MCODave

You can buy a brand-new 2016 model Fuji Roubaix 1.3 at Performance for $1019. They will give back double points on road bikes, so you if you buy a $30 membership you will get $200+ back for future purchases. Assuming you will use that extra $200, this puts you right under $850 before your local tax and/or shipping. And if you have a local store, shipping to store is free.

I'm in no way advising you to buy at Performance or anywhere else, just showing that in today's internet age it took me all of 2-3 minutes to find a better deal.

RPK79

When I had my own business I didn't like getting cash. Credit card transactions were automatically deposited in my account and I used the mobile app on my phone to deposit checks. Cash meant a trip to the bank and in most cases I would have just preferred to pay the CC service fee.

rmfnla

That may be exactly what will happen...

rmfnla

There are others who are perhaps a bit more creative with their accounting practices than you...

CafeVelo

Doesn't sound out of line to me at all. Regardless of age he's probably got upwards of $800 tied up in it. Old bikes get sold at cost+assembly costs. That's how it works. If shops were willing to lose money on closeouts they wouldn't last long. I would have assumed the friends and family discount on the bike, even being three years old, to be no less than $1k.

Maelochs

Except that if he tries to sell a three- (then four-, then five-) year-old bike for more than one could buy a new one, he is likely to never sell it and thus never get any of his money back. At some point he would do well to cut his losses ans display a bike which might actually sell.

EGBigelo

I can get a 2016, same model, newer components for the same price. Probably less in a couple weeks. Who in their right mind would pay for a bike three years old when you can one for the same price with newer technologies.

Yes, shops that lose money on close outs don't last long. Neither do shops that don't sell bikes. Selling the bike at cost is better than not selling it at all.

rpenmanparker 

Three years old is really not a problem. The older generation groupset is an issue, however. You don't want 5700 if you can have 5800. Actually it isn't even a matter of price. The 5800 is the right buy in any case.

EGBigelo

I agree. I did care about the age. I liked the color and everything. For that much money I'd rather have the newer 105.

CafeVelo

That's the perpetual problem we face as shops. Our costs are often considerably higher than what is readily available online (and at performance which is basically online). They get those prices by buying in absurd quantities and using their command of market share to demand low prices, which ensures they keep the market share they hold. The other side of this is that every other customer thinks we have huge margins and the key to getting internet prices is demanding them. I've gone so far as to show customers the dealer book and how lousy our margins are to end their insinuating I'm trying to rip them off and make a 100% margin. I can promise you even if he offers it at cost it wouldnt be enough of a difference from 1175 to matter. Don't rail on the shop because the industry's cost structure is broken.

Maelochs

The point here isn;'t whether he will lose money on the bike, the issue is how much he will lose and when? No one is going to buy a 3-soon-to-be-4-soon-to-be-five-year-old bike with an outdated groupset for More than the latest model with the latest groupset. he is Not going to get back what he put into it----ever.

The only question is, could he take whatever cash he could get and whatever floor space he could free up and combine them to make money as opposed to losing money--because the only question with the old bike is how much will he lose and when.

At what point does he realize he might as well throw it in the dumpster as leave it on the floor, because No one wants or ever will want it at any price he wants to sell it, even cost? Does he really think that five years from now, when Wal-Mart is selling CF bikes with electronic shifting and the bottom-dollar basic offerings from Giant and Trek weight 16 pounds ... that Then suddenly someone is going to want it? Is he planning to hold it for 30 years and sell it as C&V?

If it were me I would cut my loses

Doug28450

What about an 8, soon to be 9 year old bike?

In August of 2008 I bought a new Giant TCR. The bike had to be ordered, I needed a size XL. A few weeks after I picked up my bike, another same model showed up in the store. It's still there.

mapeiboy

It might not matter to the big corporation on whether you pay cash or credit card for the purchase . I can tell you this if I go to my LBS with pile of cash to buy my dream bike ($11,000) you can be sure I will get a better deal than with a credit card .

02Giant 

I am now of the opinion that the dealer (especially since the op returned and offered $-125 of the original price) is waiting for the one unsuspecting buyer that doesn't consider (know)the age of the bike and buys it for a minimal "discount".

softreset

Awesome, Form 8300 time! Those are super fun to fill out.

bmthom.gis

The trick here is go talk to the owner, tell him you are interested in that one and ask what kind of a deal he/she would make on it. Easy as that! Either they will come back with an offer you find acceptable, or they won't.

