber still isn't taking more time and man (or robot) hours than assembling a motorcycle or car. Just the complexity of an internal combustion engine alone...

I get it. These companies need to survive, and their sales of high end bikes won't approach those of bigger car and motorcycle brands, so they need higher margins and whatnot. I get that. But still. Something is seriously wrong here.
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Old 04-03-18, 06:21 PM
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I have many years' experience in the bicycle business and a degree in Economics, and I do not disagree with you.
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Old 04-03-18, 06:32 PM
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Bikes offer a lot of value these days.
Sure, a $15K bike is spendy, but cars ($500K for a Ford GT)
& motorcycles ($184K for a Honda RC213V-S) can be too.
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Old 04-03-18, 06:35 PM
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Originally Posted by robertorolfo View Post

So recently I've been curious about more modern bikes, and taking a look around at what people are selling. But just now I followed a link to the Trek website where someone suggested a commuter bike for a poster in here, and I decided to click on the "Road Bikes" section to see what was going on.

And, well, OH MY GOD. Over $15K for a bicycle. For a freakin' bicycle! Yes, it's top of the line. Yes, it's carbon fiber. But seriously? Even the slightly lesser models were over $10k, while more "run of the mill" stuff is still around $5k.

What is this madness?

Maybe cars are more your speed? And you know what, there are quite a few entry level cars that come in around the $10K mark these days. Yes, the entire car... all four wheels of it.


So, seriously, how in the world can they justify these bike prices? I don't want to hear about R&D costs, because just as much money, if not more, is spent on designing a good motorcycle or even a basic car. And I don't want to hear about materials, because no way in heck 15lbs of whatever the heck they are using can cost more than hundreds of lbs of motorcycle material, or even more car material (no matter how cheap it is). Labor? Are you kidding me? Your hand-laid carbon fiber still isn't taking more time and man (or robot) hours than assembling a motorcycle or car. Just the complexity of an internal combustion engine alone...

I get it. These companies need to survive, and their sales of high end bikes won't approach those of bigger car and motorcycle brands, so they need higher margins and whatnot. I get that. But still. Something is seriously wrong here.
This has the potential for a field day, but i only have a few min, so ill snip some of your post and respond only to the quoted parts...

It all comes down to choice. Really- thats it. Choice.


Does anyone need a $200,000 car when a $25000 car will be just as reliable?
Does anyone need a $3,000,000 house when a $200,000 house will house the person?
Does anyone need diamonds of any cost when cz will look the same?


No. Nobody needs any of that expensove stuff, but it exists because there is a market for it. Not only is there a market for luxury lifestyle items, but its a growing market. Clearly there is demand.

Once again- choice.


As for there being 'quite a few' new cars for $10k...ah...it isnt the point od this thread, but you and i have differeing opinions on what constitutes 'quite a few'.


I learned long ago that other people's money should be spent by them and not me. Shaming people for what they spend their money on is extremely tacky. I dont understand some people's hobbies, but they dont understand mine.

Nobody needs a $15000 bicycle.
But that isnt why bicycles cost $15000. Nobody needs most of what they buy, yet they continue to buy for a host of reasons.




Choice.
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Old 04-03-18, 06:42 PM
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Keep in mind that $1 today is equivalent to $3.21 in 1980 buying power. Inflation has a lot to do with it, plus the need to make a profit on low volume sales. Not excusing the pricing of the top end machines, but a $1000 bucks back in 1980 becomes a $3000 bike today. Just the way it is. Been selling bikes since 82 and yes, there are a lot of fools with money than brains. The market will bear the price. So be it.
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Old 04-03-18, 06:52 PM
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the sad part, the Majority of the $1,000 entry level bikes are not any better than some of $100 Craigslist bike...

yet people flock to buy them, cause they are "new".
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Old 04-03-18, 06:58 PM
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I think there are two factors at play, maybe three.

First, a lot of baby boomers are retiring and cashing out and can afford the toys they put off while they were in earning mode. Que Harley Davidson sales. An older person with disposable income might not think spending 10k on their one and only dream bike is wrong.

Some people earn a lot more than others. One of my buddies earns 3x what I do (probably more) and once the basics are covered most of that is disposable income. 10k for a bike is probably less worrisome than 1k from me.

