[Konabumm]

So I was just at my LBS ordering a new Sun Singletrack rear rim. So my bike guy is flipping through his order book and I spy the BS cost $23.50
they are charging me $47 + 15% discount so about $40 bucks.

I guess I just didn't realize how much markup there is.

 

[sneakysnake]

It's like that with most items in regular stores too.

 

[Konabumm]

It's like that with most items in regular stores too.

Yeah I know it - I guess this just took me by surprise. Makes me want to get a tax ID and build a store front.

Might need to look into that

 

[skinny mike]

the bike industry is a very high margin industry. up until a few weeks ago i worked at a shop, now i plan to order parts either direct from companies when possible or from mail-order sites.

 

[robdamanii]

the bike industry is a very high margin industry. up until a few weeks ago i worked at a shop, now i plan to order parts either direct from companies when possible or from mail-order sites.

I thought bikes were a low margin and parts and accessories were the high margin items?

 

[skinny mike]

I thought bikes were a low margin and parts and accessories were the high margin items?

bikes are a lower margin than parts and accessories but i still think that its pretty high.

 

[Konabumm]

all i know is we mtbers are getting donked in the butt

 

[jimmydean]

From what I've seen, bikes average about 20%, but parts are more like 60%-100% or more. The shop makes the dough on breakage and upgrades.

Same goes for computer printers (as an example). There is no money in selling a printer, there is a huge market for the consumables.

 

[BurlyShirley]

all i know is we mtbers are getting donked in the butt

Uh, the price in the book is shop cost. You want the shop to not make money off of what they sell? All those tools and employees cost money to keep around...and heaven forbid the shop actually profit.

Go for the best deal possible, but I promise you, the shop isnt "ripping you off"

 

[Echo]

Yeah I know it - I guess this just took me by surprise. Makes me want to get a tax ID and build a store front.

Might need to look into that

Bwaaaaaaaah

 

[McGRP01]

So I was just at my LBS ordering a new Sun Singletrack rear rim.

Get a MTX.

 

[jacksonpt]

Get a MTX.

Sponsored, huh?

 

[Tame Ape]

bikes are a lower margin than parts and accessories but i still think that its pretty high.

Not even close my friend, they're lucky to get a 50% margin on ANYTHING in the store. Hardware/bikes are usually closer to 30% which is pretty awful. Cycling is a classic 'dog' industry, people put in two dollars only to make one.

 

[McGRP01]

Sponsored, huh?

They're both Sun rims. But, yes...they are a sponsor.

 

[jacksonpt]

The 'every day' prices at my one LBS are very, very close to what I would pay at Jenson or Pricepoint plus shipping. My other LBS gives me deals on most stuff, so their prices are very competitive...

 

[jacksonpt]

They're both Sun rims. But, yes...they are a sponsor.

really??? hahahhaha - I was just givin ya a hard time.

 

[jonKranked]

yea i was surprised by the markup when i started working at a shop. Very few shops deal in enough volume to have markups on parts lower than 100%. But still most of the $$$ they make is from repairs. It sucks a$$ but in the big scheme of things the bike industry is rather small (when compared to electronics, cars, hell even the moto-x industry. you can get a nice moto-x for the same price as a a nicely spec'd DH bike - why? moto-x sells more units)

 

[Nobody]

This complaint has been trumpeted a thousand times on the 'Monkey and other sites.

I'm not gonna argue with ya.

Yeah, LBS is doinking all of us in the heinie.

Take a look at the people who work in the shop. Count the number of Lexus' in the employee parking lot. Find out how many of them own their own home.

I tell ya, i worked for 18 years in the bike biz and i make more money in one day cooking for other people than i did in one week spinning a wrench.

 

[spookydave]

Yeah I know it - I guess this just took me by surprise. Makes me want to get a tax ID and build a store front.

Might need to look into that

Now there is a grand idea. Seeing as I own my own biz I think you should do that. Then you will see just how fast that mark up gets eaten up by everyday costs of doing biz. Oh, have fun paying your sales tax every quarter and doing all that paperwork.

