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Actual Cost of a Higher End Bike

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Road Cycling “It is by riding a bicycle that you learn the contours of a country best, since you have to sweat up the hills and coast down them. Thus you remember them as they actually are, while in a motor car only a high hill impresses you, and you have no such accurate remembrance of country you have driven through as you gain by riding a bicycle.” -- Ernest Hemingway

Actual Cost of a Higher End Bike

Old 10-07-10, 06:04 PM
  #76  
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Originally Posted by Grumpy McTrumpy View Post
https://www.startribune.com/business/28666934.html

""

From its 135,000-square-foot, energy-efficient headquarters and warehouse that border Bloomington's Hyland Park Reserve, QBP employs 450 people and expects another year of profitability on revenue of $150 million, up 20 percent from 2007. If it were publicly held, QBP would rank at No. 71 on the Star Tribune 100 list of the state's biggest public companies.


""
A company that does not manufacture a single item doing $150million annual revenue and having 450 employees? And we all wonder why bicycles and parts are so expensive?
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Old 10-07-10, 06:05 PM
  #77  
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Last I heard nobody is flocking to the bike industry because of record high profit margins. It's not like people are lining up to buy stock in bike companies. But the thought of a bike priced higher than a motorcycle doesn't pass the goofy test. Obviously the money is going somewhere. IMO it's in efficiency. The bike supply chain seems horribly inefficient. LBS, distributor, heck probably an importer, the actual manufacturer, and probably a similar chain for the components. Everyone in the industry is used to asymmetric conditions so they're used to locking out buyers via distribution agreements, etc. It's high time for a little revolution in the industry. That middle group of distributors needs to be overthrown!

Grab your pitchforks, let's go burn down a warehouse!
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Old 10-07-10, 06:07 PM
  #78  
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Originally Posted by LUCAS View Post
A company that does not manufacture a single item doing $150million annual revenue and having 450 employees? And we all wonder why bicycles and parts are so expensive?
they do manufacture stuff. look it up. They own Surly.
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Old 10-07-10, 06:08 PM
  #79  
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Originally Posted by LUCAS View Post
I am certainly not arguing that distributors do not contribute to the value chain. I am just saying they charge too much for what they bring to the table. If independent bicycle shop owners were smart, they would have formed a co-op years ago.

Always follow the money. Bike manufacturers and retailers are not getting obscenely wealthy as far as I can see. Distributors, on the other hand are cleaning up. This is partly the reason I can buy Shimano groupsets cheaper from PBK than at my LBS. PBK buys excess inventory directly from bike manufacturers. No distributors involved.

Markets are great, but they are not always perfect. Especially with relatively low volume items like bicycles.
At some shops, if you ask nicely, they'll give you decent group prices based on ordering straight from the manufacturer .

Maybe the problem simply isn't bad enough to need new business, or maybe no one has tried it.

I agree that markets aren't perfect. I'm not sure the distributors are cleaning up, I haven't heard any substantiated reports of their profits.
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Old 10-07-10, 06:10 PM
  #80  
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Originally Posted by Grumpy McTrumpy View Post
they do manufacture stuff. look it up. They own Surly.
Cute. You mean they send out designs to companies that manufacture.
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Old 10-07-10, 06:12 PM
  #81  
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oh just because they don't have a factory with 'merican workers means they don't manufacture stuff? like most bicycle companies?
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Old 10-07-10, 06:13 PM
  #82  
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Originally Posted by patentcad View Post
Elaborate.
Uncle Pcad, this is one of your funniest posts in some time. Well, that I've read...

