How much does an LBS make on every bike?
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How much does an LBS make on every bike?
Around how much money is left after the bike, it parts, shipping, and assembly are paid for?
How much for an entry level road bike <700-1000>, a mid-range <1400-1800>, and a high end <1800 - don't bother looking at the price tag>? I've heard that bike shops actually only make a little from every bike sold, and most of their profits come from service and accessories.
How much for an entry level road bike <700-1000>, a mid-range <1400-1800>, and a high end <1800 - don't bother looking at the price tag>? I've heard that bike shops actually only make a little from every bike sold, and most of their profits come from service and accessories.
#2
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One of my favourite shops extends a 15% discount on parts and accessories to our co-op members but cannot extend this to new bikes because the markup and profit margin is too low.
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bike industry has always run on low margins for 'branded' bikes - mostly in the 22% markup range. That does get enhanced by pre-season bookings incentives and other possible special programs a manufacturer might offer; but these ain't no great shakes...
Then , of course, there are additional built in costs, like freight, which cut that margin significantly.
When you start dealing with 'Private' label stuff or brands which are really just a 'label' and not a lot of support behind them, then the margins can go up significantly.
Accessories and the needed little crippty crap offers substantially more margin, but then you gotta sell a bunch of that stuff to make any volume. But they can offer a small discount to club riders to bring them thru the doors more often, since that's whoz likely gonna need stuff on an ongoing basis.
Hence, established bike shops with long histories are successful because they sell good stuff, sell wisely to the customer and support the after-sale issues.
That's your trade-off.
I do all of my own work, so sometimes I do feel bad that I'm not throwin as much business to the LBS as I'd like to. But if they have what I need, I don't mind buyin it there.
Then , of course, there are additional built in costs, like freight, which cut that margin significantly.
When you start dealing with 'Private' label stuff or brands which are really just a 'label' and not a lot of support behind them, then the margins can go up significantly.
Accessories and the needed little crippty crap offers substantially more margin, but then you gotta sell a bunch of that stuff to make any volume. But they can offer a small discount to club riders to bring them thru the doors more often, since that's whoz likely gonna need stuff on an ongoing basis.
Hence, established bike shops with long histories are successful because they sell good stuff, sell wisely to the customer and support the after-sale issues.
That's your trade-off.
I do all of my own work, so sometimes I do feel bad that I'm not throwin as much business to the LBS as I'd like to. But if they have what I need, I don't mind buyin it there.
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bike industry has always run on low margins for 'branded' bikes - mostly in the 22% markup range. That does get enhanced by pre-season bookings incentives and other possible special programs a manufacturer might offer; but these ain't no great shakes...
Then , of course, there are additional built in costs, like freight, which cut that margin significantly.
When you start dealing with 'Private' label stuff or brands which are really just a 'label' and not a lot of support behind them, then the margins can go up significantly.
Accessories and the needed little crippty crap offers substantially more margin, but then you gotta sell a bunch of that stuff to make any volume. But they can offer a small discount to club riders to bring them thru the doors more often, since that's whoz likely gonna need stuff on an ongoing basis.
Hence, established bike shops with long histories are successful because they sell good stuff, sell wisely to the customer and support the after-sale issues.
That's your trade-off.
I do all of my own work, so sometimes I do feel bad that I'm not throwin as much business to the LBS as I'd like to. But if they have what I need, I don't mind buyin it there.
Then , of course, there are additional built in costs, like freight, which cut that margin significantly.
When you start dealing with 'Private' label stuff or brands which are really just a 'label' and not a lot of support behind them, then the margins can go up significantly.
Accessories and the needed little crippty crap offers substantially more margin, but then you gotta sell a bunch of that stuff to make any volume. But they can offer a small discount to club riders to bring them thru the doors more often, since that's whoz likely gonna need stuff on an ongoing basis.
Hence, established bike shops with long histories are successful because they sell good stuff, sell wisely to the customer and support the after-sale issues.
That's your trade-off.
I do all of my own work, so sometimes I do feel bad that I'm not throwin as much business to the LBS as I'd like to. But if they have what I need, I don't mind buyin it there.
Last edited by eyeclan; 08-22-10 at 04:32 PM.
#5
Banned
Roughly 30%, but that covers keeping the doors open lights on mechanics paid and their health insurance too,
[hope they get some for the work]
Small parts and accessories are 'Keystone' cost is half of retail..
I note bikes for European market tend to be complete, lights mud guards ,and in case of touring bikes racks too.
The Margins for adding that stuff in US dealerships keeps the business afloat.
[hope they get some for the work]
Small parts and accessories are 'Keystone' cost is half of retail..
I note bikes for European market tend to be complete, lights mud guards ,and in case of touring bikes racks too.
The Margins for adding that stuff in US dealerships keeps the business afloat.
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we used to joke all the time about how people seem to expect to be able to haggle on the price of a bike, but they would never go to the market and try and haggle on the price of a pound of bannanas
as others said the margins are really low, and the funny thing sometimes the more expensive the bike the less you make.
as others said the margins are really low, and the funny thing sometimes the more expensive the bike the less you make.