 

[Eren]

markup is generally 20-35 percent oer what they buy it for. My nieghbor works in a shop, to see how cheap they get ****, he got me the new marzocchi roco with his discount, i got the damper AND spring for 256.17 hehehe

Edit: i said 20-35% because thats what my LBS cahrges over what they buy things for, i guess there reasonable then, haha.

 

[w00dy]

Try looking at any other industry. In general 100% markup is what a store has to make in order to turn a profit. Bikes are an industry where people are working because they love it, not for money, so they are willing to reduce their margins.(generally speaking, I know this isn't universal)

If I'm not mistaken, jewelry stores tend to run the highest margins, operating between 300 and 1000%.

 

[jimmydean]

Pizza (take and baked) is the highest markup, followed by Subway last I checked. I think the markup at Subway is like 600% (the $3 sandwich is about $.50 in raw materials). If you want to make money, you can open a Subway location for about $30k and be rockin' the Lexus in no time!

 

[spookydave]

markup is generally 20-35 percent oer what they buy it for. My nieghbor works in a shop, to see how cheap they get ****, he got me the new marzocchi roco with his discount, i got the damper AND spring for 256.17 hehehe

Edit: i said 20-35% because thats what my LBS cahrges over what they buy things for, i guess there reasonable then, haha.

no way could they stay in biz with 20% markup. After they pay their fed, state and local taxes there would be not much left for overhead. Oh, those guys need to eat a little too.

 

[sanjuro]

Yeah I know it - I guess this just took me by surprise. Makes me want to get a tax ID and build a store front.

Might need to look into that

Oh, my god, he charged you $23 dollars on a $23 item. Did you file a claim with better business bureau?

EDIT: I realized he actually charged you less, $17. This whole thread is exactly why Quality makes a catalog without pricing.

 

[dhbuilder]

yeah.
when it comes to buying moto shorts or pants and gloves,
a motorcycle shop is on average 1/3 cheaper.

example- fox gloves.
lbs-$29-30.
moto shop-$19-20.

and no matter what you walk into a lbs to get.
it's never in stock, and always has to be ordered.(d.h. supplies anyway.)
so you wait and wait.
and here in tennessee there's literally a 10% sales tax.
so you can order online for less mark up.
and for less than the cost of the sales tax, have the parts delivered right to your door in less than three days.

shops have a hard time competing with that.

it seems to me that other than outright sales.
they make most of their profit from folks who need their mechanical service in addition to a parts outlet.
and those of us who wrench our own bikes and don't need their mechanical assistance are paying for services we don't need.

hence the mail order and on line stores.

no matter what the mark up.
i don't know of anyone who's become independantly wealthy by owning a lbs.

 

[Zark]

no way could they stay in biz with 20% markup. After they pay their fed, state and local taxes there would be not much left for overhead. Oh, those guys need to eat a little too.

Where most shops make the money is labor. $65 tune ups and lots of $5 flat fixes.

 

[Anders]

when its cheaper for me to order a part thru jenson or pricepoint and overnight it, i usually do. im not gonna pay $60 for a generic headset that costs $20 online

 

[urbaindk]

For parts, my LBS goes online checks the price that Speedgoat has and that's what I pay. Whenever I've ordered parts, it's usually there in two days. I think that's pretty cool. Speedgoat isn't the absolute cheapest online retailer but their prices are pretty good. I guess I usually end up saving a little on shipping.

 

[Spunger]

Think about it though, $23.50 + shipping.......rims aren't the smallest things in the world to ship (although fairly light). Just the box size alone to ship a rim must cost $7-10 depending on the size.

So.......They are making $10 off of your sale if you get it for $40. I don't see where there's a problem. The last few parts I ordered from my LBS I was surprised that they were $2-3 more than mail order but I didn't have to wait as long, or pay stupid shipping. I told the counter guy who was taking my order that I was excited to know that they can get so close to internet pricing. I wouldn't go in there and nickle/dime them on parts I could get online way cheaper.......but special order stuff that online places sometimes have OR it's just a special order item anyways goes to them.

