Price increases

[Doomanic]

In Europe you cannot influence the selling price due to strictly enforced competition laws. You can have an RRP but beyond that it is all upto the reseller, for any product. Any attempt to coerce reselers is considered anti competitive and is heavily punished and illegal.

It's amazing how often popular items seem to go out of stock if you don't play their game though. I used to own a model shop (down Zimmer) that specialised in high end radio controlled cars. It was a cut throat market with loads of entitled arseholes (otherwise known as customers) who didn't want to pay full retail but if you were too open with how much you were discounting it suddenly became very hard to get stock.

 

[Pigin]

So you go into a shop and the “entitled arsehole” asks would you like to pay full retail or should I see if I can offer you a lower price because I want your custom in the hope that you will continue to shop here in the future.

You reply oh I would very much prefer to pay full retail as I wouldn’t want you to think me an entitled arsehole.

I get it @Doomanic, being in business can be tough and fraught with the pit falls of just trying to make a buck. I guess it’s as hard as not paying through the nose and taken advantage of. Winners (or should that be whiners) and losers all round. ?

 

[Doomanic]

I guess you both missed the past tense in my post?

I'll never work in retail again.

I caught people trying to read my trade price lists to see just how much more they could knock off from a product that already discounted 10%. The mark up in the RC trade was 33%, so not a huge margin for discounting in the first place. An awful lot of people apparently didn't understand that their hobby was how I paid my mortgage and wouldn't dream of working for less money themselves.

 

[Mikerb]

the entirety of the retail trade has been complicit in making a rod to beat itself with by running perpetual "sales". It has now reached the stage that everyone expects a deal. There was a time when sales or discounts were restricted to specific events ...usually January and October/end of summer.............now you would be hard pressed to find a time when there is not a sale. It all leads to customer expectation and it is difficult to see how the trend can be reversed now.................except perhaps when there are so few retail outlets especially in niche product lines, that there is no local competition. But then again there is online retail!!
Just had a new bike shop open in my local area. It started as a watering hole for roadies.....coffee and calories and a warm place to take a break on a chilly or wet day. He had such a big footfall evenings and weekends ( anytime during lockdown) that he expanded that with bike accessories/spares plus repair and servicing. No bike stock but has plans for that. His shop is not near any significant centre of population but is on a popular bike route. So maybe there are other bike shop models than the traditional high street.

 

[urastus]

the entirety of the retail trade has been complicit in making a rod to beat itself with by running perpetual "sales". It has now reached the stage that everyone expects a deal. There was a time when sales or discounts were restricted to specific events ...usually January and October/end of summer.............now you would be hard pressed to find a time when there is not a sale.

All that has gone out the window now though hasn't it? Increased demand has seen to that - no sales needed while people are waiting impatiently for stock.

Apparently a recession is on the way - so that will change again. Retail and manufacturers will do what they can to survive.

This topic seems a bit pointless? We control the pricing. If we're all too keen to buy, prices will increase, of course; the primary goal of business is profit. If we're cautious and not in any hurry to buy, retailers and manufacturers will try to get us to do so; hence sales etc.

 

[smtkelly]

I remember working at Bonthrone bikes around 2000/1. I used to just be a junior mechanic mostly assembling bikes to be shipped out. Anyway the I remember having a peak at the mark-up on the bikes when the manager wasn't looking some bikes 50-60% (I think the Marins/Gary fishers). It shocked youngster me but looking back when you consider overheads, holding stock etc its not unreasonable (an well Bonthrone's did go bust a few years later)

Around the same time I wanted a Santa Cruz Super 8. Took me a 8months of saving and selling my old bikes. I think Stif were the only UK supplier in those days but the internet had just reached main stream and I found a shop in Sweden who were much cheaper than here in the UK. Thing is they refused to sell to me because Santa Cruz wouldn't let them sell outside their country... I reminded them its the EU, free trade etc and eventually the owner (who to be fair was classic Nordic nice guy) said he'd buy it himself and then resell the frame to me. I really hate companies who reap the benefits of free/trade movement then try to restrict markets for their consumers.

This bad boy showed up 6 or 7months later. Funny to look at now but it was a magic carpet in the Alps but a lung popper in the UK probably as heavy as a emtb (edit: just found the ad for selling it - 26kg) and rode like a rocking horse on the flat (at least I didnt put 3inch tyre on it ? ).

 

[Al Boneta]

That is one way to reduce imports!

The crews of these ships have to be quarantined for two weeks before they can dock. The workers at these ports are running the bare minimum of staff, due to Covid.

 

[Drsooty]

I understand all of that. However the commercial world in the real world is somewhat different. Hence the fines...

Many many many more I’m sure don’t get caught.

