Got it now. Thanks Andy

It's simple economics and industry forces...

Demand for bicycle components is generally inelastic, meaning, even if prices are high, roadies are willing to pay for premium products, and demand won't decrease all that much (bikers have buying power). In some cases, elasticity is negative, meaning a price reduction would actually DECREASE demand, because the components would be perceived as lower quality (either implicitly by the consumer, or because a salesperson at your LBS says so to push the more expensive products).

So, even if a derailleur only costs $80 to make, they can get away with charging $800 for it. If they don't, and try to be "fair", their competitors will run them out of business...it's the case with most sporting goods, not just bike components.

Those of you saying it's because of R&D and marketing - you are *partly* correct, but R&D/marketing costs alone do not account for the sheer size of industry margins - most of it is just economics+industry forces.

Some may argue that this is exploits the consumer, but to be honest we make ourselves pretty easy to exploit.

Everything you said here applies to a lot of industries, doesn't explain the unusually inflated costs of bicycle components.

Yep. Same with gas.

Well altogether, the sports/race oriented cyclists of all kinds, collectively represent 14% of the total market. I think that many of us would be in that category, but a sizeable number of that group would most probably overlap into the recreational category, as well.

So we've got all of these components, but relatively few cyclists who would be interested in purchasing any of them. So what do you do?

It wouldn't make sense to sell them at rock bottom bargain basement prices. That would be hard to explain. In order to contribute to the bottomline, you've got to increase your prices. As cycling increases in popularity, expect prices to rise, as well. You ain't seen nuttin' yet!

- Slim

Yes, components are marked up greatly...but it's nothing compared to the furniture and clothing market. If you own a $1000+ road bike, then you obviously have money to spend. A bike is not a necessity, it's a luxury, and we are willing to pay for it. Does DA cost $2000 more to make than Sora? Doubtful. I'd wager that all levels of components cost pretty much the same to actually make at the factory. Are components today that much more advanced than components made 5-10 years ago? I don't know, but I guarantee the marketing is much better. We are talking about bicycles, not medical instruments or high-performance cars. Despite all the marketing mumbo-jumbo, a 2012 Brand-X bike is pretty much the same as it was in previous years.

So you guys that are saying bike components are outrageously overpriced all own stock in Shimano? Their stock must be going through the roof with such margins. Forget Apple, buy Shimano, SRAM and Campy.

facts right here.

+1
Why is everything in the cycling world so expensive!!!!!!!!!

Obviously, the industry is run by idiots.

You'd think that someone would just cut their crazy profit margin by a third or possibly just sell significantly higher quality stuff for the same price and make even more of a killing by still collecting an insane markup after taking everyone else's business. But nooooo, they obviously just want to overcharge...

Price-fixing, its a conspiracy. All the money is being shuffled to secret accounts on Planet X

Same reason the NE housing market is ridiculous...because people are willing to pay 450K for a 900 sq. foot shack.

Hmm I don't think this is really true. I make stuff for a living, and when I pick up a higher end parts I can often see that there's significantly more money into making it than the lower stuff. Differing manufacturing methods, for example. I can get a part cast at a fairly low price, but as you make that part more complicated with tighter tolerances costs go up. If you want to forge it, you'll have a stronger and lighter piece, but again, costs go up. More extensive machining? Yup, that'll cost more too. Roller bearings versus plain?

I can buy a 7900 rear derailleur for $200 on Amazon. When you look at a piece like that with a machinist's eyeball, you're more likely to be amazed at how cheap it is.

My point is that I doubt it costs Shimano 10X's more to make a DA component than it does to make a Sora. I'm sure it does cost more, but the markup is much greater on higher-end products.

You could be right, but again, I'm not sure. I can easily make two similar parts and have one cost ten times more than the other...just depends what the customer specs.

Yep. Econ 101. Market price = what a willing buyer will pay a willing seller.

actually a lot of truth here. why do you think the american auto makers have been pushing the big suv's and etc for so long?? the margins on the cheap stuff isn't high enough, on a $13000 gas miser the margins are very slim cuz they are competing on price, at the high end with things like Escalades and Navigators the $65k price tag carries a large margin. no surprises there that the same would be said other product markets as well, just my .02

Shimano also sells fewer DA units than 105, so it would make sense that it would need a higher margin beyond the higher R&D and higher production costs.

ok ffk it....bikes are expensive. i get it. i will say though. after thoroughly cleaning and overhauling my 10 year old sora shifters on my commuter, they work really, really well. so alas, you get what you pay for i guess. shimano really does make awesome stuff. ever try one of their fishing reels??

yep, the big three all make great components. I love the idea that you can actually rebuild most Campy stuff and keep on riding it.

And yes, pretty often when I hear my freewheel go ziiiiiiiiing, I think back to fishing as a kid with my granddad.

A lot of the confusion goes away when you understand that price is not the same thing as cost. In fact, one can argue they are almost unrelated. A business makes money when the price exceeds the cost, and loses money vice versa.

The best thing that ever happened to me (when considering bike components), was Shimano redesigning their Ultegra shift lever between the 6600 groupset and the 6700, and SRAM Rival moving to carbon fiber brake levers. Enabled me to obtain one of each of the obsolesced shift levers for $200 a set. That is about half of MSRP.

Definitely the best time to buy. With the new Red on its way out, I picked up some new Red shifters for $360 shipped. Full group cost me nearly 1/3 of retail.

I don't see to many LBS owners driving Ferrari's.

^^so what you guys are saying is all of the luddite cheapskates should pray the electric shifting takes off even more, then we can buy mechanical groups cheaper.

yes, have owned several, they're ok, overpriced though, lotta great competition out there in that market. imho, shimano reels are of slightly above average quality and typically at the higher end price wise compared to features...