Younger people have adopted a live for the moment attitude because the traditional pathway to savings is less available to them. Many won't be able to afford a house or have secure jobs with pensions etc... so they enjoy what they can when they can. Blinging out on a set of wheels they can ride with friends may be the new downsized dream for them.

I'm an old scrooge though who grew up with parents who went through the depression so I personally think bikes in that price range are crackers. I'm more sensible and spend that sort of dough on diving gear.
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Old 04-03-18, 07:02 PM
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Simple. Supply and demand. They cost 15K because people buy them.
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Old 04-03-18, 07:15 PM
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prices keep rising, people keep buying

it's perceived value..people view high priced items as better, more desirable

hard to believe but some people maybe be financing bicycles
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Old 04-03-18, 07:18 PM
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Originally Posted by Flip Flop Rider View Post
prices keep rising, people keep buying

it's perceived value..people view high priced items as better, more desirable

hard to believe but some people maybe be financing bicycles
This is going to come off in a snobbish tone and I donít mean for it to be that way but I can not believe anyone finances anything but a home or collage.
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Old 04-03-18, 07:56 PM
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15k for a bicycle is still cheaper than many Rolex watches.

Just like anything else, past a certain price point you're just paying for a status symbol.
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Old 04-03-18, 08:06 PM
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Originally Posted by sdmc530 View Post
This is going to come off in a snobbish tone and I donít mean for it to be that way but I can not believe anyone finances anything but a home or collage.
I think that, technically, anyone who carries a balance on a credit card is financing everything they buy with it--and usually at less-than-friendly rates. It cracks me up to think of all those people who use their plastic at fast-food joints--they're paying interest on their meal before they can even get it unwrapped.

Back on topic, though, what people are willing to pay for non-essentials is a study in illogic.
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Old 04-03-18, 08:12 PM
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Originally Posted by rollagain View Post
I think that, technically, anyone who carries a balance on a credit card is financing everything they buy with it--and usually at less-than-friendly rates. It cracks me up to think of all those people who use their plastic at fast-food joints--they're paying interest on their meal before they can even get it unwrapped.
I put all my daily expenditures on a credit card. Free 1.5% cash back. Pay every statement off in full. Haven't spent a dime on credit card interest yet.
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Old 04-03-18, 08:16 PM
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15k for a trek thats entry level bruh ,
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Old 04-03-18, 08:23 PM
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Some folks could wonder similar things about my musical instruments, and I'm just an amateur musician.

I have a friend with a super high end bike. It was probably over $10k before he started swapping out parts for the latest goodies. His cheap bike that he rides in the winter is worth more than all of my bikes together. Just the tires on his cheap bike... and so forth. You get the picture.

But... he doesn't own a car, he's a bachelor, maybe pushing 60, and he puts in an insane number of miles. His bike is usually covered in grime, just because of how much he rides.

So I figure, there could be less healthy hobbies. Enjoy.
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Old 04-03-18, 08:30 PM
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When people hear I spent $1000 on a bicycle their eyes bulge out. I'd never admit to $15,000 out of fear they might drop dead!
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Old 04-03-18, 08:35 PM
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Originally Posted by General Geoff View Post
I put all my daily expenditures on a credit card. Free 1.5% cash back. Pay every statement off in full. Haven't spent a dime on credit card interest yet.
My wife and I do the same thing. One card for emergency use one for everything else. Pay it off in full every month make about 600$ a year is cash back rewards itís a win win. We never have a debt of any kind except mortgage. We also donít do much In The way of unsessary spending either. I bike, she likes to hike and such as well. We donít eat out, arenít movie type people family time wins all. Donít mean to thread jack either



Back on point my bike is worth about 1500 and itís my pride and joy. Didnít think price was crazy actually. If I had saved money longer working overtime I could have spent double that. Didnít need to, but always dream of bigger,better,faster like others do. Is 10k insane for a bike, well yeah but if you can afford it and itís your your thing than have at it. No heartburn from me.
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Old 04-03-18, 08:37 PM
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The OP has obviously cherry-picked some examples. Sure, you can spend $15k on a bike, and you can spend $200k on a car. But for $2k you can get a very good bike, and for $30k you can get a very good car.