But that wasn’t my point. My point was by selling at X. They know the retailers need Y. So the prices the bikes are sold at are going to be fairly consistent ??

Fair point.

 

[Drsooty]

It's amazing how often popular items seem to go out of stock if you don't play their game though. I used to own a model shop (down Zimmer) that specialised in high end radio controlled cars. It was a cut throat market with loads of entitled arseholes (otherwise known as customers) who didn't want to pay full retail but if you were too open with how much you were discounting it suddenly became very hard to get stock.

That does happen. Or there may be limited edition items or bonus products which you won't have access to.

 

[runjhike]

As a dealer I don’t set the retail prices of the bike brands I sell. I sign a dealer agreement and I am contractually bound to maintain the MSRP the brand dictates. I am allowed to have sales a few times a year, but other than when a bike is no longer the current model year, I am stuck with that price.
The reason brands do this is to prevent dealers from undercutting each other and keep things fair.
Now, I have been in the business since I was 12 years old, starting with sweeping the floor at my neighborhood bike shop and eventually becoming a a product manager at Specialized. Even though we are supposed to maintain MSRPs, shops still cut each other’s throats trying to steal sales away from each other. It’s happened for as long as I can remember.
Margins have been on a steady decline for the last 20 years. When I managed my first shop at 18, most shops operated at a 40% margin. Operating costs were between 20-30% depending on the season. That left us with 10-20% profit.
Before the global pandemic, margins shrank to 25-35%. Operating costs have steadily increased to 30-35%. So now the potential profit is 0-10%. Does that seem sustainable?
EBike margins are not as good as acoustic bikes.
Ebikes cost more to ship than acoustic bikes.
Ebikes increase insurance costs to bike shops
Ebikes require more training for technicians and sales staff
Ebikes require specific tools and parts
that are becoming increasingly more
expensive. Lithium cell balancer? Yeah I have one and it was $3500.
Ebikes take longer to service and require more after sale care.
I could keep going on, but ultimately we sell Ebikes because they are just more fun.
Brands and Manufacturers have had to operate with same increased costs. Shipping has gone through the roof. Disposal fees for batteries and electric waste has quadrupled in the last 5 years because of the paradigm shift to “clean” energy.
Nobody in this business is out to gouge or chisel anyone. We were more pissed off about decreased supply and price increases than our customers.
At the same time we still have to able to operate at break even or our 5% end profit to provide a living wage for our staff.
These are just the tip of the the iceberg when it comes to price increases. You want to talk a bout greedy bike brands or bike shops? Back in the 60s and 70s the shop I work at operated with 10% overhead and bike margins were 50% or more.
here is a video of Huntington Beach looking toward Long Beach and San Pedro, one of the biggest shipping ports on the west coast
Some of these ships have been waiting upwards of two months to be unloaded

I feel for you and all small businesses. I own a construction company and deal with the same. There are several problems associated with this but the two biggest problems are very few people have any idea of the cost of doing business and their ignorance is reflected in the silly statements they make about gouging which is just a result of the poor education systems that abound anymore that are more concerned with social justice education than reading, writing and arithmetic. The other issue is derived from the first. People that get into business and have no business being in business. They don’t charge enough because they don’t understand their financials. They see someone else charge a price and think they can charge the same price without regard to their business’ overhead structure. All of this is compounded by COVID because volume has been drastically reduced while overhead has increased so people have no choice but to raise prices. I doubt we’ll fix the first two issues anytime soon but hopefully the COVID part will be resolved for the most part in the next year or so. Good luck to you and your business. And eBikes are awesome!!!

 

[Coolcmsc]

I have been out of retail for a couple of years. But, manufacturers / suppliers conspiring to set and fix retail prices was certainly illegal in the UK. And as far as I know nothing has changed. A retailer in the UK is free to set whatever price they see fit.

However, a supplier refusing to supply a retailer... has definitely been something that I am aware of happening. Make of that what you will.

Rob, thanks! Was about to make same point. Cupla earlier posts were conflating these two facts.

I want to praise the LBS’s I know, at least. They have done their best to give us a fair deal to me and those I know in a difficult year. The LBS’s I know are struggling to maintain a service.

I know some have a big backlog of deposit money on undelivered bikes.

But does anybody know at what point the LBS has to pay the trade price to the supplier?

 

[Gary]

But does anybody know at what point the LBS has to pay the trade price to the supplier?

It depends entirely on their agreement with the supplier.
and is no one elses business really

 

[Coolcmsc]

It depends entirely on their agreement with the supplier.
and is no one elses business really

Yes, not my business, agreed.

But what is my business is the deposit purchasers provide for their bike. In larger LBS’s that’s maybe hundreds of bikes given the wait for mine (5 months so far for a Cannondale).