Noctilux.95

I was told recently by my local Trek dealer that all bike manufacturers will soon use the Felt Bike model where model year will no longer be introduced therefore no need to discount the previous year. Dealers apparently don't like discounting bikes

bmthom.gis

There will still be discounts to older models with the previous generation of components. I don't see any reason though that manufacturers have to come out with a new model every single year, especially if nothing significant is changing.

indyfabz

Uh...Guess failed to realize that you answered you own question with that last sentence?

RoadGuy

Sure the Business Does.

When/before calculating the end of year profit or loss from the business, the value of all of the assets has to be calculated. This includes the value of the shop's inventory. Both the Federal Government and the State Government may allow the inventory to be valued at the cost of acquisition OR the current market value. Current market value being the realistic price that the inventory items cost, minus or plus the change in value due to market changes.

If you buy a gadget for $300, it doesn't sell after a year, and the realistic selling price drops to $100, the Shop Owner who reports his inventory at market value can show the value at $100 (a tax loss/depreciation of $200 of the inventory). If he then sells it at/for $300, the additional $200 he makes on the sale is reported as a profit on the sale (he has to report the $200 gain on the sale as profit, recapturing the loss he initially reported).

RPK79

That's not depreciation that's an inventory valuation method, but then I'm a manager at a CPA firm so maybe you know better.

RoadGuy

As I explained previously there are lots of reasons a Shop Owner might prefer cash over plastic or a promise to pay.

#1 Cash on hand is liquidity and flexibility. Just because you accepted cash does not mean that you did not record the sale "on the books". Having cash on hand allows to to make "spot" purchases/make moves without having to go to the Bank to get money. Wholesale Suppliers sometimes offer "one shot seals" that are one time cash offers for heavily discounts products. If you have the cash onhand, you can take advantage of these limited opportunities and increase your shop's bottomline.

#2 Cash on hand costs less money than cash in the bank. Only having a credit line or limited cash available in the Bank increases the Shop's cost of doing business. By having cash on hand, the Shop is not paying the handling fee on the Deposit to the Bank. You are not paying the Bank to hold your money, you are not paying the Bank to give your money to one of your Creditors when you need to make for something, and you are not paying the bank to borrow money you might need for daily shop operations.

#3 For the Buyer to receive Warranty from the Bike Manufacturer (if any Warranty is left), the sale date must be recorded by the Bike Shop.

RoadGuy

Yes, you might consider that an Inventory Valuation Method, BUT how does the Inventory Valuation Method affect the business's reported bottomline reportable income?

To report the business income, you have to report the assets of the business. The Owner of a Sole Proprietorship pays Income Tax based on the overall profit from the business. TheOverall Profit of the business includes tha value of the Inventory. The Owner of the Business will pay Income Tax based on the value of the inventory as Profit or gain from the business. Depreciate the value of the inventory to show the true profit from the business.

An Unsold Item in Inventory decreases in value as time goes on. Depreciating the reported value is the more accurate way of reporting on the health and profit or loss from the business. I once worked for a Computer Systems House whose Owner insisted on carrying six year old computers that he had been using for Software Development Company at the original purchase cost on his sales inventory (about $4,000 each when the current market value was about $300 each). Yeah, his bottom line profit looked good (on paper), as did his Company valuation due to the value of the inventory, and selling product with no inventory cost. BUT, in fact, our paychecks were bouncing, and the heathcare the Owner promised was discontinued/suspended by the Healthcare/Medical Insurance Company for non-payment. I tried to convince the Owner to allow me to liquidate the obsolete inventory to allow us to buy more current/more desirable products, and get the inventory turns up, but he was determined not to sell for less then the units cost him. I ended up leaving the company before the Bank came to seize the property, because I didn't see any way to save the Company when the problem was the Owner.

No Insult Intended, but I took Business and Accounting Courses in College as Grade Raisers, Engineering Classes were sinking my GPA to the Basement.

I've seen more incompetent CPAs and CPS Firms in my years, than honest, competent firms. An Classic Example is: during and after my Divorce, I watched as a CPA Firm retained by my EX depreciated the same car she bought in 1994, as being a new car she bought each year in 1994, 1995, 1996, 1997, 1998, 1999, and 2000 for her business. Each year they took off the costs of buying a new car, and first year depreciation. And they never reported any Registration Costs for the car paid to the State of California. How can that possibly be legal? Or did the Firm simply miss each year that she only bought one car, and that was in 1994?

RPK79

You depreciate fixed assets over their useful life. Inventory is a current asset.

RoadGuy

You can call it whatever makes you happy.

So, what do you call inventory that has become unsellable, and has no monetary (low very low value, only value is scrap metal) value to the business?

You have to describe what happened to the value of the asset. Isn't that part of Accounting?