Price of bikes - some thoughts....

[Redbikejohn]

OK full confession, I've yet to jump onto the e/bike wave but this also applies to non e bikes too.
The other day I had a thought. Almost all of the components that make up a bike is bought in, with zero design or development cost so why are they (the bikes) so expensive? And are premium brands really worth it?

Bought in components:
Wheels
Gears/derailleur/chain
Motor
Brakes
Battery
Discs
Bars and stems
Suspension

Not bought in:
Frame (but most likely bought from generic factory in China)
Software and display.

This is probably why decathlon could market a bike for less 3000 pounds uk. I suspect other manufacturers had plenty to say to their component suppliers about that. So I fully expect to get plenty of stick for this post as so many die hard ebike users seem to get genuinely upset when I say they are too expensive ?. Come on, they are motorbike money. But I think I can even answer my own question really.....they are still selling as fast as they are supplied ?. Really not a dig at anyone here who enjoy their bikes but more a comment on my frustration.

 

[RickBullotta]

It's the better/faster/cheaper paradox, but in bike terms (strong, light, cheap). My eMTB and my KTM 350 were about the same price. But my eMTB is under 40 lbs with trail/AM suspension, which is actually quite an engineering accomplishment. Could it have been produced for less? Probably. But everything is a tradeoff. Can you buy a cheaper eMTB? Of course. And some are pretty decent. But there will always have to be compromises made. The other dimension is the go-to-market model. Selling through shops, distributors, and so on requires that there is margin for everyone in the value chain. Direct-to-consumer gives more flexibility in pricing. But that's not without "cost" either - usually manifested as limited service options and slower response to warranty issues.

 

[H.E.]

Well costs are Marketing, Service/Warranty and Retailer margin etc, and
you want to have some control over the quality from your suppliers.
Also you will think about where you want to position you're product on the market
to set the price of the product right.

 

[RickBullotta]

If you were a bike manufacturer or vendor and you could sell everything you produce to wealthy or credit fuelled punters,
Why would you sell the stuff any cheaper ?
They are worth exactly what the market can stand. And we can afford them, or not, it's our choice.

I would like to know how in hell Gulfsteam can justify £40m for a new Gizzy 450 in my preferred spec.

I can get you a sweet deal on a pre-owned G500 with fresh engines for only £27m. ;-)

 

[VWsurfbum]

OK full confession, I've yet to jump onto the e/bike wave but this also applies to non e bikes too.
The other day I had a thought. Almost all of the components that make up a bike is bought in, with zero design or development cost so why are they (the bikes) so expensive? And are premium brands really worth it?

Bought in components:
Wheels
Gears/derailleur/chain
Motor
Brakes
Battery
Discs
Bars and stems

Not bought in:
Frame (but most likely bought from generic factory in China)
Software and display.

This is probably why decathlon could market a bike for less 3000 pounds uk. I suspect other manufacturers had plenty to say to their component suppliers about that. So I fully expect to get plenty of stick for this post as so many die hard ebike users seem to get genuinely upset when I say they are too expensive ?. Come on, they are motorbike money. But I think I can even answer my own question really.....they are still selling as fast as they are supplied ?. Really not a dig at anyone here who enjoy their bikes but more a comment on my frustration.

I pretty much agree with you but I also agree with what @Kilham5 said, its worth what people are willing to pay.
The bike is one thing, what really rattles my cage is the cost for stuff like Jersey's and Helmets, that stuff they take the piddle.

 

[RickBullotta]

This has to be one the greatest examples of cycling "taking the piddle" that I have succumbed to.

£9 for a 4g piece of injection moulded plastic.

Bontrager Blendr ION Light High Mount | Sigma Sports

I've taken to 3D printing stuff like this, but I suspect that amortizing the cost of my $1000 printer eliminates nearly all of my savings on parts and shipping.

