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Negotiating with LBS

Old 03-24-03, 03:29 PM
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Justen
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Negotiating with LBS

Hi,

I am just wondering how much of a margin bike stores have to negotiate deals ?

I had heard that it is not much and that this is why bike stores tend to give better deals on accessories as they can mark them up more and therefore, afford to give more of a discount.

One LBS has offered me a deal on a 2002 model of bike as they now have the 2003's.
They also said they will switch over the bike seat to the one I want and change the tires.

How do I know that I am getting a exchange on the tires or the seat ?

Justen
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Old 03-24-03, 03:47 PM
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KleinMp99
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Originally posted by Justen
How do I know that I am getting a exchange on the tires or the seat ?

Ask them?
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Old 03-24-03, 04:00 PM
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Originally posted by KleinMp99
Ask them?
Hi,

Actually, I miswrote that. I meant, how do I know that I am getting a fair exchange on the swapping of seats and tires.

I have no idea how much stock tires and seats are normally worth.

Justen
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Old 03-24-03, 04:00 PM
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>>>>>I am just wondering how much of a margin bike stores have to negotiate deals <<<<<<

It seems like everyone on this forum looks at the margin on the bikes in how much the LBS is making on the deal. That's not the case folks.

When I worked in retail, the margin of a can of beans (from wholesale to retail) could have been 20 - 30 percent. Our actual PROFIT after all the expenses were paid was often less then .01. Yes that's correct. We would sell a can of beans at .79 cents and barely make a penny!

I remember years ago reading how Sears made a profit of $1.23 off a bicycle that sold for $115.00. If someone stole a bike from the store, the entire department would not make a profit for the entire month!

I suspect the LBS is probably making about 2 1/2 to 5 percent profit at BEST for each bike sold after ALL EXPENSES are paid. It's a misconception that these LBS owners are making a killing. They're not. Most are struggling big time.

The other day an LBS owner told me a customer walked in an wanted to buy a mid-level MTB. Here's the kicker. He wanted the LBS to throw in a brand new BMX along with the purchase!
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Old 03-24-03, 04:04 PM
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From what I understand, it is true that the LBS does not have much of a profit margin on new bikes. So the retail is probably a fair price. Nevertheless, you can find lots of great deals. I just bought a new bike yesterday and got a discount because the store was offering 10% off on all bikes. Also, you can find a lot of great deals in fall/winter as this is the low season and they want to make room for next year's models.
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Old 03-24-03, 04:06 PM
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Pick the seat and tires yoiu want, they will most likely be worth more than stock, if not at least u get what u want right?
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Old 03-24-03, 04:16 PM
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Hi,

I don't think it's unreasonable to ask about profit margins etc. Different businesses work differently. If you don't deal with bike shops much, how would one know how much they mark up ? If they are able to knock $20-30 off the price of a bike, then they must have some margins to work within ?

BTW..I didn't ask for a discount. When I came back from a test ride, I was told that the owner was willing to offer me $30.00 off the bike and switch components. So, how do they absorb this discount ? Is it spread out over other products or is it just good business to try and keep the customer coming back aftersale ?

Justen
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Old 03-24-03, 04:16 PM
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Originally posted by Brennan
From what I understand, it is true that the LBS does not have much of a profit margin on new bikes. So the retail is probably a fair price. Nevertheless, you can find lots of great deals. I just bought a new bike yesterday and got a discount because the store was offering 10% off on all bikes. Also, you can find a lot of great deals in fall/winter as this is the low season and they want to make room for next year's models.
Umm...that's very very untrue

You'd be surprised how high the margin is on higher end road bikes. However, profit is another issue...and I can't comment on that because it depends on a lot of independent variables
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Old 03-24-03, 04:19 PM
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>>>Nevertheless, you can find lots of great deals. I just bought a new bike yesterday and got a discount because the store was offering 10% off on all bikes.<<<<<

Exactly... If the LBS is offering a good deal, I'll take it. I'm not about to nickel and dime this man/woman to death.

