Margins-or how much is enough-industry types please chime in

[wingguy]

it's just how it works.

Is it how it works? I'm still struggling with your claim that one frame doubled in price in 4 years.

Which frame was it?

[AJS914]

Thruth about your "boutique" https://www.bike24.com/1.php?content=21 ... ed;mid=917

you can but specialized stuff in almost every net in EU, most ship abroad. In Finland brand is carried by independent shops only, with many other brands.

Place of manufacturing has everything for being "boutique" / premium / luxury . None of those are made in far east. Most of it is made in Europe. If not all. NONE of reputable Swiss watches are made in China. Some mechanisms ( for cheap ones ) come from Japan. So...BS. Basically all what you wrote.

You have no idea what you are talking about. Here you go:

https://www.reuters.com/article/us-luxu ... KS20130304

All they have to do is make 50% of the watch movement in Switzerland and they can label a watch as made in switzerland. It's the same in a lot of other European countries where goods assembled in the country gets it stamped "made in".

Anyway, what is the point of this? It has nothing to do with this stupid thread in the first place.

It's all supply and demand. If there is no demand for $300 saddles then nobody will buy them and they will lower the price.

[Rick]

Contemplating what is an appropriate margin is a pointless exercise. Despite the many factors that go into such decisions, ultimately it is a market driven decision at any level of the supply chain. The correct answer to the question of margin size is simply the size that is the most profitable. The people that operate these organizations have a duty to the owners to be as profitable a possible. Failure to do so should result in their replacement by others who will seek to maximize profit.

Different industries and markets differ in the how big margins can be based on the balance of power between buyers and sellers. Many parts of the bicycle industry are not particularly competitive. Read Michael Porter if you wish to understand this in depth.

Mr Gib got it right.

[stormur]

Thruth about your "boutique" https://www.bike24.com/1.php?content=21 ... ed;mid=917

you can but specialized stuff in almost every net in EU, most ship abroad. In Finland brand is carried by independent shops only, with many other brands.

Place of manufacturing has everything for being "boutique" / premium / luxury . None of those are made in far east. Most of it is made in Europe. If not all. NONE of reputable Swiss watches are made in China. Some mechanisms ( for cheap ones ) come from Japan. So...BS. Basically all what you wrote.

You have no idea what you are talking about. Here you go:

https://www.reuters.com/article/us-luxu ... KS20130304

All they have to do is make 50% of the watch movement in Switzerland and they can label a watch as made in switzerland. It's the same in a lot of other European countries where goods assembled in the country gets it stamped "made in".

Anyway, what is the point of this? It has nothing to do with this stupid thread in the first place.

It's all supply and demand. If there is no demand for $300 saddles then nobody will buy them and they will lower the price.

Quote from the article : This means cost-conscious watchmakers in the lower-priced segment can import 100 percent of the cases, dials, hands and straps and still mark their watches “Swiss Made” as long as half of the parts of the watch movement are made at home.

Did I mention in my post "reputable" ? I did. Fiat & Prada share country of origin, and so what ? Hope now it's clear for you. Same as "boutique specialized stuff made in china & to buy only at dealers and concept stores"
Stiupid is only for some, interested to keep some things quiet... . But your'e right. If there's demand, will be supply.

@wingguy: struggle or find by yourself it's not to difficult... . I just can't name even country of the manufacturer...

I can give you other example : Specialized Allez. Check frameset price increase over the years.

[wingguy]

@wingguy: struggle or find by yourself it's not to difficult... . I just can't name even country of the manufacturer...

Yes you can. Frameset MSRP is publically available information that doesn't confirm or even imply that you have access to confidential trade secrets. Heck, you could tell me that it wasn't the frame that you were talking about, but here's the name of another one that also doubled in price from 2k to 4k and I'd totally believe you, no harm no foul.

So put up or shut up, which frame is it?

I can give you other example : Specialized Allez. Check frameset price increase over the years.

The Allez is a large family of frames that has encompassed anything from steel, to entry level alloy, to E5 smartweld, to cutting edge hydroformed aero sections on the Sprint. It's self evident that there will be huge price variations across different models and different generations. Are you comparing like for like frames?

[stormur]

trust me I can't. They noticed I get it by accident , and got "notice" from legal dep. ... .

1st : Allez sprint is far from anything I would call "cutting edge". Bulged welds, totally crap cable routing ( no one is able to make it worse ), far from really fancy alloy. And fork which is/ was / will be recalled .

If you take 1 particular frame, which design didn't changed to much over the years and look at MRSP, you'll notice that price increase over the years is far bigger than justified inflation/ labour cost / material cost / taxes increase. Nor even by any operational cost increade ( like additional or extraordinary sponsoring costs ) . From my notes it comes avg for the market price increase year-to-year is about 15%. On "high end" ( I wrote it with hard heart ) products more than on cheaper ones.

Lets say Pinarello Dogma. What was the price of 65.1 DA di2 at premiere, what's now for same specced F10 ? Both are top model at the time from "premium" branded "manufacturer" ( I'll still reserve this term for companies which do things by themselves in own premises called factory ). How many years in between ? Price increase in % ?