--------------------

I love all of the distributor bashing going on. Until very recently, I worked in high-end audio - not dissimilar from high-end bikes. Distributors aren't walking around with bags of money on their feet, instead of shoes. In fact, a lot of big-name audio distributors have gone under in the last 3 years. As a salesman, I can tell you this - someone has to sell the people that sell the people. This, in addition to buffering inventory distribution, is the main role filled by distributors.
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Old 10-07-10, 06:18 PM
  #83  
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Originally Posted by Chris_F View Post
Grab your pitchforks, let's go burn down a warehouse!
Yet BFers brandish their pitchforks every time someone mentions BikesDirect. Ha ah.
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Old 10-07-10, 06:21 PM
  #84  
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it's the monkey house at the zoo. logic and reasonable consideration are not very entertaining.
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Old 10-07-10, 07:00 PM
  #85  
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Prices are set at what people would pay - plain and simple. If products are too expensive, less people buy, prices will come down. Supply and demand. And thank God for profits - that's what drives innovation. No profit, no innovation. Capitalism at it's best.
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Old 10-07-10, 07:18 PM
  #86  
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Originally Posted by LUCAS View Post
A company that does not manufacture a single item doing $150million annual revenue and having 450 employees? And we all wonder why bicycles and parts are so expensive?
They obviously serve a purpose otherwise they wouldn't exist and remain profitable.

Without a middle tier of distribution the VP of Sales for Trek would have to deal with every LBS from bum****, IA to NYC. They're obviously not interested in doing that and it's more efficient to have one central distributor deal with all the LBS's. The bicycle distribution model is very similar to any other retail product.
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Old 10-07-10, 07:34 PM
  #87  
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If it's too pricey for you, don't buy it. Is that too complicated for some of you imbeciles?
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Old 10-07-10, 07:48 PM
  #88  
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Originally Posted by gregf83 View Post
They obviously serve a purpose otherwise they wouldn't exist and remain profitable.

Without a middle tier of distribution the VP of Sales for Trek would have to deal with every LBS from bum****, IA to NYC. They're obviously not interested in doing that and it's more efficient to have one central distributor deal with all the LBS's. The bicycle distribution model is very similar to any other retail product.
The VP of Sales at Trek can deal with a collective co-op formed by bike shop owners. That model would have been much better for end consumers.

When some bicycles cost much more than motorcycles, then there must be some level of inefficiency in the distribution system.

Bicycles are not that complicated to manufacture. Certainly not more complicated than motorcycles.
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Old 10-07-10, 07:50 PM
  #89  
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Originally Posted by patentcad View Post
If it's too pricey for you, don't buy it. Is that too complicated for some of you imbeciles?
Oh, I love the product. I am just lamenting that I can't afford the bikes I drool over. And I feel very strongly that somehow, the pricing is screwed.
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Old 10-07-10, 07:51 PM
  #90  
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Originally Posted by LUCAS View Post
Oh, I love the product. I am just lamenting that I can't afford the bikes I drool over. And I feel very strongly that somehow, the pricing is screwed.
The market ultimately determines the pricing. Prices are rarely screwed. Just consumers.
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Old 10-07-10, 07:52 PM
  #91  
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Originally Posted by patentcad View Post
Prices are rarely screwed. Just consumers.
This does not apply to college costs, those prices are utterly screwed.
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Old 10-07-10, 07:57 PM
  #92  
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Originally Posted by patentcad View Post
Elaborate.
Don't encorage him. BF takes long enough to load as is
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Old 10-07-10, 08:12 PM
  #93  
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Originally Posted by LUCAS View Post
Oh, I love the product. I am just lamenting that I can't afford the bikes I drool over. And I feel very strongly that somehow, the pricing is screwed.
So your complaint is the bike you want is more than you can afford and you think the industry should lower prices to your range
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Old 10-07-10, 08:13 PM
  #94  
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Bikes are designed using finite element analysis. I am a structural engineer and use finite element analysis daily. It took colnago 4 years to perfect the C59, they would have to sell A LOT of them just to cover my fees if i designed that, let alone all the other costs. and how much does it cost to ship the thing from Italy to Australia, fully insured and boxed - and then the dealer has to assemble. It would cost colnago big bucks just to produce an empty box of that size and quality and send it to me.

Oh and something is worth what someone is willing to pay for it.

Last edited by lazerzxr; 10-07-10 at 08:16 PM.
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Old 10-07-10, 08:22 PM
  #95  
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Originally Posted by LUCAS View Post
The VP of Sales at Trek can deal with a collective co-op formed by bike shop owners. That model would have been much better for end consumers.
By Jove, I think you've got it! Why didn't someone else think of such an elegant solution! (Where's that eye-rolling emoticon?)

