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
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
and puppies (pets).