To finish this topic from my side :

Margins in cycling industry are enormous in comparison to other sporting goods areas.
Quality of the products has not so much to do with branding those as "premium". Perormance increase is minimal, lifespan shorter, warranty claim percentage higher, price doubles at every level ( I mean going from standard-premium-super premium level of product from same brand ) .
Almost none of those products ( serial production, I'll skip this time custom made frames, just Quotting part of discussion from other forum : "Q: Is custom frames pricing a scam ? A: Mostly yes. Some of framebuiders have a beard, so those would charge even more". ) can be considered as "premium" nor "boutique" being made in unlimited quantities on far east and readily available over net shops.
Are naturally proud exceptions. Not so many of them.
Quliaty of todays "flagships" doesn't correspond with pricing. Not at all.

Do all of this bother me anyhow ? Nope. Just observations.

I never pay MRSP, not even half of it... so got sometimes nice stuff for the fair price. Some brands I thought to avoid like a plague ( notorius issues or crap design), some I do like, even if it's unresonable. Totally my thing.
Do I think it's normal that bicycle frameset made in China cost same as 70-90HP outbord engine from Mercury ( made in USA ) ? No. it's not. But it is how it is, and I'm curious how it goes in future ( and when it'll crash , becuase it has to, like every bubble ).
NFA

[wingguy]

trust me I can't.

Yes, you can. It's not a secret. It's publically available information. If they already know you know the secret stuff, it doesn't matter a damn if you talk about the non-secret stuff that came with it.

The only reason not to say is because it's not true and you're making shit up again. So what frame is it?

If you take 1 particular frame, which design didn't changed to much over the years and look at MRSP, you'll notice that price increase over the years is far bigger than justified inflation/ labour cost / material cost / taxes increase. Nor even by any operational cost increade ( like additional or extraordinary sponsoring costs ) . From my notes it comes avg for the market price increase year-to-year is about 15%.

The 2010 Allez with 2300 cost £499. The 2018 with Claris cost £599. That's a 20% increase spread over 8 years. IF the Allez had gone up by 15% year on year since 2010 it would now cost £1530. Your notes are wrong by literally an order of magnitude.

[wheelbuilder]

So silly. A company made a "mistake" and accidentally sent you some confidential information? You are under no obligation whatsoever, legal or otherwise to ensure that the secret goes no further. Unless you are an employee of this company and signed some kind of confidentiality agreement. The only way your story makes any kind of sense is if this company sent you a bunch of free stuff or gave you a great deal on something in the hopes that you would remain silent. This seems unlikely and more like some made up secret conspiracy nonsense to make you seem or feel important?

[alcatraz]

Fair margin is whatever they want.

If they want to sell 2 saddles a year then by all means sell it for 1000$.

This conversation is rather pointless. The customers have no influence over the margin of products. Just be patient and hunt down a used one off season (or from places that are currently in their off season). The more patient, the better the deal.

If supply is low (new or second hand) chances are price will be high. If you are still stubborn enough to get that part then you'd better be patient.

/a

[dudemanppl]

Also the Allez Sprint fork has never been under recall. Among the other lies you're repeating. I thought you got banned.

[glepore]

Ok, phrase my initial question another way-is there a point where you say, wait a minute, I'm willing to support ip and innovation but enough is enough? Or is product ip for non patented stuff sacred enough that its always questionable to buy "grey market" (leaving aside questions of whether the products are in fact identical, as I'm assuming that functionally they are).

Mr Gib is certainly right; my initial inquiry was inartfully phrased, but the discussion is interesting.

[Calnago]

This thread is like the final scene out of the movie “Fatal Attraction”. Just when you think it’s all over the original Nemesis comes back to stir things up again. But yes, Mr. Gib got it right.
https://youtu.be/hd521kE7f0A

[maxxevv]

That's some tall claims ( and somewhat sounding like tales) in these replies.

[sawyer]

I would say that from what I've seen is that particularly over the last 5 years the cost of like for like high quality parts and components has gone up by around 15 to 25% on average in the UK. Part of that is our own stupid fault with the post-brexit currency crash, but even accounting for that it's a big hike, far in excess of wage growth. The pricing of high end parts in 2012 was a lot more accessible for normal people than in 2017, that's for sure.

Yeah, I'd agree. In particular top end frames, finishing kit and shoes have gone up a lot ... as opposed to wheels and groups. I remember buying a Record 10 Groupset in 2006 for £900 odd cheapest online price and 12 years later it's about £1250 for Record 11 mechanical ... so a CAGR of 3% which seems ok.

Back then top-end frames were £2k, and are now £4k ... 6% pa inflation ...

[glepore]

This thread is like the final scene out of the movie “Fatal Attraction”. Just when you think it’s all over the original Nemesis comes back to stir things up again. But yes, Mr. Gib got it right.
https://youtu.be/hd521kE7f0A

LOL. That movie...it seems like a comedy now. Bring me a rabbit...