Typical discount structure for a Specialized dealer?
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I just wish I understood where the role reversal originates. Buyer and seller each have a role. Buyer is supposed to get the lowest price for goods that he can. Seller is supposed to get the highest price that he can. Why is either of those unattractive? What kind of business needs the customer to be doing the owner's job of maximizing his profit? That is a recipe for failure for all parties concerned. My best guess is this all comes out of cultural and religious norms. Believe what you want, but casting aspersions on another's ethical or moral propriety re: this topic is the one thing that actually IS wrong. And by the way, if there was not an established willingness of the bicycle dealer to haggle (or the one down the block) there would be no expectation by the buyer that he could get a better deal. No one goes into Best Buy and tries to negotiate. The price is the price. Why do you think that is not the case in bike shops.
We live in an informed society a where business should expect a consumer to try to get the lowest price possible.
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I think the point that was being made is there is gross margin and net margin. Gross margin refers to the portion of the sales price which is not the cost of goods sold. Net margin or net profit is the portion of the sales price that is left over after all costs of goods AND business operating costs are subtracted. % gross margin and % markup refer to the exact same dollar amount even though they are different numbers. % net margin is invariably smaller.
Also, I am a manufacturing guy, not retail, so I assume retail tracks and rolls overhead into COGS as manufacturing does. So the only big difference in manufacturing is SG&A between gross and net, but not as large as someone in retail if they are just tracking purchase price versus sale price.
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Since I worked in a similar industry for over a decade, I do feel that I have a notion as to what 30,40 and 50% margins mean.
Put another way- if my digging had led me to discover that the bike I want is on a 50% margin, as God made little green apples, I'd never pay full retail or close to it. On the other hand if margins are at 25% then I know, from experience, that in a retail business of this nature that's getting close to the bone.
It would appear my $3800 retail bike is at 30% and price-fixed at a small discount off that, max. I will use this info for good, not evil. I'm not a ball buster and do see the other guy's side of things, to a fault sometimes.
Now......... want to talk about how I get beat up in my line of work?! Didn't think so. Actually neither do I <grin>. But stuff is hard all over. I want to maximize my bang for buck. My customers sure want that from ME, and are completely willing to have someone else make their widget for slightly less. It is what it is. This is SUPPOSEDLY a free-market economy... which is why manufactures aren't SUPPOSED to be able to price-fix.... which is a whole other topic of debate.
Enjoying the back-and-forth guys. I love how the high IQ of this forum allows for light w/o heat. A hat tip in all y'all's direction.
Put another way- if my digging had led me to discover that the bike I want is on a 50% margin, as God made little green apples, I'd never pay full retail or close to it. On the other hand if margins are at 25% then I know, from experience, that in a retail business of this nature that's getting close to the bone.
It would appear my $3800 retail bike is at 30% and price-fixed at a small discount off that, max. I will use this info for good, not evil. I'm not a ball buster and do see the other guy's side of things, to a fault sometimes.
Now......... want to talk about how I get beat up in my line of work?! Didn't think so. Actually neither do I <grin>. But stuff is hard all over. I want to maximize my bang for buck. My customers sure want that from ME, and are completely willing to have someone else make their widget for slightly less. It is what it is. This is SUPPOSEDLY a free-market economy... which is why manufactures aren't SUPPOSED to be able to price-fix.... which is a whole other topic of debate.
Enjoying the back-and-forth guys. I love how the high IQ of this forum allows for light w/o heat. A hat tip in all y'all's direction.
#129
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I just wish I understood where the role reversal originates. Buyer and seller each have a role. Buyer is supposed to get the lowest price for goods that he can. Seller is supposed to get the highest price that he can. Why is either of those unattractive? What kind of business needs the customer to be doing the owner's job of maximizing his profit? That is a recipe for failure for all parties concerned. My best guess is this all comes out of cultural and religious norms. Believe what you want, but casting aspersions on another's ethical or moral propriety re: this topic is the one thing that actually IS wrong. And by the way, if there was not an established willingness of the bicycle dealer to haggle (or the one down the block) there would be no expectation by the buyer that he could get a better deal. No one goes into Best Buy and tries to negotiate. The price is the price. Why do you think that is not the case in bike shops.
