wheelreason

Gross revenue, but yes, forgo that all day every day.

Koyote

Nope, the $638 would be profit. If you sell something for more than you paid, you've made profit.

wheelreason

Really?, That would be true if my COGS was the only thing involved, and there were $0 other expenses or overhead, so yeah, all day every day.

Koyote

Overhead and "other expenses" have nothing to do with it, since they are fixed costs and must be covered independently of this sale. If your shop earned a profit that month, selling an item for $638 over its marginal cost means you earn $638 more profit; if your shop took a loss that month, selling an item for $638 over its marginal cost will reduce your loss by $638. That's pretty basic.

Again, I'm not suggesting that you'd necessarily want to sell at such a slim margin very often, or at all. But the $638 would definitely be additional profit or a reduction in loss. That's just basic arithmetic.

wheelreason

I'm gonna run with that one, oh wait, I already am...

Koyote

Probably a smart move. Such discounting is a slippery slope -- if you do it too much, you wouldn't be able to cover your overhead and you would lose money each month. But you seem confused by the fact that selling one single item for more than it's cost (assuming no other discounting) is indeed profitable. That's odd.

Why do you think that cruise lines sell available staterooms at cut-rate prices right before the ship sets sail? Because the marginal cost of having another passenger onboard is almost trivial (just the costs of meals and bed linens), hence selling the stateroom for a bit more than marginal cost adds profit. And since most travelers prefer to plan and book trips far in advance, such practices likely don't lead to more widespread discounting which would eat into profits.

I could give you examples like this all day long, because it's basic logic, and it's pretty easy to see in our everyday world.

Troul 

Needed NMT 50ml of shimano mineral oil, so off to the LBS I went.... & Then to another LBS, & then another, & another. I put the brakes on trying to buy it locally.

Got back, went online, & ordered the minimum I could easily get the fastest via online. 500ml will arrive today. A little excessive lol

Koyote

100ml

Maybe you're not in the US?

mstateglfr 

Cool, forgo it all day every day. That could make sense for you since it is actual inventory on an actual floor ready to actually be sold. All that is totally different from a component a shop cant even buy from vendors.

As it stands with no access to the component- $0 in component sales and $0 in charged labor, which = $0 profit
If you buy the component from an online retailer and do not upcharge- $0 in component sales and $25 in charged labor, which = $25 in profit.
If you buy the component from an online retailer and do upcharge for the service and time- $10 in component sales and $25 in charged labor, which = $35 in profit.

^ this assumes your mechanic is working and paid hourly so they are available to install in all scenarios.

Again, your scenario with a bike on the floor isnt at all close to what I posted about. The only similarities are that they both involve sales at a bike shop. Other than that, they arent at all alike and the fundamental differences should be clear.

unterhausen

QBP doesn't have this stipulation. Most distributors don't. There is all kind of overlap between distributors. Giant, of all companies, does have a deal like this they offer to shops. There is a shop that took that deal not far from here. I hear the owner is not particularly happy about it, but they had a warehouse full of bikes when nobody else did, so it finally paid off. Giant accessories aren't that great. I think you can forego it, one of the local shop sold giant, cannondale, and specialized until Spesh bought them out recently.

As far as the argument y'all are having over accepting lower margins because profit is profit, it really depends on the item. If it's something a shop is confident they will sell, you can offer all you want and they will certainly say no. If you do it in springtime on a popular bike, you're identifying yourself as someone that's probably going to lowball them forever, which is not that great of a customer to have. And they are never going to be a loyal customer anyway. If the item is not so desirable, you have a chance. Especially at this time of year. Lots of shops ordered bikes they wanted at the time and now have to get rid of to buy next year's bikes. So it's probably a good time for bargain hunters.

NumbersGuy

It's always interesting how some individuals with very little understanding of how a business operates want to tell them how they should change their operations to better suit individual customer needs. Sure, almost every business wants to keep their customers happy, but they also have to think beyond the simple, am I selling product X for more than I can source it for. Purchasing items from a retailer, whether at MSRP or any level of discount carries with it many factors that would need to be accounted for such as ensuring authenticity, warranty, sales taxation, shipping costs, return policy, restocking fees, contractual obligations and many more. Sure, Customer 1 comes in and you can order his part from Retailer A.. easy right. What about when Customer 2's part isn't available at Retailer A, so you have to deal with another, and so on and so forth until the LBS is trying to manage parts coming in from numerous sources, with different practices and policies. It doesn't take long before that becomes difficult or impossible to manage, when a wrong part comes in, or there's a question about authenticity, or something fails under warranty. There is a reason that well run businesses have processes and requirements in place for new vendors, and often negotiate terms.

There have been multiple factors impacting supply of parts, and allowing or encouraging customers to source items themselves if they are able to is probably the smartest way the LBS can handle it from a business perspective. They need to think beyond the single customer transaction, and in the OP's case it seems charging for the labor is fair to both sides.

