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Dealer mark-up on bikes is 35%?

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Dealer mark-up on bikes is 35%?

Old 09-23-16, 05:20 PM
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vinuneuro
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Dealer mark-up on bikes is 35%?

Yesterday I happened to walk by a Specialized store in the city so I stopped in to see if they had the new Roubaix to demo. No luck, but we looked through their dealer system and while looking at availability all the prices were listed too. Retail price for the Expert $4000, 'Dealer cost: $2600.' I've read so many times about how small margins are for dealers, but even with overhead and other costs this seems quite generous. That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
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Old 09-23-16, 05:35 PM
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That seems like an awfully high margin. Was it a Specialized-only store? If Specialized owns the store, they probably get a cut of all sales anyway? Just guessing.
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Old 09-23-16, 05:42 PM
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Originally Posted by vinuneuro View Post
Yesterday I happened to walk by a Specialized store in the city so I stopped in to see if they had the new Roubaix to demo. No luck, but we looked through their dealer system and while looking at availability all the prices were listed too. Retail price for the Expert $4000, 'Dealer cost: $2600.' I've read so many times about how small margins are for dealers, but even with overhead and other costs this seems quite generous. That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
How many rih dealers do you know?
How many going out of business do you know. They deserve every penny they get.
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Old 09-23-16, 05:42 PM
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OP, Inthink you mean margin, not markup. 33% margin is a 50% markup. Margin is the portion of the retail price that is above the dealers' cost. Markup is the fraction of the dealer's cost thst is added to it to make the retail price. Not the same thing.
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Old 09-23-16, 05:46 PM
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How do you think bike shop owners pay for their golden yachts?
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Old 09-23-16, 05:57 PM
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Originally Posted by vinuneuro View Post
Yesterday I happened to walk by a Specialized store in the city so I stopped in to see if they had the new Roubaix to demo. No luck, but we looked through their dealer system and while looking at availability all the prices were listed too. Retail price for the Expert $4000, 'Dealer cost: $2600.' I've read so many times about how small margins are for dealers, but even with overhead and other costs this seems quite generous. That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
You should open your own bike shop. I'll be the first in line to buy one of your bikes at 'dealer cost'.
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Old 09-23-16, 06:03 PM
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I guess I should have expected to get flamed. I certainly don't expect dealer cost or close to to it, but that they won't budge even a little irks me a bit. Makes me grateful to have gotten nearly 20% off during the Spring sale for my 2016 (courtesy Specialized ).

Originally Posted by Wested View Post
That seems like an awfully high margin. Was it a Specialized-only store? If Specialized owns the store, they probably get a cut of all sales anyway? Just guessing.
They sell Specialized, Cannondale, Giant, Colnago, Fuji, GT, Jamis, among a number of other brands.

Originally Posted by rpenmanparker View Post
OP, Inthink you mean margin, not markup. 33% margin is a 50% markup. Margin is the portion of the retail price that is above the dealers' cost. Markup is the fraction of the dealer's cost thst is added to it to make the retail price. Not the same thing.
Thanks for the correction.
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Old 09-23-16, 06:05 PM
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I bought my Giant for $2200 (retail price $3000) and my cross bike for about $1300 (retail price around $1700).

Best time to buy a new bike is when the new years models come out and the shops need to unload all the old stock. Which is right about now actually.

If you are paying full retail then you need to be a better consumer.
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Old 09-23-16, 06:18 PM
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You only have to pay full retail if you really want a current model during a non-sale.

Also keep in mind that the cost includes assembly, sales, bike shop space, and some amount of guaranteed post-sale service. For cheaper bikes at least, all this can justify a pretty substantial increase over dealer cost.
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Old 09-23-16, 06:31 PM
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Sounds about right. I had a team deal at a Cannondale dealer and team price for CAAD10 Ultegra and SuperSix Red were about 28% off of MSRP and I'm sure the shop was still making some money. It's a business
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Old 09-23-16, 06:38 PM
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I don't begrudge them that - there is a lot of overhead.

Gouging is selling a dollar's worth of epinephrine in a $30 to manufacture self-injecting pen for $600 while paying the CEO who doubled the retail cost from $300 to $600 a $17 million bonus.
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Old 09-23-16, 06:55 PM
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Originally Posted by PepeM View Post
How do you think bike shop owners pay for their golden yachts?