Dude, really - you think that it's that simple? Okay, fine - he deals with the collective co-op. Then what? Who IS the governing body of the Borg- er, co-op? How do they communicate with the dealers to know what they need and want? How many staff do they need for this channel of communication? Where are all of these people located? Who takes care of actual shipping, seeing that things go to where they need to go? How many people will that take? Where will they, along with the warehouse, be located? Will there need to be more than one, since the US is kinda big (not to mention the rest of the world)? Now, are all of these jobs performed by LBS owners and their staff in their free time? No? ****, I guess that you'll have to pay all of these people... in any event, looks like we've got it nailed down! Sound good?

More importantly, sound familiar?
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Old 10-07-10, 08:35 PM
  #96  
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Originally Posted by StanSeven View Post
So your complaint is the bike you want is more than you can afford and you think the industry should lower prices to your range
Not really. I end up buying a lot of stuff from PBK, Chainreactioncycles and Wigggle. I feel bad sending my money overseas, but it is just unbelievable the price difference sometimes. How does PBK end up selling stuff for the prices they do and still make a profit? And don't forget that they are shipping accross the ocean. How could that be, if not that we have some inefficiencies built into the distributive system here?
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Old 10-07-10, 08:38 PM
  #97  
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Originally Posted by WhyFi View Post
By Jove, I think you've got it! Why didn't someone else think of such an elegant solution! (Where's that eye-rolling emoticon?)

Dude, really - you think that it's that simple? Okay, fine - he deals with the collective co-op. Then what? Who IS the governing body of the Borg- er, co-op? How do they communicate with the dealers to know what they need and want? How many staff do they need for this channel of communication? Where are all of these people located? Who takes care of actual shipping, seeing that things go to where they need to go? How many people will that take? Where will they, along with the warehouse, be located? Will there need to be more than one, since the US is kinda big (not to mention the rest of the world)? Now, are all of these jobs performed by LBS owners and their staff in their free time? No? ****, I guess that you'll have to pay all of these people... in any event, looks like we've got it nailed down! Sound good?

More importantly, sound familiar?
A co-op does everything that QBP or any other distributor does.
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Old 10-07-10, 08:50 PM
  #98  
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Originally Posted by LUCAS View Post
The VP of Sales at Trek can deal with a collective co-op formed by bike shop owners. That model would have been much better for end consumers.
Good luck getting the co-op to agree on anything. Maybe it would work in a communist country.

When some bicycles cost much more than motorcycles, then there must be some level of inefficiency in the distribution system.

Bicycles are not that complicated to manufacture. Certainly not more complicated than motorcycles.
Honda makes over 10M motorcycles per year. Perhaps they have some economies of scale working for them.
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Old 10-07-10, 09:03 PM
  #99  
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Originally Posted by gregf83 View Post
Good luck getting the co-op to agree on anything. Maybe it would work in a communist country.

Honda makes over 10M motorcycles per year. Perhaps they have some economies of scale working for them.
Yeah, there are economies of scale working. But, why is that I can buy some high value bicycle items manufactured by US companies for a lot cheaper from retailers in the UK? I just bought a wheelset that I paid $900 for, and the cheapest I could find it here was $1300. And it was shipped from the UK freightfree.

$400 is a huge price-differential.
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Old 10-07-10, 09:06 PM
  #100  
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Originally Posted by LUCAS View Post
Not really. I end up buying a lot of stuff from PBK, Chainreactioncycles and Wigggle. I feel bad sending my money overseas, but it is just unbelievable the price difference sometimes. How does PBK end up selling stuff for the prices they do and still make a profit? And don't forget that they are shipping accross the ocean. How could that be, if not that we have some inefficiencies built into the distributive system here?
Ok, the US model is based upon distributors as the middle person. The UK system has manufacturers shipping directly to LBS or retailers. That's why PBK and Wiggle can sell for less there's no middle person. On the plus side, just about any dealer in the US can get a part in a day or two; in the UK a new part could take a day or a week.
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