Last Saturday I saw a 2002 Cannondale Hybrid at $400.00 that originally cost $700.00. That was a steal. It's was beautiful... Truly...
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Old 03-24-03, 04:29 PM
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Some stores have been offering no tax sales so you can save over $100.00 on some bikes. I have never really seen much better sales.

The bike that I am interested in is last years. The new 2003 version is only about $100.00 more than the original price on the 2002 model. Is there usually a big gap in prices on old and new models ?

Justen
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Old 03-24-03, 04:30 PM
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Originally posted by KennethToronto
Umm...that's very very untrue

You'd be surprised how high the margin is on higher end road bikes. However, profit is another issue...and I can't comment on that because it depends on a lot of independent variables
What would be an example of the independent variables you referred to ?

How big the store is ? Whether they are this years or last years model ?

Justen
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Old 03-24-03, 04:30 PM
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>>>>>>So, how do they absorb this discount ? Is it spread out over other products or is it just good business to try and keep the customer coming back aftersale ?<<<<<<


Good question. Often times the LBS is NOT aware that he is losing money on the deal until it's too late. It's true. One thing is certain. The first thing that dissapears when an LBS is not profitable is CASH! The LBS will then delay in paying his bills, taxes, utilities or whatever to keep afloat. They will live off sales instead of profits or borrow money from a bank. It a cycle of death.
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Old 03-24-03, 04:33 PM
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My LBS often gives me little discounts on various things I buy, but I suspect that's mainly because I've spent so much there over the years.
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Old 03-24-03, 05:21 PM
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I work in a bike store and there is a huge variance in cost vs retail for the bikes that we sell. We have huge overheads as we are based in a mall. Some bikes we are lucky to get $50 gross profit (NZD) yet others they make a killing. My Apollo retails at $1,500 yet cost was $480! it is a road bike though...some road bikes have a cost of more than half the retail.

Brendon
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Old 03-24-03, 05:25 PM
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Steve,
I have to say that out of all the bike stores that I have been to, I like this one the best. It is not because of the offer they made but because of how they have treated me since then. There is no pressure at all and they are always ready to answer questions. I can see that the after sale service is probably going to be just as good too.

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Old 03-24-03, 05:40 PM
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Brendon,

I have no idea as to how much profit they would normally make on a MTB but I acknowledge that bike store owners have to make a living like everybody else. I just want to get the best deal I can.

Is it pretty standard practice to offer to swap seats and tires etc for customers ? It seems to me that most people complain about the original seats and tires etc that come with the bikes. One store only offered me a $15.00 credit for the seat that came with one MTB when I asked to swap for a $50.00 Ergo seat. $15.00!! (cdn).

Justen
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Old 03-24-03, 06:20 PM
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quite often we will swap tyres around or swap stands etc. We dont get people asking to have saddles changed that often..... but then again the saddles we get are pretty nice to begin with.

Brendon
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Old 03-24-03, 06:45 PM
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It depends where you live, the season, the market, etc. In Montréal, the market is fairly competitive, so it's hard to expect a big sale. However, near the end of the season, there are a few models that the store owner might be more willing to let go.

Good deals, in my humble mind, are mostly done if you want to swap a new part could be sold to someone else with something else. Or if you offer the shop a few alternatives that would suit you, there might be one that also suit them better. For instance, the saddle they remove from your bike would probably be good for another guy. Likewise for changing the stem for a shorter or longer one. Exchanging them at time of purchase will save you some money (you get a saddle that suit you), but it doesn't cost any money to the shop.