 

[steve_sordy]

Years ago I got involved with a product that had to be sold at 40pence on the supermarket shelf. The marketing guys said that any higher and the punters wouldn't pay. It was a very competitive market. This was how the cost structure went.
40p shelf price, less 17.5% vat to the Inland Revenue (it's 20% now!), leaving 33p
33p less 40% supermarket margin (or they wouldn't put it on the shelf) leaving 19.8p selling price from the manufacturer.
19.8p less 40% manufacturer Marginal Income to cover things like Logistics, Sales, etc and other overheads, leaving 11.9p. Less than 40% MI and the company would decide to make something else instead.
11.9p which had to cover all costs of materials and the cost of manufacture.

The only way that the 40p could come down was if the manufacturer decided to take a hit, or the retailer (hah!). The only way the taxman took a hit was if someone else did first, but their cut was always 17.5%.

To buy the raw materials and the packaging and then make the product for less than 30% of the shelf price was a challenge. But companies achieve it every day or go out of business.

 

[JoeBlow]

I bought an Orbea Wild FS H20 last September for £3990. I thought it was reasonable value for money considering the spec.

 

[Ripping g]

Profit big or small makes the world go round some need more profit than others to stay open as I always say the price is the price if you don’t like it go somewhere else ??

 

[Neeko DeVinchi]

Your not gonna get any stick from me @Redbikejohn. And in fact, many people are yearning for cheaper emtbs to be released.

Take it from someone whose trying to advocate to new riders who ordinarily assume/gauge that owning a ebike is for the rich.

Working alongside distributors like Halfords has yielded interesting results to allow many to take to the bike at a much cheaper price. And although I can't reveal a certain bike which they'll release soon, believe me when I say, 'they've heard the cries that emtb's are expensive'.

Nevertheless like most things, the cost of products usually reflects accessibility & availability.

 

[Tubby G]

Years ago I got involved with a product that had to be sold at 40pence on the supermarket shelf. The marketing guys said that any higher and the punters wouldn't pay. It was a very competitive market. This was how the cost structure went.
40p shelf price, less 17.5% vat to the Inland Revenue (it's 20% now!), leaving 33p
33p less 40% supermarket margin (or they wouldn't put it on the shelf) leaving 19.8p selling price from the manufacturer.
19.8p less 40% manufacturer Marginal Income to cover things like Logistics, Sales, etc and other overheads, leaving 11.9p. Less than 40% MI and the company would decide to make something else instead.
11.9p which had to cover all costs of materials and the cost of manufacture.

The only way that the 40p could come down was if the manufacturer decided to take a hit, or the retailer (hah!). The only way the taxman took a hit was if someone else did first, but their cut was always 17.5%.

To buy the raw materials and the packaging and then make the product for less than 30% of the shelf price was a challenge. But companies achieve it every day or go out of business.

A pack of Mentos ?

 

[apac]

The price of second hand E mountain bikes up for sale is what makes me laugh. I think it says something in itself when people are asking 7k - 12k for a used bike. The for sale section on this forum is full of them. Imagine paying £12,000 for a bike and then realising is was not what you wanted or hoped for and then trying to sell it for a small loss ?. GLWTS?

 

[Pdoz]

I'd love to be a fly on the wall at Specialized HQ

Brose rep " OK team , I see Orbea have released a price rise model , warranty - what do you think? "

Warranty " WELL, bro , factoring in your last 3 years performance figures it might be time to re name the 23 model the levoooooo , add a few extra 0's just to be safe? "

Marketing " Sorry guys, slim is in, we can't have big bro frames with space for levoooooo . Hey, R+D , any chance of the Slim Light motor funding another add campaign?"

R+D " Fr kin evo yeah , we've got this. Slip that sexy little mahle into last years enduro , whatya reckon, marketing? "

Marketing " Prime idea , mate. And sexy sells, so lets put together an add with a couple exploring their sexuality in an Enhanced world. Accounting, what's the budget?"

Accounting " Ummmm.....cough, splutter, sniff.....sales have been up and stock is down, the global market is in a pan demonic spiral. I'm thinking we can re lease a $ works? frame for about last years complete bike price with a nice little Brose buy out bonus added in, so long as lockdowns continue and everyone is trapped in front of screens Marketing should be our biggest budget - go for IT ."

IT Dear john, if it's red and you are still frustrated - pay IT ?

OK full confession,

more a comment on my frustration.

