A 25 Year Old PSA on the Price of Bikes from Bridgestone

Well done! Thanks for bringing this back. My RB-1 is 22 years old, and it’ll keep going another couple decades, I hope. I’m certainly expecting it to. All well-built bikes should last at least 20 years, even these hi-falootin new plastic ones. That fancy new-bike tune won’t, and maybe the parts won’t, but that’s why you keep your (hopefully friendly and competent) LBS in the picture. Also, for those of you who tip–most of us aren’t arrogant enough to expect it beyond the cost of the tune–remember that beer doesn’t pay the rent, and not all of us are alcoholics.

Great post, BR! Although, as we’ve seen on other similar articles trying to illustrate the many differences of IBD vs. Online dealers, we’re going to see a lot of butthurt shortly…

BRING ON THE BUTT HURT!

Long live the mighty IBD!

One reason I’m happy to work in a shop that stocks brands who don’t allow online sales of their bikes or frame kits is exactly the reason J states. We’ll match pricing, sure. But it has to be in stock at a local brick-and-mortar competitor. In other words, not “they can order it for me” or “Amazon, wiggle, pricepoint, etc. has it for US$X.XX”, but “I can go there and buy it today.”

That said, I also know the shops around well enough that if someone’s looking for a sub-US$300 beater, I can point them in the right direction to get a SAFE version of that. I had a guy in on Saturday who was looking at single-speeds and wanted to know what I thought of Sole, etc. I told him honestly that if he wanted to save $100 on the bike, he should either be able to build it himself or be ready to cough it right back up to a mechanic to build it for him.

The non-sarcastically best sale I had recently in this vein was to a guy who test-rode one of our bikes and one at the shop next door (literally three doors down, but still). We were willing to match the wheel-and-deal discount package for accessories, etc., but he liked our bike better. So he bought with us, but felt that since he’d spent time testing their bike (mechanics do have to re-tune the floor bikes after all), he’d go ahead and buy the helmet, bottle cage, etc. over there. Works out for everyone.

That is ridiculous! Somebody wrote something about “tip the mechanic”. ARE YOU KIDDING ME?! Tip the mechanic? TIP?! What? No way!

I am not going to tip the mechanic. That’s absurd. Do you tip the girl working at the Burger King? Do you tip the grocery clerk? Do you tip the guy working at the gas station???? That’s what I thought!

Whatever dude. Tip the mechanic? No. The mechanic? Please. Dude makes a living wage. He doesn’t need a tip. When the bike shop stops nickeling and diming you for every little thing, then get back to me on tipping the mechanic. Geezus! Tipping the mechanic?!

@Marcus, biggest profit is in service, and if you know/have a great mechanic it is worth it.

@Marcus
I read in BRaIN [many moons ago, numbers may have changed] that average gross margin on full bikes was ~45%, but operating costs worked out to be ~43% of bike revenues, so net margin on bikes was around 2%. Accessories and parts at MSRP have around 100% margin [“Keystone” pricing], clothing was 100% margin or higher. Shop work was in the 300% – 500% range for margin [$15/hr for the tech, $60 hourly shop rate].

Bikes are the loss leader, and the repairs, helmets, bells, gloves, etc. allow the shop owner to stay in business.

JMS-here is the problem with your line of thinking-it’s short sighted. I may be biased here due to running a shop in California where the overhead is monstrous, but when I see people using our repair shop that way, I can only hope that two more people will make up for the purchase someone made on the internet. Here’s why: a great service center does, at the most, around $12,000 a month in labor sales. In my business, if all we did were repairs and small parts to keep everyone on a closeout BMC happy, I’d go under instantly. Our rent tops $20,000, so factoring in all the other associated costs (salary, utilities, advertising, maintainance, upkeep of a massive selection in inventory to be able to satisfy the growing need of all the various disciplines of cycling,etc) we are sunk. So the next time you scoff at your local bike shop’s prices, say goodbye for good and pretend like you don’t need any help the day before every race to get that ticking sound out of your bottom bracket because they might not be there next time. The online warehouse isn’t going to help you out in a pinch. I value my mechanics as much as the next guy, but I’m not oblivious to the fact that they are only a tiny piece of the pie. When vendors sell their scraps at the end of the year to bottom feeders instead of giving their dealers a reduction in price and rebates on leftover inventory, it wounds the LBS irreversibly. The rapid turnover at the manufacturer level in design right now provides an impossible climate when everybody wants either next year’s model before it is available or the current year’s model at wholesale pricing because the remaining inventory from the vendor is already being sold to discounters. When manufacturers start working in better partnership with the IBD and absorb more of the risk, it will give IBD’s room to compete, and ensure that brick and mortar stands a better chance of competing in a online world. But until then, I’ll be scrambling to find people that appreciate how hard we are trying, how much risk is involved, and who appreciate how much our time and space is worth just to keep the lights on one more day. Please really support your LBS.

