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bike shop issues......

Old 12-22-09, 10:22 AM
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bike shop issues......

for the most part i have liked my LBS and in the last year have spent around 3 to 4 grand in the shop, i also have told others to go there to buy gear and bikes. I participate in many of their outings etc as well. recently i decided I wanted to get into an off road bike and gave them a call to see if they could offer me any deals on an older model bike as it isnt imparitive i have the latest and greatest for off roading. to make a long story short the store owner told me of one model he had for 2500 bucks which was about 1500 more than i would have spent on this venture. the part that torques me is that a week earlier his partner told me the bike was 2400 but then the owner goes on to tell me that retail for it was 3500 which when i looked it up on the manufacturers web site full retail is only 2800. so he jacked up the price 700 bucks to make it sound like he was giving me some steal of a deal........ to me that was pretty shady business and now i am contemplating if i should spend another nickle in there again.....
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Old 12-22-09, 10:28 AM
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Here's a suggestion.....

Why not take that bit of info to the one person that can actually solve it, instead of coming here and getting 50 different opinions from people who have various axes to grind?

Why not call and talk to the owner of the shop. It is quite likely nothing more than a misunderstanding. They happen in even the best run shops.
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Old 12-22-09, 10:36 AM
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it was the shop owner that boosted the prices.... to add to it a bit i told him i wasn't looking to spendover 2k for a bike and that i had found a couple nice used ones but was hoping for a bit more i could buy from him. he then told me that i could be buying something that would need this and that etc.... mainly to scare me from looking at used anything but in the end i did find a bike that was basically brand new for 750 that originally went for 1600 and had original everything on it tits on tires never even off road. so end result i am happy i bought what i did but i gave them a shot to sell to me and they messed up royally
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Old 12-22-09, 10:41 AM
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Did you ever consider telling the owner that the mfr's site shows the msrp to be $2800? The owner could indeed be mistaken, or there may be a reason why the msrp is $3500 (different model, upgrades, blah-blah). Your gripe may be reasonable, but your answer lies within the walls of the LBS, not here.

As for the partner quoting $2400...maybe it was tagged @ $24XX, he interpreted it as $2400, but the owner rounded it to $2500. Again, you should ask them; however, I wouldn't bother inquiring further unless I was in the market for that particular bike in that price range.

You haven't handed over any money yet, so there's no reason to feel swindled.
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Old 12-22-09, 10:51 AM
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So he misquoted a bike that you're not even considering buying?

Boo f'in Hoo.
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Old 12-22-09, 10:53 AM
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maybe you are right and no i dont feel swindled, i just have a hard time understanding why these places feel they need to make 100% markup on everything. it would make sense to me to make deals here and there to move bikes and still make a reasonable profit. im just one person and I am sure they have made a couple grand off me already this year.
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Old 12-22-09, 11:02 AM
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Soooo....they were offering you a bike at a price below MSRP.....

Highly doubt there was anything intentional or malicious about what happened with the quotes. It happens. As for being wrong about the MSRP....honest mistake I am sure....fact is he was still offering a bike for $300-$400 below MSRP. With some rough numbers....that could have basically cut his margin in half.

Steering you towards a bike outside of your budget...not something I like seeing shop owners do. Usually happens because "we have this one already in stock!" Poo-pooing the idea of a used bike by making it sound like an impending train wreck - again....poor tactic. Often used in the industry. it was probably taught as a sales tactic at some poor sales training one year at interbike or by certain main line reps. It's a tactic that actually implies that the customer is ignorant. So ignorant in fact that they can't figure out whether a bike they want to buy will work.

All in all none of this would fall into what I would categorize as a "shady business." Granted we are all a part of the mass consumerism/internet generation and we are used to prices set in stone and shown up front and stored in computer systems for the whole world to refer to....but in fact this is still a cottage industry. When you get a quote for a bike and it's a "deal" I would always advise anyone to have the person who quoted it for you write it down on the business card for the shop with their name so that you can refer back to it at a later date. not saying this would give someone the right to scream if the price ever changed, but it would give a different shop employee or owner an opportunity to address it directly if the situation arrised.