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I used to work at a bike shop and never got used to the idea that many shoppers wanted to haggle over the price of a low end bike. They'd drive up in a new Mercedes or BMW. Then try to get the shop owner/manager to drop the price a few dollars. The markup is too small for a shop to do that. Then after they bought the bike they'd want to haggle on the price of a low end truck rack.
Lets see. $45,000 for the car. $500 for the bike. $120 for the bike rack. Whats wrong with that picture?
They say they want the bike for exercise and to get healthy. Being cheap is not the way to get healthy. Do they try to haggle about their gym membership costs?
Lets see. $45,000 for the car. $500 for the bike. $120 for the bike rack. Whats wrong with that picture?
They say they want the bike for exercise and to get healthy. Being cheap is not the way to get healthy. Do they try to haggle about their gym membership costs?
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The Lord is merciful and gracious, slow to anger and abounding in steadfast love. - Psalm 103:8
I am a cyclist. I am not the fastest or the fittest. But I will get to where I'm going with a smile on my face.
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I used to work at a bike shop and never got used to the idea that many shoppers wanted to haggle over the price of a low end bike. They'd drive up in a new Mercedes or BMW. Then try to get the shop owner/manager to drop the price a few dollars. The markup is too small for a shop to do that. Then after they bought the bike they'd want to haggle on the price of a low end truck rack.
Lets see. $45,000 for the car. $500 for the bike. $120 for the bike rack. Whats wrong with that picture?
They say they want the bike for exercise and to get healthy. Being cheap is not the way to get healthy. Do they try to haggle about their gym membership costs?
Lets see. $45,000 for the car. $500 for the bike. $120 for the bike rack. Whats wrong with that picture?
They say they want the bike for exercise and to get healthy. Being cheap is not the way to get healthy. Do they try to haggle about their gym membership costs?
I want to pay for a bike ? If the store owner drives a $60,000 car is it then ok to try and negotiate.
Unless I am missing something nobody can force me to buy something at a certain price
and nobody can be forced to sell me something at a certain price. Something about a free market.
#9
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If you got only X to spend on a bike, there will be something in that price-point.
thats why manufacturers have so many models with different parts picks.
your champagne tastes on a beer pocket book will get you a reasonable value ,
Just may be Andre's sparkling wine and not from France ..
You can get used bikes , many shops have some on consignment . there .
My local does.
Car analogy? heck the Bike shop owner's wife may have a career
as a Lawyer or Doctor, or the payments are expensive..
some people need prestige.. even in the bike they want.
thats why manufacturers have so many models with different parts picks.
your champagne tastes on a beer pocket book will get you a reasonable value ,
Just may be Andre's sparkling wine and not from France ..
You can get used bikes , many shops have some on consignment . there .
My local does.
Car analogy? heck the Bike shop owner's wife may have a career
as a Lawyer or Doctor, or the payments are expensive..
some people need prestige.. even in the bike they want.
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Around how much money is left after the bike, it parts, shipping, and assembly are paid for?
How much for an entry level road bike <700-1000>, a mid-range <1400-1800>, and a high end <1800 - don't bother looking at the price tag>? I've heard that bike shops actually only make a little from every bike sold, and most of their profits come from service and accessories.
How much for an entry level road bike <700-1000>, a mid-range <1400-1800>, and a high end <1800 - don't bother looking at the price tag>? I've heard that bike shops actually only make a little from every bike sold, and most of their profits come from service and accessories.
The shops I patronize extend 10% discounts to bike club members. I rarely take advantage of this since I know I'm paying for them to be around for me. I could buy more stuff online (I do for some more generic purchases), but nothing beats the physical process of walking into a shop, putting cash on the counter, and walking out with what you want.
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low margins are another reason why there's so much variability of on-floor sales service...
this being true for much of 'retail', but LBS are different than other retail in many ways.
its not uncommon to have only a few reasonably paid staff in a small store, cause they can't afford to pay more.
not likely that any small LBS owner is gonna be drivin a Jag, unless the bike shop is a diversion from the real money maker.
so regular employees are usually not well paid.
that doesn;t mean that they don;t work. what it means is that they don;t stay for very long. so what you get are noobs which have to learn the intricacies of working with a broad range of customers, fitting their needs and knowing the products.
Sooner or latter they gotta move on also to make more bread.
and a lot of the money a shop has is tied up in the bikes and other inventory you see , layin, standin and hangin.
you can;t sell from an empty shelf - and buyers want to see variety when they walk in...
Hence when asked, I might recommend a LBS, but also advise they should always involve the owner/mgr/known longterm employee who has some history if they are buying a bike or other significant purchase. Not so much for price but just to have that qualified 2nd opinion. I never mention 'price' when speaking about a shop, because that's up to the buyer to decide what they'll pay.