As I opened my own shop I decided to take a much different approach because of these very issues.
Small shop, focus on repairs and keeping in stock the daily items clients would need.
When it comes to bikes, I mainly deal with brands that require custom fits and builds and that are not readily available online.
For parts clients are recognizing me as a place to come, chat about their needs and I will order it in for them. And, if I can match online pricing or do better… I WILL. No over head, smaller space and a focus on repairs means I have the ability for a slightly decreased margin.
Bike shop landscape is changing because of the massive online retailers and because of their access to leftover manufacture items at greater discounts.

Here is hoping the model works… so far, so good!

I try to buy accessories from my LBS, but I just don’t understand why they price items like tires, for example, at $69.99 for Conti GP4000s when you can find it for half that online. If they would at least try to be somewhat competitive with price, even just a little below full-on retail, I’d be on board.

Switching gears a bit, does anyone know what the margin is on custom bikes, e.g., Seven, Parlee, et al?

My next bike will be bought through the internet. Why because they only sell it there. I would love to buy my next bike from my local LBS but they don’t sell what I want and their not going to order it for me of that I’m pretty sure. My clothing pretty much al comes from them, they give me discount great if not I don’t go for discount go for honesty and good help. I live in Haarlem and Bike Planet has always been good to me. If they had my bike over there I would buy from them in a heart beat.

John, the LBS has to charge that on tires like that in order to make money. The ones on amazon, pricepoint, et. al. are probably old stock that they bought for less than wholesale, and are making a slim margin on.

Margin on a lot of the custom bikes is usually less, sometimes a good deal less than the major brands, but what makes these bikes awesome for the dealer is cash flow. It’s spoken for already by the time the order it, so you are less likely to have to have to make credit payments on the bike.

“Switching gears a bit, does anyone know what the margin is on custom bikes, e.g., Seven, Parlee, et al?”

John,

Margin on these custom frames is ~30-35 points, which is right in line with higher end bikes from boutique brands. They usually require quite a bit more time from the retailer to broker the deal (fit, design, spec), but if the retailer is sharp they can do alright with the rest of the build (kit, wheels, cockpit).

Dave

I blew out a sidewall on the way to a ride last month. Man, was it nice that an LBS was within walking distance. Maybe when Amazon has their delivery drones, they’ll be equipped with compressed air & haul away the old tire carcass too.

I buy all my parts through the LBS.

Of course, I work there and buy at employee discount — shop cost if I pre-pay — cheaper than anything I can get online.

I don’t care where you buy your parts or bikes.

@John
The $69.99 price IS the fair price for the GP4 tire. The “fair price” is the price recommended from the supplier to keep that store operating at a margin that keeps the doors open. The “fair price” isn’t a price that is fair to YOU. While a slightly cheaper price would make it more fair to you, but it isn’t fair to the LBS. When you show your loyalty to an LBS, they will/ should show their loyalty to you. I have customers who NEVER buy online. Why? Because they know from their own experiences what it takes to keep a business going. Do I still give them a discount? Yes, but it isn’t uncommon for them to tell me “R, are you making enough at that price?” Because of this, they ALWAYS get the best deals. They don’t go around telling all their friends what they paid either.
Secondly, I pray no one who has knowledge of Parlee or Seven’s margin tells you. I have information from 3 years ago of what Parlee’s margin were. I can tell you that when a Parlee frame is sold, the only one making money in the equation is Parlee. I used to sell Scott Bicycles, but had to give them up because I needed to sell 70-75% of the whole preseason at full margin to make a true profit. The brands we sell now have much better margins in the price range that keeps my doors open. $1,000> bikes + labor keep shops rolling. Bikes >$2,000 make very little money. If a shop discounts the bike, the shop is just moving money around. Like taking a fiver from one pocket and putting it in another…
If every day your pay was negotiable, would you keep working their? Unfortunately, LBS are.