Shops are run for the most part by well intentioned individuals who have an innate love for some aspect of this sport. Unfortunately most of these individuals have little to no experience in industries outside of the bike industry and as such apply only what they know or have learned from experience in the industry. They also don't tend to be highly qualified business people financially. You might see the actions as a shady move by some money loving shop owner who is trying to rob you blind, but honestly....there just isn't enough money in any of this to support individuals like that for very long. That extra $100 on that quote is a big number for many people....but when considering the average overhead in a shop....that nets out to about $3-$4 for the owner. As such it can sometimes be a little too easy for many in a shop to lose that frame of reference that most others are using when looking at price.
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Old 12-22-09, 11:09 AM
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Originally Posted by IRONHEAD1
maybe you are right and no i dont feel swindled, i just have a hard time understanding why these places feel they need to make 100% markup on everything. it would make sense to me to make deals here and there to move bikes and still make a reasonable profit. im just one person and I am sure they have made a couple grand off me already this year.
Most every place is actually the same. Due to my intense interest in the bike industry I have often wondered why the customers in this industry seem to price in-elastic and are always under the impression that they are simply handing all their money away if they buy anything. Most retail margins are in the 25%-40% range at places like big box stores and in the 30%-80% range at most mom and pops. Even then the average net is 3%-4%. Figure out what $ amount worth of bikes you'd have to sell to net out you current salary if you only netted 3%-4% from their sale. I've done the math....it's frightening. It's also why I still operate my bike related business in a sort of industry grey zone. The traditional model is crap for the buyer and the seller.

Consider the NBDA's figures for average gross margin on a bicycle sale 30%-40%. Now let's assume you want to offer the best prices in town and make up for it with volume.....so you discount from MSRP to 20%. Seeing as how many shops net 3-4% (and knowing that a lot of a shop's business is from service and sales of accessories with higher margins) you could have theoretically broke even on your bike sales....at best.

....but as the saying goes....you may have lost money, but that's OK. You'll make it up on volume.
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Old 12-22-09, 11:43 AM
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Originally Posted by IRONHEAD1
it would make sense to me to make deals here and there to move bikes and still make a reasonable profit.
At normal pricing we get to keep 3-4%. The rest gets devoured by what are called the "cost of doing business".

Originally Posted by IRONHEAD1
im just one person and I am sure they have made a couple grand off me already this year.
Which means they got to keep about $80.

If a shop does $500,000 in sales, after all is said and done, and if the owner doesn't owe anybody any money which would eat away profits due to interest, he's going to make about $20,000. That's right-he worked 50+ hours a week to clear $20K.

You might not want to go to a shop because you feel the prices are high. Feel free to shop elsewhere-just please don't assume others will support it and please don't assume we're making plenty of money and can therefore give you deals. There's just not that kind of room in the model. Are we slowly evolving to a new model? Far too slowly, if you ask me.....
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Old 12-22-09, 11:47 AM
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Originally Posted by BikeWise1
Here's a suggestion.....

Why not take that bit of info to the one person that can actually solve it, instead of coming here and getting 50 different opinions from people who have various axes to grind?

Why not call and talk to the owner of the shop. It is quite likely nothing more than a misunderstanding. They happen in even the best run shops.
BikeWise, you must be a professional consultant because that's exactly what Scientific Solutions would recommend. If there's a conflict, put it on the table and discuss face to face with the party involved. It won't get solved here.
To the OP, The comment about them offering you a bike at a discount is a good one, and that puts you in a good position to nicely point out that they mis-quoted. I'd add something like "So did you mean to offer me a $1000 discount from $2800?" I'd use the mistake to my advantage by being nice about it. Also, if he sticks to his guns and won't lower the price substantially, you are in a perfect position to shop somewhere else. After all, you've confronted him with a mistake, now what does he do about it. My guess is you might wind up with that bike at or near your spend limit. Don't get mad, take advantage of the situation, YOU are in the driver's seat now.
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Old 12-22-09, 11:50 AM
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How well does the owner know you?