But when I see a deal online I take it. Always have always will

BUT.......I have never disclosed how much I paid for something bringing it into a shop. They aren't stupid if you're bringing in high dollar items they know. There's nothing wrong with paying a shop the $$$ for frame preps or if there's things that are out of you ability to do but the worst thing to do is spit in their face how much cheaper you got something online.

 

[indieboy]

someone drag out the dead horse and break out the bats

 

[Echo]

The quickest way to end up with a million dollars in the bike industry is to start with 2 million.

 

[Ian F]

Yeah I know it - I guess this just took me by surprise. Makes me want to get a tax ID and build a store front.

Might need to look into that

<-- BTDT. It's a PITA. Trust me. It's like reaching over a dollar to pick up a dime. I've seen the price-books and I know what the mark-up is. It seems great in theory, but it's really not worth it.

The best way to get deals on bike stuff? Get a p/t job at your LBS.

 

[OGRipper]

The margin on complete bikes is very low, especially after you factor in the build, free tune-up(s), discounted accessories, and the time it takes to sell you the bike (not to mention rent, utilities, insurance, etc). The margin on service is slightly better, not great, but there is usually a good mark-up on parts, so service can be a good profit center. Doing a special order takes more time than grabbing something off the shelf, but most shops don't upcharge for an s.o., but they sometimes make you pay the shipping when you ask for a rush.

Like others have said, there are far better ways to make money than to open a bike shop. There are always exceptions but most do it for the love of bikes and, because they often help create a bike community and give bike junkies a place to go for a fix, most deserve your support.

 

[N8 v2.0]

Try looking at any other industry. In general 100% markup is what a store has to make in order to turn a profit. Bikes are an industry where people are working because they love it, not for money, so they are willing to reduce their margins.(generally speaking, I know this isn't universal)

If I'm not mistaken, jewelry stores tend to run the highest margins, operating between 300 and 1000%.

Furniture stores are almost as bad as that!

 

[Ascentrek]

so is realestate

 

[davep]

Just wanted to share a little info about profit margins to bring some reality to what some think is 'making tons of $'. I ran a large snowboard shop for a while (daily mgt as well as buying) that did a litlte bit of bike stuff as well. It is widely known and accepted fact that the sporting goods industry (non main stream like f-ball jerseys etc) has very low mark up. In fact, it is a huge deal for a small shop to be able to get some kind of volume discount to be able to toun a net profit at years end.
T
he standard mark up on hardgoods in the snowboard biz is 40% and on softgoods it is keystone (or 50%). This may seem like a lot but at years end, the net profit (return on investment for the companie) was single digit! usually ~ 8%. So in other words for every $100 that the store spent, in the end, it got back $108. Keep in mind as well, some years were very bad (due to weather or just economy) and we would be very lucky to break even!! This was one of the largest snowboard shops in the Seattle area.

Now look at the bike biz...clothing mark up is generaly the same, but bike margins are closer to 25 - 30%. This equates to a net profit of ~4%!
I
f you look at some things people never think of like food, and clothing, and furnature, that is where the real $$ is. You should be pisssed at you LDS (local department store) as these guys have a mark up closer to 200 - 300 %. A $100 wholesale item is marked at $400 - $600. Ever wonder how Nordstom has a private jet when they are always having a sale??

There is a lacal family that owns a few second hand clothing stores (value village) here in seattle. The kids (20 yo.) drive new bmw's the dad drives either a Ferrari or a Hummer H2 with 24's.....

Back to the bike thing though, there are some serious issues that make this biz even mare hard and f'd up. I have/had access to QBP and BTI wholesale catalogs, and many times the large mail order places are selling items (mostly drive train and brakes) at wholesale or below!! I believe that THIS is what truely needs to be fixed in the bike biz for the LBS to continue to survive. How the f#*k do these online shops get items cheap enough to be able to sell at wholesale and STILL make more margin that the LBS?? (retorical q)

I believe that this all causes a snowball effect where the LBS is not doing well so they have to try to make $ at ALL opportunities and thus they see the customer as an adversary (read post by pau11y about tool loan). Because of the concern for the immediate bottom line TODAY, the LBS would rather turn away a potential customer and have the wrenches stand around and do nothing than forgo a couple bucks and use an already paid employee help to potentially earn a long time customer. In turn the customer feel alienated (as in his mind, the employee has nothing to do, and is there to help) and then swears to only shop on the net, perpetuating the situation.