I do know that the backup of good bike knowledge makes a huge difference for anyone buying their 1st and 2nd bikes (and often later when it comes to new technology...) and the cycling experience gets off to the best possible start.
anyway, always best, as a buyer, to come in with a smile on your face, and leave the same way, even if you don;t buy.
this being true for much of 'retail', but LBS are different than other retail in many ways.
its not uncommon to have only a few reasonably paid staff in a small store, cause they can't afford to pay more.
not likely that any small LBS owner is gonna be drivin a Jag, unless the bike shop is a diversion from the real money maker.
so regular employees are usually not well paid.
that doesn;t mean that they don;t work. what it means is that they don;t stay for very long. so what you get are noobs which have to learn the intricacies of working with a broad range of customers, fitting their needs and knowing the products.
Sooner or latter they gotta move on also to make more bread.
and a lot of the money a shop has is tied up in the bikes and other inventory you see , layin, standin and hangin.
you can;t sell from an empty shelf - and buyers want to see variety when they walk in...
Hence when asked, I might recommend a LBS, but also advise they should always involve the owner/mgr/known longterm employee who has some history if they are buying a bike or other significant purchase. Not so much for price but just to have that qualified 2nd opinion. I never mention 'price' when speaking about a shop, because that's up to the buyer to decide what they'll pay.
I do know that the backup of good bike knowledge makes a huge difference for anyone buying their 1st and 2nd bikes (and often later when it comes to new technology...) and the cycling experience gets off to the best possible start.
anyway, always best, as a buyer, to come in with a smile on your face, and leave the same way, even if you don;t buy.
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we used to joke all the time about how people seem to expect to be able to haggle on the price of a bike, but they would never go to the market and try and haggle on the price of a pound of bannanas
as others said the margins are really low, and the funny thing sometimes the more expensive the bike the less you make.
as others said the margins are really low, and the funny thing sometimes the more expensive the bike the less you make.
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There are a couple of points, I buy things that are on sale in the grocery store, if bananas are on sale I buy them instead of the peaches that are not on sale.
Now when I go to the bike shop I work on a deal for the bike i want, if the shop doesn't like the offer, they don't sell me a bike. I have also found that at some shops the salesman does not have the authority to lower the price but the owner of the shop does.
I stock up on tubes when they are on sale, if the LBS is having a sale I will shop.
Now when I go to the bike shop I work on a deal for the bike i want, if the shop doesn't like the offer, they don't sell me a bike. I have also found that at some shops the salesman does not have the authority to lower the price but the owner of the shop does.
I stock up on tubes when they are on sale, if the LBS is having a sale I will shop.
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I used to work at a bike shop and never got used to the idea that many shoppers wanted to haggle over the price of a low end bike. They'd drive up in a new Mercedes or BMW. Then try to get the shop owner/manager to drop the price a few dollars. The markup is too small for a shop to do that. Then after they bought the bike they'd want to haggle on the price of a low end truck rack.
Lets see. $45,000 for the car. $500 for the bike. $120 for the bike rack. Whats wrong with that picture?
They say they want the bike for exercise and to get healthy. Being cheap is not the way to get healthy. Do they try to haggle about their gym membership costs?
Lets see. $45,000 for the car. $500 for the bike. $120 for the bike rack. Whats wrong with that picture?
They say they want the bike for exercise and to get healthy. Being cheap is not the way to get healthy. Do they try to haggle about their gym membership costs?

The higher end the bike, the more margin it will be. I've noticed LBS here slash quite a bit off these top end bikes % vs. the lower end models.
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The seller can always say "no." But, if you don't ask, you can not get (as my Grandpa told me).
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There are a couple of points, I buy things that are on sale in the grocery store, if bananas are on sale I buy them instead of the peaches that are not on sale.
Now when I go to the bike shop I work on a deal for the bike i want, if the shop doesn't like the offer, they don't sell me a bike. I have also found that at some shops the salesman does not have the authority to lower the price but the owner of the shop does.
I stock up on tubes when they are on sale, if the LBS is having a sale I will shop.
Now when I go to the bike shop I work on a deal for the bike i want, if the shop doesn't like the offer, they don't sell me a bike. I have also found that at some shops the salesman does not have the authority to lower the price but the owner of the shop does.
I stock up on tubes when they are on sale, if the LBS is having a sale I will shop.
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if they arent marked up, how can the shops afford to drop the prices so much at model year change?
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It still costs money to store old inventory. It's better to move out the old to make room for the new.
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If it's anything like the golf industry, they get concessions to eliminate old inventory where there will be a price adjustment on old stock in order for them to purchase new stock. It doesn't do the manufacturers any favors if the LBS's aren't buying new merchandise to move, either.
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There's also taxes to be paid on inventory that is in stock over the 12/31-1/1 year change. Rather than keep inventory sitting around and pay taxes they'll discount inventory by a % of the amount of tax so they lose less by moving it even at a loss than by keeping it and putting the tax money into it for another year or portion thereof.
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You also sell old inventory at a loss just to get it off the books...been there done that. And take the write down off the taxes.
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Webshots is bailing out, if you find any of my posts with corrupt picture files and want to see them corrected please let me know. :(
ISO: A late 1980's Giant Iguana MTB frameset (or complete bike) 23" Red with yellow graphics.
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