In fact, in my case, the LBS has had the full MRRP all that time, because it was bought in the U.K. using the ‘ride to work scheme’ which I have been paying off monthly since ordering (if you‘re not in the U.K., don’t sweat the detail, but essentially, the LBS gets the full price from a loan company at the point of order and the government pays some of that to the loan company related to income tax rates and you pay the balance to the loan company from the point of ordering, which is obviously still the main part, then the bike turns up).

My point is not so much what’s right and wrong, but who is gaining an advantage when the order book is so long and so large? I suspect not the LBS and certainly not the customer. Not the importer and not the carrier. Who’s left....?

 

[Gary]

Who's gaining an advantage? Er... You are. For actually having your foot in the queue.
Stop overthinking it and trying to make out you're being ripped off. Believe me. We're all being hit by this.

 

[Coolcmsc]

Who's gaining an advantage? Er... You are. For actually having your foot in the queue.
Stop overthinking it and trying to make out you're being ripped off. Believe me. We're all being hit by this.

I understand your point. And I agree I’m probably overthinking it. Not an excuse, but it’s tempting to do that in my position.

But coming back to what exactly I’m paying for and your point about being in my position, are you saying you have been hit by having to pay for your whole bike up front months before delivery?

Thousands have participated in the U.K. Cycle To Work Scheme this last year. Although I can’t know this, obviously, I think you would probably be in the minority of those in feeling paying for the whole bike up front months before delivery is simply, "..getting a foot in the door"

 

[Doomanic]

In fact, in my case, the LBS has had the full MRRP all that time, because it was bought in the U.K. using the ‘ride to work scheme’

Depending on the scheme they may have only had between 85 and 89% of the voucher price, and that's assuming they've actually been paid at all.

 

[Gary]

are you saying you have been hit by having to pay for your whole bike up front months before delivery?

No. I'm in a completely different position to you. but have a greater insight regarding the current situation.

 

[AME]

I guess you both missed the past tense in my post?

I'll never work in retail again.

I caught people trying to read my trade price lists to see just how much more they could knock off from a product that already discounted 10%. The mark up in the RC trade was 33%, so not a huge margin for discounting in the first place. An awful lot of people apparently didn't understand that their hobby was how I paid my mortgage and wouldn't dream of working for less money themselves.

So you always pays full retail whenever you buy something?? Yeah right...

I am one of thoose assholes spending evry penny i got as a hardcore rcracer in the 90’s. Working my ass of while at school using 2 hours a day on the bus getting to and home from school. Ofcouarse i tried to get what i needed as cheap as possible.

On the subject; i do understand that there is a priceincrease, but when a Levo goes up almoast 35% in 11 months, somethings aint right. And we already 10-15% higher than europe here.

 

[Gary]

somethings aint right

Ya fink?
?

 

[Doomanic]

So you always pays full retail whenever you buy something?? Yeah right...

No, but I don't go into a shop expecting further discount off an already discounted item, nor would I expect top get a huge discount off a full price item if I hadn't already built up a relationship with the shop.

 

[Pigin]

.In Europe it was far cheaper.

Its only gone up £400 so that tells you there was a load of margin in that bike in the UK.

This doesn’t tell the full story of currency fluctuation and the pros and cons agreeing a price based on a fixed point it. World economics is an amazing interlaced phenomenon. Try this one (I know totally odd ball and off the OP post but hopefully it will help in the global view). A good coffee harvest caused the price corrugated iron cladding to rise. No? Yes! A good harvest means the farmers have more money to spend in locations in the middle as southern America’s where they have a subsistence farming economy. Normally they can’t afford roofs for barns, outbuildings or even dwellings.

At the local building merchants farmers are stripping existing stocks of corrugated roofing now they have more income. Soon the building merchants run out and have to source their stock at virtually any cost. The world demand goes up, prices go up. So on and so forth. With saw the same effect with multi-finish plaster during the first lock down as everyone wanted to do renovations.

Look at the EMTB market in the same way. We are all buying when there is “shortage” and so are the retailers. As we say here it’s all about making hay when the sun shines. We are seeing consumerism at it’s best and worst. I choose to look on the positive side in that we are hopefully keeping our LBS and their employees in business.

 

[EME]

Well if you wanted proof that we were being ripped off though just look at the kenevo. In Europe it was far cheaper.

Its only gone up £400 so that tells you there was a load of margin in that bike in the UK. Its probably about where it should have been all along now relative to the expert levo

Where it is , and where it should have been, will have been a function of what people are prepared to pay for them, hopefully that will be more than cost and Maintain a LBS-based supply chain. Folks will only feel 'ripped-off' if the bike does not live up to their expectations -- which itself its judgmental and not necessarily real.