Remember they are salesmen first. They don't give handouts. It's nothing personal.
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Old 12-22-09, 11:52 AM
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Also take into account many rigs sometimes have parts swapped on them while sitting at the shop. Many times the parts can be "upgraded" from the original spec. This would effective move the "MSRP".
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Old 12-22-09, 11:54 AM
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Originally Posted by IRONHEAD1
blah blah LBS sucks, blah blah
www.performancebike.com
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Old 12-22-09, 12:01 PM
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you guys are too much lol.... i squared away everything just now so it's all good I also bought some new goodies from them to boot. no sad feelings. just for the record i do support my LBS as much as possible and do understand their importance to the community. i was simply stating i wasnt fond of the over quoting of msrp to enhance the sale price nor the scare tactic. its all good though
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Old 12-22-09, 01:43 PM
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Originally Posted by IRONHEAD1
you guys are too much lol.... i squared away everything just now so it's all good I also bought some new goodies from them to boot. no sad feelings. just for the record i do support my LBS as much as possible and do understand their importance to the community. i was simply stating i wasnt fond of the over quoting of msrp to enhance the sale price nor the scare tactic. its all good though
Understand, but keep in mind that this stuff puts food on some of our tables....albeit not too much food...about 3%-4%
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Old 12-22-09, 03:21 PM
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Originally Posted by roccobike
BikeWise, you must be a professional consultant because that's exactly what Scientific Solutions would recommend. If there's a conflict, put it on the table and discuss face to face with the party involved. It won't get solved here.
To the OP, The comment about them offering you a bike at a discount is a good one, and that puts you in a good position to nicely point out that they mis-quoted. I'd add something like "So did you mean to offer me a $1000 discount from $2800?" I'd use the mistake to my advantage by being nice about it. Also, if he sticks to his guns and won't lower the price substantially, you are in a perfect position to shop somewhere else. After all, you've confronted him with a mistake, now what does he do about it. My guess is you might wind up with that bike at or near your spend limit. Don't get mad, take advantage of the situation, YOU are in the driver's seat now.
Good advice for the OP.
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Old 12-22-09, 03:38 PM
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Originally Posted by Psimet2001
Understand, but keep in mind that this stuff puts food on some of our tables....albeit not too much food...about 3%-4%
is that net or gross?
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Old 12-22-09, 04:20 PM
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Originally Posted by BikeWise1
At normal pricing we get to keep 3-4%. The rest gets devoured by what are called the "cost of doing business".



Which means they got to keep about $80.

If a shop does $500,000 in sales, after all is said and done, and if the owner doesn't owe anybody any money which would eat away profits due to interest, he's going to make about $20,000. That's right-he worked 50+ hours a week to clear $20K.

You might not want to go to a shop because you feel the prices are high. Feel free to shop elsewhere-just please don't assume others will support it and please don't assume we're making plenty of money and can therefore give you deals. There's just not that kind of room in the model. Are we slowly evolving to a new model? Far too slowly, if you ask me.....
If this is the case, the business model is seriously flawed and unsustainable. No business can survive on 3-4% margins.
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Old 12-22-09, 04:23 PM
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The other thing to remember here is that this group is a bunch of bike weenies, who can do much of their own fitting, maintenance, research, etc. There is a much bigger percentage of the population that walks into a bike shop clueless, needs the handholding, and is happy with what they get for the prices they get it. WE, I think, are the exception, not the rule.

EDIT: Here, let me tell you my LBS story.

I got my CAAD9 from the ONLY local Cannondale dealer this year because 1) I hadn't been on a road bike in YEARS and needed the help 2) I wanted a warranty. Fair enough. I got what I paid for. When I first got the bike I had really bad issues with FD adjustment. I took it back several times and even to different locations of the same LBS (the largest Midwest LBS chain)...nobody could seem to get it just right. So, being the usually self-sufficient guy I am, went to the Park website and got everything I could on RD and FD adjustment. I went to the Shimano site and downloaded the technical documentation of every component on the bike. For two nights I read them with the bike in front of me, familiarizing myself with the components, how they were supposed to work, and how to adjust them. The third night I pulled the chain, RD, and FD off the bike and set everything back up, from scratch, according to all the stuff I had referred to the nights before. From the last tightened bolt it worked 200% better than the LBS had ever left it. A few more tweaks after riding and I feel like I have a DAMNED good 105 drivetrain.

Long story short the LBS could have impressed me, but they blew it. How hard could these adjustments be if someone who really didn't know what they were doing could review documents for two nights and set the thing up more perfectly than the LBS EVER did in 4-5 tries?

Since then I've replaced my fork, recabled, pretty much everything except I haven't touched a BB yet... I'll never buy an LBS bike again unless I get such a killer deal that I simply can't buy the components for less. I'd rather buy a frame and build it up now...not just because I can, but because I'm evidently more capable than the people, at least at this LBS, that get paid to do it.

I still value this LBS because the people are very nice, they're convenient to my house when I want a few gels for a ride, need a nut or bolt, etc. But past that, they blew it. I'll be self-sufficient now.