It is my opinion (and been proven in my many years in retail) that as a retailer you need to earn your customers. You need to bend over backwards some times, even though you know the customer is wrong, to have a long time customer. Helping a kid quickly fix a bike w/o charge, or putting on tune-up/repair clinics, or matching a price for a loss, or taking back a product that was obviously miss-used is the way to earn customers for life. Employees have the potential to be the shops BEST marketing tool OR the worst. I have done it, it works!

BUT i think that the retail bike biz, does not in general, does not have the financial flexability to be able to do these kind of things that they NEED to do if they want to attract and keep customes. Why, you ask..because the vendors (bike part mfg) f%&k over the LBS by 'allowing' massive pricing variation in there products and thus online shops selling products for LESS than the wholesale pricing avalable to other shops.

sorry for the lenght of my ramble...

 

[Ciaran]

Now there is a grand idea. Seeing as I own my own biz I think you should do that. Then you will see just how fast that mark up gets eaten up by everyday costs of doing biz. Oh, have fun paying your sales tax every quarter and doing all that paperwork.

Now that I am starting/running my own biz I am understanding how much WORK it really is. The best part so far was finally getting the wholesale price and no sales tax at one of my materials suppliers. And let me tell you... I am marking up stuff more than 100%!

Of course I am not in the bike industry, so I might actually make some money.

W00dy, the markup on jewelry is insane! Living in So Cal allows me acces to the jewelry district in Downtown, and while I am still paying "retail" it is WAAAY les than going to a jewelry store in the mall or what have you. When I bought the wifes engagement ring last year I learned a ton about jewelry and wsa very surprised to se how much stuff is marked up.

 

[sanjuro]

Back to the bike thing though, there are some serious issues that make this biz even mare hard and f'd up. I have/had access to QBP and BTI wholesale catalogs, and many times the large mail order places are selling items (mostly drive train and brakes) at wholesale or below!! I believe that THIS is what truely needs to be fixed in the bike biz for the LBS to continue to survive. How the f#*k do these online shops get items cheap enough to be able to sell at wholesale and STILL make more margin that the LBS?? (retorical q)

The reason why mail order can sell products before wholesale is the OEM grey market. Bike manufacturer order 10,000 groups, and use 7,500. They sell the 2,500 to a mail order house, and mail order can sell it below wholesale.

I noticed that in particular with Marzocchi forks in late fall/early spring.

Shimano stopped the OEM market a few years back. This is when you could buy a XT rear derailleur for $40. Now only 6-7 companies are licensed mail order retailers, like Excell and Performance.

I don't begrudge anyone from buying from mail order. If it is cheaper that way, then I will buy something, usually clothing. But don't come into my shop with your sob story about high markup...

 

[BurlyShirley]

All a consumer should worry about is where to get things cheapest. If you can install it, more power to you for buying online. Come into the shop w/ it, and Im charging you to install. Buy it from the shop, usually Ill toss it on for cheap or nothing. What's cheaper?

Even w/ my discount, it is often cheaper to buy online...so I do. But then again, I know what im doing a little bit. No way I could afford the hobby at all if I paid retail all the time.

 

[sanjuro]

All a consumer should worry about is where to get things cheapest. If you can install it, more power to you for buying online. Come into the shop w/ it, and Im charging you to install. Buy it from the shop, usually Ill toss it on for cheap or nothing. What's cheaper?

Even w/ my discount, it is often cheaper to buy online...so I do. But then again, I know what im doing a little bit. No way I could afford the hobby at all if I paid retail all the time.

There would be a few items I would never buy mail order, particularly one of the less reputable places.

Forks is high on that list, because OEM is much lower quality than after market. Wheels are another one. I noticed many of Mavic training wheels required a bit of truing when they came on complete bikes. I would send this wheelset back if I ordered it directly from Mavic.