The ability - and days - of easily charging more because you can ( no perceived competition) disappeared some time in the 20th century. Im struggling to think of any industry left where price fixing -- even through old tricks like 'showing' - could still be an option. Communication killed that as prices, opinion and comparison are so easily communicated. That - and the power of the internet as a sales platform - have led to a consistent reduction in 'margins' in every industry I have been involved in.

I think what you are really saying is you cant / wont justify paying the price for a Kenevo / Levo yourself. That is fine -- others will -- and you have lots of choice at different price points to buy whatever you consider good value.

 

[Coolcmsc]

No. I'm in a completely different position to you. but have a greater insight regarding the current situation.

HaHa! Anything else you’re greater at? Seems likely lots of things ?

 

[Coolcmsc]

Depending on the scheme they may have only had between 85 and 89% of the voucher price, and that's assuming they've actually been paid at all.

Now, that’s helpful. So going back to my earlier comment, are you saying the loan company might be taking my money and not giving it to the LBS?

Hadn’t thought of that. So, perhaps in the case of the Scheme, the group taking advantage is the loan company who, for absolutely nothing other than a bit of admin effort, are getting my money until the bike arrives?

Well, if that’s true and I agree it’s plausible, then right there you have a group taking advantage. Further, they have been Government vetted and approved because of the tax part of the Cycle to Work Scheme in the U.K. They’re definitely not in the same boat as the rest of us — Gary was saying that everybody is in the same boat and later added that not realising that shows lack of insight — and they appear to have more than a foot in the door....

 

[Doomanic]

The c2w company usually charge a commission. This is generally between 11 and 15% so even if they have paid the shop it won’t have been for the full voucher amount. The point they pay the shop will be down to the contract they have with the shop and it may be voucher submittal date plus 30, 60 or 90 days, or end of voucher submittal date month plus 30, 60 or 90 days or it could be tied to bike supply date plus the other criteria above. The one thing it definitely won’t be is instant.

 

[Coolcmsc]

The c2w company usually charge a commission. This is generally between 11 and 15% so even if they have paid the shop it won’t have been for the full voucher amount. The point they pay the shop will be down to the contract they have with the shop and it may be voucher submittal date plus 30, 60 or 90 days, or end of voucher submittal date month plus 30, 60 or 90 days or it could be tied to bike supply date plus the other criteria above. The one thing it definitely won’t be is instant.

Thanks, that’s helpful ?

 

[R120]

"Prices must go up, the UK consumer is in for a big Brexit shock," says e-Bike retailer

Fully Charged founding partner Dan Parsons outlines in this guest post how prices are set to rise in a post-Brexit world.

cyclingindustry.news

Price increases an unavoidable reality for many shipping across the Channel

Price increases are a harsh reality of UK's new trading relationship with Europe, skyrocketing shipping costs and currency swings.

cyclingindustry.news

 

[Jackware]

Have just been watching a online presentation regarding changes in the vehicle aftermarket and one contributor highlighted that to get components from China, the cost has increased from $2000 for a 40ft container to $12,000 and some shippers now threatening to only get the containers loaded onboard if $16,000 was paid!

 

[steve_sordy]

Have just been watching a online presentation regarding changes in the vehicle aftermarket and one contributor highlighted that to get components from China, the cost has increased from $2000 for a 40ft container to $12,000 and some shippers now threatening to only get the containers loaded onboard if $16,000 was paid!

That would appear to be nothing to do with Brexit, or is it? No doubt someone will know for sure.
How many bikes can you get in a 40' container?

 

[Coolcmsc]

That would appear to be nothing to do with Brexit, or is it? No doubt someone will know for sure.
How many bikes can you get in a 40' container?

Have just been watching a online presentation regarding changes in the vehicle aftermarket and one contributor highlighted that to get components from China, the cost has increased from $2000 for a 40ft container to $12,000 and some shippers now threatening to only get the containers loaded onboard if $16,000 was paid!

Interesting and worrying, thanks.

The prices for full containers (shipping, content, tax) is more complicated than this helpful info implies.

For example, my cousin imports those office water dispensers from China by the container load — he fills the water vessels themselves with British water ???.

A couple of years ago, he told me that in his market, the cost of a full container (shipping plus contents plus other costs) almost always works out the same whatever is in it. Apparently that’s because things like volume, weight, materials, cost of production (machinery and labour and materials and design) interact in such a way that it all come out about the same. Three years ago he told me it was about £40,000 all in.

A good bench mark for setting up a business selling stuff, any stuff, from China in the U.K. was his other comment.

Anybody know which of these pricing methods is most realistic for importing a container of bike’s/bike frames/wheels/components or however that’s done? So, not vehicle aftermarket stuff or water dispensers, but bike’s?