Regards,
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Old 03-25-03, 03:38 AM
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we had a couple of bikes exactly the same apart from the frame size and the stem size....we had some guy come in with really wierd body dimensions so he ended up with the small fram but the longer stem .....also discount...ALL BIKES HALF PRICE!! been doin this for a few weeks now to get rid of stock before we close and move. pretty sad in a way. the bikes that have a cost higher than half we just fake a higher retail price so that the half price covers cost hehehe

Brendon
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Old 03-25-03, 04:45 AM
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Check online retailer prices for your replacements. Frankly, it sounds to me like you're stressing over beans. If they're willing to switch parts at all, they probably aren't trying to gyp you.
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Old 03-25-03, 05:10 AM
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As an aside on what our LBS's are up against, the two major component suppliers, Campy and Shimano, no longer will give retailers a discount to sell gruppos. My guess is that they, Campy and Shimano, are under tremendous pressure from people like Trek and Specialized and the other big bike manufacturers to not sell groups as this allows those of us who want to do so to purchase framesets from smaller frame builders (like Scapin, Sachs, etc.) and end up with a bike put together they way we want for a reasonable price. Our costs to do so have just jumped by about 25% on the component side.
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Old 03-25-03, 07:29 AM
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When I worked in photographic retail, we would try to sweeten a deal with free extras rather than cash off the price. £5 in free film did not cost us £5cash, only the wholesale price of the film, but the customers saves the retail price.
If you want to press and LBS for a deal, get them to throw in some spare inner tubes, waterbottles, blinkies etc.
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Old 03-25-03, 07:38 AM
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when i bought my bike i could have bought the frame direct from Steelman for $960 (4 years ago) but had it sent to my LBS to build. my LBS charged me the same price, $960. The Shimano group cost the same through the site, mail order and the LBS. The LBS didn't add any money to build it up.

**the LBS is an official seller of Steelman, so they may get a kickback off of that frame. That is great for them. They get their money from the manufacturer, not the consumer. **
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Old 03-27-03, 01:30 AM
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When it comes to a major purchase, it can't hurt to ask the LBS what they're willing to do. The worst that will happen, assuming you're not rude, is that they'll just say "nothing less than retail". Then you'll know where you stand, at least.

It is worth bearing in mind that the LBS may be willing to throw in some accessories as opposed to cutting a purchase price. That's cheaper for them than the retail price of the goods, but you save the purchase price.

There is some good advice above. But some people are just too timid about doing business with bike shops. Bike shops are businesses, like any other. They're willing to do what they're willing to do, and you're willing to pay what you're willing to pay. So ask.

Some things people say (not necessarily above, but in other places on these boards):

Said: Don't push price with LBS, because you need the "relationship".

Well, as far as a relationship goes, they need one more than you do. They need you to buy things to stay afloat; you just need a bike. So the best remedy is to rely on them to think for themselves. If they won't do something, they'll tell you no. If they will do it, they'll say so. And whatever people tell you, an LBS will fix your bike, sell you a water bottle, or true a rim wherever you buy a bike. So, there's not much reason to spend a lot more for something called a "relationship"-- unless, of course, you really have one with the guy who runs the store and aren't just using this as an excuse not to negotiate.

Said: LBS make so little, you have to pay what they ask or they'll go broke, leaving you without any shop or support.

It's up to the LBS to run his business. If something costs him a lot of money, he's just going to have to charge what it costs. I can't see why this is different than any other business in that respect. Imported wine costs more than domestic. So, the supermarket charges more for imported wine. The supermarket doesn't raise prices on bread, or on paper towels, and then tell people they should just pay these higher prices in order to "support their local supermarket" so that someone will be around to provide fine wine. Why is a bike shop any different? For example, if a shop isn't charging enough for repairs to be profitable, then he ought to raise his price to cover those costs rather than hoping to guilt trip people into spend $60 on spandex knee warmers or retail on a new bike to "cover' repair expenses. Some things cost money-- let him charge what they cost.

In short: supply, demand. It's your money, after all. If you're willing to spend more just so a guy in a bike shop will like you, well, more power to you. If you're not, then treat the transaction like you would any other significant purchase.
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Old 03-27-03, 05:31 AM
  #25  
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Geeeez you guys actually get discounts?

The only thing my LBS which is almost 60kms away from me ever gave me was grief... they have insulted every bike I have ever taken there maybe cos it wasn't one of their brands
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