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Old 12-22-09, 04:27 PM
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Originally Posted by Torvidicus
is that net or gross?
Net. from the National Bike Dealers Association

Originally Posted by www.NBDA.com
AVERAGE EXPENSES FOR SPECIALTY BICYCLE RETAILERS

(From NBDA Cost of Doing Business Survey,
expressed as a percentage of gross annual sales)

Payroll Expenses — 20.5%

Occupancy Expenses — 7.7%

Advertising/Promotion — 3.%

Auto and Delivery — 0.5%

Depreciation — 0.9%

Insurance — 0.8%

Licenses/Other Taxes — 0.5%

Professional Services — 0.5%

Office Supplies/Postage — 1.2%

Telephone — 0.6%

Travel/Entertainment — 0.4%

Other operating expenses— 1.3%

TOTAL OPERATING EXPENSES — 37.7%

NET INCOME BEFORE TAX — 4.2%

GROSS MARGIN ON BICYCLE SALES — 36%

GROSS MARGIN ON CLOTHING SALES — 43%

GROSS MARGIN OTHER EQUPT. — 48.1%
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Old 12-22-09, 04:29 PM
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Originally Posted by khatfull
If this is the case, the business model is seriously flawed and unsustainable. No business can survive on 3-4% margins.
Now you know why so many shops go out of business. As an owner I used to like well used to say, "they got free sock and gu'd to death".
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Old 12-22-09, 04:49 PM
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Originally Posted by Psimet2001
Now you know why so many shops go out of business. As an owner I used to like well used to say, "they got free sock and gu'd to death".
Total net profit seems like a pretty backwards way to look at an individual sale though. Any sale that's making him a net profit (considering sales time, cost of goods and shipping, and any risk such as shop warranty) is increasing his overall net profits. The store rent doesn't go up because he sold you a bike!

It may be that one makes crap for running a bike shop, and that stinks, but chasing away customers will not help to make ends meet.

That said, I think the OP is in a tiff over a minor mistake (the mistaken original price). The shop is going to tell you why used sucks and new rocks. And he's trying really hard to not have "super deal" bikes at the end of the year. I really think it's a crumby model for the LBS that manufacturers put out a new model every year, even if it does have the same Sora parts.
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Old 12-22-09, 05:20 PM
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Originally Posted by crhilton
Total net profit seems like a pretty backwards way to look at an individual sale though. Any sale that's making him a net profit (considering sales time, cost of goods and shipping, and any risk such as shop warranty) is increasing his overall net profits. The store rent doesn't go up because he sold you a bike!

It may be that one makes crap for running a bike shop, and that stinks, but chasing away customers will not help to make ends meet.

That said, I think the OP is in a tiff over a minor mistake (the mistaken original price). The shop is going to tell you why used sucks and new rocks. And he's trying really hard to not have "super deal" bikes at the end of the year. I really think it's a crumby model for the LBS that manufacturers put out a new model every year, even if it does have the same Sora parts.
It's not so much the individual sale as it is the tough business lesson many of these guys learn when they realize they are broke and can't figure out why when they sold everything for more than what they paid for it. Seriously...you have to keep in mind the collective that is local shop owers. Some are very astute business people. The majority....not so much.
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Old 12-22-09, 07:45 PM
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i don't shop much at the lbs's around here. unless it's something i need now and can't afford to wait. i do think that a good lbs can add value to their products with great service and advice, but i'm mostly beyond that. of the last $6k i've spent on bikes and related gear in the last 2 years, only 10% has gone to a lbs.
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Old 12-22-09, 07:59 PM
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And the low-volume LBSs are getting screwed by mfrs and distributors. That's why they should think about going to an Ace/True-Value model of local owners buying in big-volume co-op mode.

Khatful learned to do his own stuff. Me too. My LBS's Park Tools were exorbitantly priced, so I went online. Also for the components. If my LBS ever decides to go with co-op purchasing and drops their prices to online-competitive, I'll go to them. My objective is NOT to put them out of business or encourage others to do so, nor to undermine local dollar-recirculation, but to reward businesses, including LBSs elsewhere who are savvy and offering customers good deals. If mfrs are going to Asia and former Soviet-bloc countries to save money, and distributors have eliminated in-state wholsalers to make profits on volume, retailers should get a clue on how to save money on their purchase costs, and then passing the savings on to their retail customers. This isn't rocket science. If they don't then a lot of their customers will find suppliers who get this concept, and with declining sales volumes the clueless LBSs will charge above-MSRP prices to make cashflow, and eventually go belly up because they didn't understand what they needed to do to make a sustainable living selling mass-produced commodities.
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