 

[GDAS]

Even before e-bikes, you could spend "motorbike money" on a premium mountain bike, such as Santa Cruz, Yeti etc. If I want to order a premium car, there will be a huge list of options to choose from. If I want to order a premium e-bike, there won't be a huge list of options, but instead there will be range of models with different specs to choose from - e.g. Trek Rail 5/7/9/9.5/9.7/9.8XT blah blah all with the same motor & battery but with different frame material and components. Yet if I want to order an off-road motorbike, there are again no options lists, and very few models, e.g. is KTM missing a trick by not offering some fancy options list? Or a KTM 250 EXC-F 5/7/9 etc instead of basic plus 6 days? Anyway, getting back to Hondas RBJ, perhaps you could look at why the CRF450L is so much more expensive than the CRF250L?

 

[Pdoz]

is KTM missing a trick by not offering some fancy options list? Or a KTM 250 EXC-F 5/7/9 etc instead of basic plus 6 days? Anyway, getting back to Hondas RBJ, perhaps you could look at why the CRF450L is so much more expensive than the CRF250L?

Ever tried buying a ktm rallye ?

Or even a husaberg - the distorted ktm/ husky intra / inter brand r+d love child?

 

[steve_sordy]

A pack of Mentos ?

Nope, it was a product that belonged in the petfood aisle.

 

[Tubby G]

Nope, it was a product that belonged in the petfood aisle.

Damn, I thought that was a good guess too, miles off!

 

[Gary]

Read Steve's Post then have a think about how components coming from different manufacturers might actually affect the final sales price.
FFS... I've never come across a forum with so many threads whinging about price.
If you think something costs too much simply don't buy it. No one's forcing any of you to buy their perfectly reasonably priced products.
Oh.. And the decathlon Emtb like all their bikes wasn't actually all that great. Ie. It was the price it sold at for very good reason.

 

[Hamina]

Almost all of the components that make up a bike is bought in, with zero design or development cost so why are they (the bikes) so expensive?

The price is quite often defined by the price that the customer is willing to pay. It doesn't have to do anything else with the sum of component prices more than exceeding it.

 

[apac]

Years ago I got involved with a product that had to be sold at 40pence on the supermarket shelf. The marketing guys said that any higher and the punters wouldn't pay. It was a very competitive market. This was how the cost structure went.
40p shelf price, less 17.5% vat to the Inland Revenue (it's 20% now!), leaving 33p
33p less 40% supermarket margin (or they wouldn't put it on the shelf) leaving 19.8p selling price from the manufacturer.
19.8p less 40% manufacturer Marginal Income to cover things like Logistics, Sales, etc and other overheads, leaving 11.9p. Less than 40% MI and the company would decide to make something else instead.
11.9p which had to cover all costs of materials and the cost of manufacture.

The only way that the 40p could come down was if the manufacturer decided to take a hit, or the retailer (hah!). The only way the taxman took a hit was if someone else did first, but their cut was always 17.5%.

To buy the raw materials and the packaging and then make the product for less than 30% of the shelf price was a challenge. But companies achieve it every day or go out of business.

So if only 11.9p could be used to manufacture the product, who was it that REALLY paid for the raw materials to be sourced or mined, transported, assembled? Steve, you forgot to mention the people whose land has been polluted, destroyed, mis-managed, and generally exploited And then being pushed out during the line of production . The same people who have moved from their settlements into the cities to work in the factories for poor wages to make the product. This is who REALLY pays for the shelf space. Not the supermarket or manufacturer. The poorest of the poor. They pay by having little of anything, and by being exploited through the whole process.

 

[Neeko DeVinchi]

Read Steve's Post then have a think about how components coming from different manufacturers might actually affect the final sales price.
FFS... I've never come across a forum with so many threads whinging about price.
If you think something costs too much simply don't buy it. No one's forcing any of you to buy their perfectly reasonably priced products.
Oh.. And the decathlon Emtb like all their bikes wasn't actually all that great. Ie. It was the price it sold at for very good reason.

No offence @Gary, but not everyone thinks that way.
Some people (no, alot of people), don't like the idea that you have to pay to get into a sport or have what everyone else has. This is how jealousy starts, which leads to resentment.
Granted, the elite/fanatic/follow-fashions can pay the high end cost. But they've made that choice. Instead of this 'backwards' concept of 'only for the rich'.