Sorry, I’ve vomited enough.

To anyone scoffing at the idea of TIPPING YOUR MECHANIC: next time you need a tune up, a bar rewrap, or heck a flat replaced, bring a $3 tallboy to drop off with your bike or when you pick it up. 3 bucks, big can of beer. If you don’t think it had an effect, boohoo you’re out 3 bucks. If you like what it got you though, which you will, try a pizza next time.

I spend my money where I feel I’m being treated fairly.

When the staff at one of my many LBS acts like a used car salesman instead of a fellow cyclist, I buy nothing more than a patch kit or water bottle…

Example: in the past week I overheard the Manager of a shop tell a potential buyer, he “HAD to buy tubeless, HAD to buy Disc brakes, HAD to buy 29er, anything less just doesn’t work in New England and is a waste of time to ride”…

I guess I better throw my FAT Chance, Klein, Bontrager, Jamis, Scott and my Indy in the dumpster as not to “waste my time.”

In a different shop, the young owner asked me “Who does the work on your bike?”, which I replied, “I do, always have.”…to which he says, “with all the new stuff that changes all the time, I’m SURE you don’t have the right tools.”

I’ve been wrenching bikes longer than he’s been alive…and when the day comes that I do need a shop for a repair, it won’t be his.

@Christopher, et al
On tipping your mechanic:
Please please please, don’t assume your mechanic likes to drink. I wrenched for 8 years and constantly got handed six packs (usually Belgian Fat Tire, which customers thought appropriate, but I got sick of it). I did drink, but not much then (hardly at all now). It might seam easy to buy a beer, but try food. Donuts, candy, soda, it’s all except able.
Try asking, very rarely was I ever asked. Ask them before they start the work and tell them you’ll be back with it by the time they’re done. They’ll remember you the next time, I guarantee, and you’ll get the return in spades.

“When someone in town buys something online to save 50 bucks but is willing to come to our events and shop rides, that is a slap in the face.”

Acting like $50 is an inconsequential sum of money to most is a slap in the face of all us non-ballers like yourself. And FWIW I support my local shops as much as I can (have dropped ~$4k at three different local shops in the past 60 days) but you bet your ass if I can get something that I don’t have an immediate need for 50% off online I will.

Anyways, I’m opening up a bar. $8 for a Coors light, $15 for a local micro. I’m sure all the bike shop owners will come in and drink vs. going to a bar across town or buying beer from Safeway.

I love this debate–last time the extremes included “I wrench on my own stuff, buy online, the LBS has no value to me” guy and the “support your LBS or YOU ARE SCUM” types. But, guess what…

We are all mostly on middle ground here.

I’ve worked in 3 different independent shops in 3 different time zones. The one commonality? Every single one of the shops opened because of a love of the sport. No one opened a shop thinking it would be a ticket to a private island in the Caribbean someday. Comparing that to online retailers is nuts–the Amazons, Pricepoints, etc are there to make money, not to provide service, recommend local trails and routes, or share the love of the sport with you.

I can assure you that the profits at your independent LBS are slim. Very slim. “Why should I buy at my LBS when I can pay half the price online??” If you are asking that question, then you are already missing the point. This is purely a dollar and cents topic for you, and you’ll have a hard time grasping the concept of why “buying local” is important. As to the “how/why” online retailers can have it for half the price, it’s because they buy MASS quantities, sell at very slim markup, and make their profit on volume. They buy 1000s, your LBS buys 10s, maybe even singles. When we see products for sale online at *less than what we pay for them through our distributors*, trust me, we are standing there scratching our heads as well. It’s just not a sustainable model for the industry. Hopefully this is changing, I believe Shimano made some new pledges in this department for 2014.