Mine works in a former flower shop building, raises two young sons and had water pipes burst upstairs earlier this year. The toilet has no jewel encrusted handle.
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Old 09-23-16, 07:19 PM
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When you figure rent, utilities, employee wages and benefits, capital tied up in stock, investment in repair department tools, etc., their pricing is fair. Not many bike shop owners get rich.

If you want to go cheap, buy from BD. I patronize my LBS so they'll hopefully be there when I need something.

Here's Schwinn's 1988 dealer price list with suggested retail. The margin hasn't changed much.

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Old 09-23-16, 07:22 PM
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Originally Posted by DaveQ24 View Post
Gouging is selling a dollar's worth of epinephrine in a $30 to manufacture self-injecting pen for $600 while paying the CEO who doubled the retail cost from $300 to $600 a $17 million bonus.
All while her Democratic Senator father wrings his hands and winks over his shoulder.
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Old 09-23-16, 07:31 PM
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Originally Posted by velociraptor View Post
All while her Democratic Senator father wrings his hands and winks over his shoulder.
In before the move to P&R.
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Old 09-23-16, 07:36 PM
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I don't know about other brands but I know about trek. When I bought my 2011 FX 7.7 hybrid bike, the retail price was $1800 but my dealer showed me the website where they order from and their cost was something like $1140. I saw the dealer cost on a whole range of fx models and I could not believe it. I recall that the lower end fx 7.2's cost was in the 200s yet it's sold for ~400-500. %'s vary but yes the markup is insane. That's why a $15,000 bike to me doesn't make sense when their cost is LITERALLY THOUSANDS LESS.
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Old 09-23-16, 07:41 PM
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Originally Posted by smarkinson View Post
I bought my Giant for $2200 (retail price $3000) and my cross bike for about $1300 (retail price around $1700).

Best time to buy a new bike is when the new years models come out and the shops need to unload all the old stock. Which is right about now actually.

If you are paying full retail then you need to be a better consumer.
I agree with you 100% re: being a more discretionary consumer. This is why I never paid full price for almost all (but 1) of my trek bikes and I've bought 5 of them since 2009. On many of them, I got hundreds off MSRP and a couple of times I talked my way out of paying tax! I just bought a full carbon 2016 emonda sl 6 and the msrp was $2,999. You guys would not believe the amount I paid by fighting with the dealer and engaging is some good haggling.

I understand about overhead but biking season = VOLUME SALES. I'm sure the amount I saved didn't prevent them from paying the electric bill. Moreover, now they have a long term customer that leaves good reviews!
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Old 09-23-16, 08:14 PM
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3 shops near me have closed in the past few years, so I assume margins/profits are not very high in total.
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Old 09-23-16, 08:21 PM
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Everybody thinks gas stations rake in big money but that margin is so low that you either fix a lot of cars or sell beer and burritos.


In the end my dad went back to working for somebody else's station.
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Old 09-23-16, 08:48 PM
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The markup is accurate. The bigger shops with high volume do really well, while the smaller ones do okay.
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Old 09-23-16, 08:51 PM
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Regardless of margins bikes aren't a high volume sale. Why do you think most shops have left over stock at the end of the year?
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Old 09-23-16, 08:55 PM
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35% is a great deal if you consider that most other non-bike stuff you buy is marked up 100%.
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Old 09-23-16, 08:56 PM
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A retail business that cannot make a 30% margin will not prosper.
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Old 09-23-16, 09:48 PM
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Originally Posted by vinuneuro View Post
That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
Dealer pricing can get a little funny. I don't know about the bike industry in particular, but many companies have licensing agreements that mandate minimum prices, or similar things. It wouldn't surprise me at all if the dealer was basically required to sell at or near MSRP.

Close-outs are usually exempt from minimum pricing, since they're last year's model.
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Old 09-23-16, 10:08 PM
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A lot of people don't understand that when something is on "sale" the business is STILL making money (well, usually). I bought my new Specialized Diverge for 15% off and they obviously still made profit (even if they sold it at cost they'd make a small amount on me coming back for services and buying accessories).

So basically I paid 15% above cost to have the perk of trying around 5 bikes back-to-back (and riding each multiple times) and trying multiple saddles and helmets out with them (all of which I wouldn't have been able to do if I purchased straight from the manufacturer at cost somehow). That's fair IMO.
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