Redbikejohn's just saying what a lot of members are thinking.
It's easy to justify the rationale of the cost of eebs, 'if you own one!' But for those who don't, I'm not gonna be that guy who say "sorry dude, your only options are push or climb'.

 

[carlbiker]

Pretty much my business experience has been a mixed one; on one hand you realise competition is great for innovation but on the other hand industry’s tend to start eating theirselves and undercut one another which long term might not be great for us punters! If all bikes were half price then they wouldn’t be as innovative as they are today, in some ways were all contributing to amazing bikes in the future since talented engineers are here making ebikes and not something else.

If a business could crush its opposition by undercutting we surely would have seen it by now so the costs are down to the high end parts were all sticking on.

I‘ve only experience of two bikes, both are stupid money in relation to anything else of value in reality. Like I could buy suspension for my van or tyres for less money so Ive accepted its complete indulgence at times and if you worked out price per hour then the values even worse, then this shiz depreciates too by 25% after new or 2nd hand there’s no warranty!

I can say though, it seems the more you pay the better the experience, I was sincerely hoping it wasn’t the case like when I bought my Orbea Wild I skipped all the better models thinking it just purely status reward rather than relative spend to performance but I was wrong. I’ve committed to an Orbea rise with a high spec but those components made a huge difference for me and unlocked the amount of things I can do on a trail and made new things possible.....

That said if I was shit hot maybe I could ride a £500 ebike and send it!!

 

[apac]

That said if I was shit hot maybe I could ride a £500 ebike and send it!!

keep your Orbea Rise long enough and you will be sending a £500 Ebike?. Best value for money, and ethically more sound? ?

 

[nasamorpheus]

OK full confession, I've yet to jump onto the e/bike wave but this also applies to non e bikes too.
The other day I had a thought. Almost all of the components that make up a bike is bought in, with zero design or development cost so why are they (the bikes) so expensive? And are premium brands really worth it?

Bought in components:
Wheels
Gears/derailleur/chain
Motor
Brakes
Battery
Discs
Bars and stems
Suspension

Not bought in:
Frame (but most likely bought from generic factory in China)
Software and display.

This is probably why decathlon could market a bike for less 3000 pounds uk. I suspect other manufacturers had plenty to say to their component suppliers about that. So I fully expect to get plenty of stick for this post as so many die hard ebike users seem to get genuinely upset when I say they are too expensive ?. Come on, they are motorbike money. But I think I can even answer my own question really.....they are still selling as fast as they are supplied ?. Really not a dig at anyone here who enjoy their bikes but more a comment on my frustration.

Cube 2020 is better then 2021 spec wise but was cheaper.. When demand is high and production can't met it, then you have higher prices.. Demand did skyrocket in couple of years but production didn't follow.. Why? They wanted to earn more and work less.

 

[steve_sordy]

Yes the components are all bought in at zero design or development cost to the bike maker. But the design and development costs are still there embedded in the item that they pay for. No bike maker actually "paid for" the design and development of the Sram 12-speed transmission, or the Fox 38 fork, or the Shimano motor, or the ........... Even if they buy an off the shelf frame from a far away country someone has paid for the design, testing and development of the frame. There is no free ride.

In the end it is us that pay for it, as we are the end user. Some of us do better out of it whether through buying skill, luck, timing or contacts. But overall we pay for it all. If we didn't, the bike makers would not make sufficient money to stay in business.

 

[Neeko DeVinchi]

Yes the components are all bought in at zero design or development cost to the bike maker. But the design and development costs are still there embedded in the item that they pay for. No bike maker actually "paid for" the design and development of the Sram 12-speed transmission, or the Fox 38 fork, or the Shimano motor, or the ........... Even if they buy an off the shelf frame from a far away country someone has paid for the design, testing and development of the frame. There is no free ride.

In the end it is us that pay for it, as we are the end user. Some of us do better out of it whether through buying skill, luck, timing or contacts. But overall we pay for it all. If we didn't, the bike makers would not make sufficient money to stay in business.