On the availability side, what's so hard to understand about manufacturers and distributors being sold out of parts, but some retailers still having remaining stock? That seems to be a common occurrence most of us have experienced throughout our lives. When this year's hot new toy is sold out at our local retailer, we don't go to that store and tell them we found them available online from another retailer and expect them to order it to resell to us. They'll get new stock when it's available through their vendors.

veganbikes

Probably some but I have seen plenty of bikes that need a little extra love and personally I would rather see the bike see how it is working for them and make further adjustments to make them happier.

urbanknight

Food for thought: in that theoretical situation, you did have to pay the mechanic's hourly wages to unbox and assemble it (about 15 min of labor), the salesperson's hourly wages to sell the bike and ring it up, the credit card's fee, and any (probably marginal) costs for grease/hairspray/paperwork/etc. Obviously nowhere near $638, but there is overhead.

urbanknight

Those free post sales tune-ups, while claiming a value of something like $75 each, are really just paying a mechanic for maybe 15 minutes of labor to adjust the cables, inspect the bolts, inspect for wear, and polish it up. They stand to make more sales if you need anything replaced from wear. Additionally, you have physically dropped by the shop and may just want some energy bars, a new water bottle, a more comfortable saddle, a better ventilated helmet, a lighter set of wheels, a faster bike... stuff you might have bought online or not even thought about from the comfort of your home.

Koyote

Marginal cost includes all costs associated with selling that bike, so yeah -- assembly and lube (a few bucks), CC fees (a bit more), but probably not the salesperson's time, since she's there anyway. But if you do want to include the salesperson, go ahead -- the point remains the same: if you sell something for more than it cost you, you've earned a profit, and that enhances the shop's profit (or reduces its loss, as the case may be) for, say, the month. Rent, utilities, insurance, etc, are all utterly irrelevant, since they will be paid anyway, whether or not that bike gets sold today.

Think about the usefulness of this: nowadays, anyone can go online and (often for a fee) find the invoice cost for a new car; in other words, find out how much it cost the dealer to put that car on the lot. If you walk in, don't screw around and waste their time, and offer a reasonable amount over that invoice (e.g., to help cover the salesperson's commission), you can get a vehicle for below MSRP. (At least in a normal market -- not during severe supply chain shortages, when someone else will walk in the next day who is willing to pay MSRP.) This isn't theoretical: believe it or not, people study and test these strategies. Hell, I've done it when buying a new car.

bboy314

Well said and pretty much exactly what I was trying to figure out how to put into words. From the customer’s POV it’s simple for a shop to buy online, but these are all real concerns that will inevitably crop up and become a headache.

mstateglfr 

The shop has to pay that mechanic and salesperson's wages either way though. Those people are presumably at the shop each day being paid. Its not like the shop will suddenly bring in hired help for an hour just to install a component, but otherwise wouldnt have paid the mechanic and the worker will sit at home watching The Price is Right.

Sy Reene

Has any shop-member consortium buying org ever been tried? Eg. regional group of say 20-40 stores organizing to get more volume buying and therefore move leverage with the distributors and manufacturers?

mstateglfr 

Yes, warranty, shipping, ensuring authenticity, and more are all things to consider.
At the same time, you make it seem like most of those are difficult and nearly insurmountable.

Warranties for a derailleur...how often does that happen in all honesty? But yeah, if a shop is concerned about that, then they should build it into the price of the service.
Shipping...well that is pretty easy and quick to determine. This isnt 1970- shipping is quickly stated on sites.
Ensuring authenticity is a legitimate concern. I dont think I have ever heard of fake bike parts coming from Backcountry/Jenson/Universal/etc. Basically havent heard of the large online bike component retailers being a concerned source for counterfeits. But yeah, if one were purchased from there, it would be a pain to work thru...the shop would have to return it. On a related note, there have been countless threads over the last 2 years about people buying fake chains from their local shops.

I get the reason why shops just say 'nope, we cant get the part'. I am not saying that is a wrong approach. I am saying the opposite approach is very much doable and many of the commonly stated concerns are overblown or just baseless.

wheelreason

I've not laughed this hard in a while. Thank you.

urbanknight

I can't speak for all shops, but I've never seen a shop NOT have a backlog of repairs, and when I was part time, I would get more hours if we had more to build/fix.

Clyde1820

Did that, myself, with a local shop. High-quality builds, but they just couldn't seem to get the parts I needed. I was able to source the "missing" parts within a couple of weeks, and they installed/tuned. I suppose they'd have preferred to do it all, but their sourcing wasn't able to get many items despite them being available through other channels. (Uncertain whether they were constrained to just QBP or what.) Of course, that was during the height of the Covid supply mess about 18mos ago.

As for "consortium" buying-groups ... I would think that's essentially what distributors do. And if a shop has an account with a handful of quality distributors, they ought to be able to get most parts within a short period of time. (Certainly ought to, if I'm able to hunt around for a week and acquire a long list of "hard-to-get" items.)

ARider2

Claims that a tube can be changed in 5 minutes, or a bicycle can be assembled from the box and made ready in 15 minutes do not reflect reality. These tasks take much longer to perform and do not include the time it takes for a shop to take the bike or box in, assess what is needed, have the work performed, and then charge the customer.

livedarklions

Right, treating labor like it's a fixed cost that has to be paid either way is actually a HUGE assumption.

mstateglfr 

...but urbanknight's scenario puts mechanics at a shop every day due to a backlog of repair. That sort of steady work then effectively makes the labor a fixed cost since it doesnt fluctuate. Extra time spent is then a variable cost.
...or have I misunderstood both the discussion and realities of labor?


fingers crossed I dont regret replying to you with a potentially disagreeing comment. <---passive aggressive sentence of the day.