There are very good reasons why the LBS needs to sell at MSRP to stay in business while the online retailer can sell near to wholesale and still make a buck. Here’s a generic look at a small LBS vs a huge online retailer (HOR)
LBS – buys in small quantities from a distributor
HOR – buys in very large quantities directly from the manufacturer
LBS – pays rent on retail floor space
HOR – pays rent for a warehouse or owns the building
LBS – heats/cools for customer comfort
HOR – minimal heating/cooling
LBS – needs lots of floor space to properly display products
HOR – product is densely stored on shelves requiring minimal floor space
LBS – product is unpacked and put on expensive fixtures (e.g. racks for clothing)
HOR – product is left in packaging and stacked on a shelf (e.g. plastic bags for clothing)
LBS – employees are there whether customers are or not
HOR – employees only at work as much as needed to keep up
LBS – employees spend time answering questions, etc. to maybe sell something
HOR – employees spend time shipping sold product
LBS – pays an accountant/bookeeper at pay rate plus profit
HOR – has several accountant/bookeepers on at pay rate
I could go on, but hopefully you get the point. There are real reasons why that tire is $70 at the LBS and $40 online.
I don’t envy the LBS, they are fighting a losing battle. They will either adapt or die.

I buy nearly everything at my LBS (2 actually) because I want them to be around when I need them, and I’m always treated well when I come in, even when all I’m there for is a few Clif Shots and a tube.

After 10 minutes discussing the merits of a variety of tires relating to what and how I ride, the shop manager recommended a tire to me, which I bought a pair of at ~$70 each. Less than a week later with less than 50 miles on the tires, I hit something (I couldn’t find what) and cut a 3/4″ gash in the tread/sidewall of the rear tire. I went back for a replacement, and halfheartedly tried to see if there was any manufacturer’s warranty coverage for such low mileage damage. There wasn’t, but he sold me a replacement at a steep discount (I think it was his cost).

A couple of weeks later, I noticed a small bulge in the sidewall of one of the tires, and asked if I should worry about it (it was pretty small). He ran a thumb over it, grabbed a new one off the shelf and sent the wheel and new tire back to the shop for a change. No charge for anything, and it was a rush job right before the weekly shop ride.

Oh, and the tires were exactly what I wanted and I’ve since purchased several sets with no issues. I got excellent service, and knowledgeable advice, with no shipping charges and immediate delivery.

@Duder
Yes, you’re right. Jensen always does a great job when changing my flats or tuning my derailleur!

Dat. Service. Hnnnnngh.

I actually learned how to fix my own bike up (somewhat) because of my LBS. I’ve commuted by bike for a few years and ride most days. I sometimes go out further distances but I am sometimes a little anxious on my own as drivers in my “neck of the woods” can be a little… Antisocial towards cyclists. I contacted my LBS when I first moved into town and asked if I could bring my bike in as my gears were slipping and my rear brake needed looking at, and I was too nervous to do it myself. I telephoned and asked when I could come in with my bike, was told “well love, that depends. First of all I need to ask you some questions. Firstly, where did you buy it?”, I answered with a local chain-ish store in my area (they have a few locations in my area but are not nationwide. I live in the UK btw). “Well darlin there’s your first f*ck up. Where have you taken it before for repairs?” I said that I had bought that particular bike from there as it was the best specced that I could afford, having returned to my home to find that my previous bike had been stolen, and that I’d taken it once to an LBS in a different local town when I lived there, he asked why, i said it was as it had a sturmey archer 5-speed hub and I had a rear puncture and was concerned about ballsing the gears up. At this point he said “well I’m going to stop you there because you’re bullsh*tting me. Those 5 speed hubs don’t come on cheap bikes and you’re taking me for a f*cking idiot. The problem with people like you is you don’t come to me when you buy the bike, you just expect me to repair it”. I then informed him that I had just moved to the area which was why I’d not been to him before, and asked whether he thought that £325 constituted an expensive bike, as that was what I’d paid. I went on to tell him that his sh*tty ” boys’ club” attitude was why I wouldn’t be coming to him in future because I had no intention of bringing business to someone who spoke to me like I was a pig. He insisted he had done no such thing so I reminded him of his “well love that’s your first f*ck up” comment, his quizzing me on where I’d bought it, and the fact that he had repeatedly sworn at me. I also told him that it was people speaking like he was that makes cycling so inaccessible to women, and that I would recommend to all my friends that they don’t go to him in future. He apologised for me taking offence at his manner (“sorry not sorry”) and said if I wanted to bring it in that afternoon he would see what he could do. I told him to stick his not-apology up his arse and f*ck off while he was at it, then hung up.
TL:DR; not all LBSs are as special lovely and wonderful as people here are making out. Some of them are dicks.

+1, nunyab.