Not trying to discredit your examples in terms of the components you highlighted, but do you have the numbers which breaks down the price of these components in terms of 'patent', 'materials', 'cost of packaging', 'trademark fees' etc?
Notwithstanding, the discrepancy between partnership/collaborations vs bulk buying and availability.

I've just checked online (in case the circumstances changed overnight) but the general consensus behind the price increase is 'availability' even at the component level.

 

[steve_sordy]

So if only 11.9p could be used to manufacture the product, who was it that REALLY paid for the raw materials to be sourced or mined, transported, assembled? Steve, you forgot to mention the people whose land has been polluted, destroyed, mis-managed, and generally exploited And then being pushed out during the line of production . The same people who have moved from their settlements into the cities to work in the factories for poor wages to make the product. This is who REALLY pays for the shelf space. Not the supermarket or manufacturer. The poorest of the poor. They pay by having little of anything, and by being exploited through the whole process.

And your solution is?
Grinding poverty has always been with us, somewhere in the world, but it is improving. Not fast enough I agree.
When examined in detail, capitalism is a really shit system, until you compare it with any of the others.

That 11.9p paid for the packaging whose raw materials came from one of the Scandinavian countries. The packaging company was UK based. It also paid for all the ingredients were grown or harvested in the UK and collected, stored, packaged and transported by UK companies. It also paid for the cost to assemble the materials and packaging by a UK company and transported and warehoused by UK companies. So in this case, no downtrodden workers in far off countries were exploited.

If 11.9p sounds an incredibly small sum of money it may help to realise that this was for a single sales unit. The items themselves were made by the tens of thousand at speeds where the item was just a blur. It was also 30 years ago.

 

[steve_sordy]

Not trying to discredit your examples in terms of the components you highlighted, but do you have the numbers which breaks down the price of these components in terms of 'patent', 'materials', 'cost of packaging', 'trademark fees' etc?
Notwithstanding, the discrepancy between partnership/collaborations vs bulk buying and availability.

I've just checked online (in case the circumstances changed overnight) but the general consensus behind the price increase is 'availability' even at the component level.

I don't work in the bike industry so I don't have the price breakdown. But even if I did it would not help the argument. The fact that a bike maker just assembles items bought off the shelf does not mean that there is no design and development cost embedded in the price. If the design was older than the write off period of the initial design and development cost then the item may be sold cheaper without affecting the profit. If we were still buying rusting steel framed bikes with rod brakes then they would be really cheap if there was a market for them!. Once the products have been made whether they are components or complete bikes, if they don't sell fast enough, every maker and/or retailer discounts them. They do this because they lose less money that way. All companies do it except those that deliberately restrict the amount they make, or trash any they can't sell as a matter of policy.

@Gary is right, if people object to paying the price in sufficient numbers, the stocks of unsold bikes will rise and prices will fall. The answer is in our hands.

 

[Gary]

No offence @Gary, but not everyone thinks that way.

Not offended at all mate. And I know fine well there are plenty folk here don't whinge about prices at all.

 

[Norange]

Not trying to discredit your examples in terms of the components you highlighted, but do you have the numbers which breaks down the price of these components in terms of 'patent', 'materials', 'cost of packaging', 'trademark fees' etc?
Notwithstanding, the discrepancy between partnership/collaborations vs bulk buying and availability.

I've just checked online (in case the circumstances changed overnight) but the general consensus behind the price increase is 'availability' even at the component level.

Availability covers a lot of angles though:
Availability of transportation means you're now paying £15k for a 40ft container rather than £2k.
Delays to component availability means you're forced to air freight rather than sea freight. So maybe £100k.
Component shortages mean you are forced into spot buying rather than direct from disty (where I've seen a 10x increase in cost!).
And absolutely agreed, shortage of supply means that costs will go up. Where prices are more liquid (raw materials etc) this will go up sooner.
Covid has added pretty significant costs to an awful lot of businesses over the last 18 months.

Fundamentally, I can't see much in the supply chain is reducing in cost at any point in the next 12 months. Anyone making hay in the last few years is going to be eating that hay! But anyone on tight margins will be putting significant increases on their prices.