As for why some bikes cost so much...the OP is focusing only on supply; but as Alfred Marshall wrote, a scissor needs two blades to cut a piece of paper, and it takes supply AND demand to establish price.
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Old 04-03-18, 08:37 PM
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Originally Posted by AlmostTrick View Post
When people hear I spent $1000 on a bicycle their eyes bulge out. I'd never admit to $15,000 out of fear they might drop dead!
Only non cyclist do this. In group rides I bet the average is well over 2k. To non cycling crowds over 250$ from Walmart is just insane to them. Makes me laugh actually
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Old 04-03-18, 08:57 PM
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It's only a tiny percentage of bicycles that cost such eye popping figures. The vast majority are less than $1,000. And although the very bottom can offer some real clunkers, you can purchase a pretty solid machine for $500.
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Old 04-03-18, 11:16 PM
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Originally Posted by jon c. View Post
It's only a tiny percentage of bicycles that cost such eye popping figures.
Absolutely. And the only ones I've seen in real life, owned by real people, have been owned by people who are all in on bikes - people who work in or own shops, are current/former racers and/or sponsor teams, and pretty much live for bikes.

I've been considering upgrading my roadie after this season, and some fairly respectable Trek models (carbon, 105 5800) can be had for ~$2,000. This seems incredibly reasonable for a piece of performance sporting equipment that I'll probably keep for 3-4 years; definitely less than 3-4 years of cable TV, a high-end phone plan, fine home furnishings, or whatever else people buy these days.
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Old 04-03-18, 11:23 PM
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Originally Posted by General Geoff View Post
I put all my daily expenditures on a credit card. Free 1.5% cash back. Pay every statement off in full. Haven't spent a dime on credit card interest yet.
THAT'S how to beat the man! You have to beat him at his own game and this is one of the ways to do that.
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Old 04-03-18, 11:56 PM
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In China, most people would scoff at spending more than 100RMB (16USD) for a bike.

Yet many of them will quite easily deposit 300RMB and pay 100RMB a month to use a crappy rental bike.

As someone else said, at some point it becomes more of a status symbol.

There are some people that throw around 15K like its pocket change, its all perspective I guess.
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Old 04-04-18, 12:09 AM
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Originally Posted by wipekitty View Post
I've been considering upgrading my roadie after this season, and some fairly respectable Trek models (carbon, 105 5800) can be had for ~$2,000. This seems incredibly reasonable for a piece of performance sporting equipment that I'll probably keep for 3-4 years; definitely less than 3-4 years of cable TV, a high-end phone plan, fine home furnishings, or whatever else people buy these days.
Sounds logical, when compared to other expenses.

I'm hoping my bicycles will outlive me, two of them are 20 years old.

Other than replacing consumable parts, I can't see myself wanting to upgrade, especially if its every 3 or 4 years.

I actually felt a little guilty buying a replacement freewheel (12USD) the other night, knowing I can still get another 5000KM out of my existing one.
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Old 04-04-18, 12:36 AM
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The market for expensive bikes is not huge. The average factory door price for a Chinese made bike sold in Europe in 2015 I think was $50 where as Africa was $30. China being by far the biggest supplier of bikes to the world market. Even Trek and Canyon carbon frames are coming out of Chinese sweatshops like Quest Composites. Same for most carbon frames even very expensive one's. Many are just a brand slap with decent components and a huge price tag.

It's not what a bike costs to make it's what a person is prepared to pay. I'm a strong believer in diminishing returns and the sweet spot to me would not be a $15,000 bike even if I was a billionaire I can't imagine throwing money away like that. Reading on another forum of someone who broke his Canyon carbon frame on the first ride (not a crash, a manufacturing fault). I would of thought $1000 was a sweet spot for value vs performance but to be honest I like old steel road bikes and not having to worry about theft or damage. I can imagine pulling an old bike out of dumpster and enjoy riding it more especially if I saved it from being destroyed which gives me a positive vibe about fighting our wasteful society.

I'm not really a premium choice sort of guy. It really has to have a definite advantage for me to pay more. Headphones is something I won't go cheap on. There is food and drink that I like that costs a little more. I tend to spend money on new experiences, stuff I haven't had before rather than premium versions of things. I'm more than happy to go secondhand to save money.

I'm genuinely interested in reading about the latest bikes and their technology but have no interest at all in buying such bikes. I don't need a 7kg bike made of a brittle material that could be destroyed with its first crash.
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