Seller is not at a moral imperative to receive the highest price possible. If they were, we would be a nation of forced shortages, bidding wars, and haggling at every transaction. Seller derives value in attracting and retaining customers, in order to project a future level of sales. If every transaction was a one time, fire and forget transaction, both sides would be far more mercenary, as your post indicates.
LBS's are, in my opinion, in the relationship business, as much as the sales business. As simple as a bicycle is, many people are terrified of tuning and servicing their own bike. I find it humorous that many people view cars as easy to service anywhere, and are mercenary with the car dealership, but fear taking the same tactics with an LBS. So they want a good LBS relationship, want the hand holding, and don't want to alienate good service and get stuck with a squeaky, unreliable, asploding bike.
I buy a lot from my LBS, and I ask what they want for something. I have rarely paid MSRP, and if their offered discount doesn't bring the price in line with the value, I don't buy from them. I am pro LBS, but to say that I, or anyone, is looking to unhealthily inflate their NET margin, is false.
#130
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I have reread this post a couple of times, and it confuses me. Buyer is not at a moral imperative to get the lowest price possible. If they were, one would never tip, or give to charity, or pay for a brand item when a no name alternative exists. Buyer has an obligation to pay a price commensurate with the perceived worth of what they are receiving, and some perceived worth is totally altruistic, hence charity.
Seller is not at a moral imperative to receive the highest price possible. If they were, we would be a nation of forced shortages, bidding wars, and haggling at every transaction. Seller derives value in attracting and retaining customers, in order to project a future level of sales. If every transaction was a one time, fire and forget transaction, both sides would be far more mercenary, as your post indicates.
LBS's are, in my opinion, in the relationship business, as much as the sales business. As simple as a bicycle is, many people are terrified of tuning and servicing their own bike. I find it humorous that many people view cars as easy to service anywhere, and are mercenary with the car dealership, but fear taking the same tactics with an LBS. So they want a good LBS relationship, want the hand holding, and don't want to alienate good service and get stuck with a squeaky, unreliable, asploding bike.
I buy a lot from my LBS, and I ask what they want for something. I have rarely paid MSRP, and if their offered discount doesn't bring the price in line with the value, I don't buy from them. I am pro LBS, but to say that I, or anyone, is looking to unhealthily inflate their NET margin, is false.
Seller is not at a moral imperative to receive the highest price possible. If they were, we would be a nation of forced shortages, bidding wars, and haggling at every transaction. Seller derives value in attracting and retaining customers, in order to project a future level of sales. If every transaction was a one time, fire and forget transaction, both sides would be far more mercenary, as your post indicates.
LBS's are, in my opinion, in the relationship business, as much as the sales business. As simple as a bicycle is, many people are terrified of tuning and servicing their own bike. I find it humorous that many people view cars as easy to service anywhere, and are mercenary with the car dealership, but fear taking the same tactics with an LBS. So they want a good LBS relationship, want the hand holding, and don't want to alienate good service and get stuck with a squeaky, unreliable, asploding bike.
I buy a lot from my LBS, and I ask what they want for something. I have rarely paid MSRP, and if their offered discount doesn't bring the price in line with the value, I don't buy from them. I am pro LBS, but to say that I, or anyone, is looking to unhealthily inflate their NET margin, is false.
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You're nitpicking the discussion. First we're not discussing moral imperatives, but rather practical considerations rearding the purchase of a specic, already selected item. It has nothing to do with brand vs. no name goods. Tipping is an understood part of the informal sales contract for many goods and services. Price shopping and negotiating are not to be confused with cheating on an implied deal. Charity has nothing to do with buying and seling. It doesn't belong in this discussion
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Aaaaah BF, where anyone who takes a healthy interest in the price they will pay from the LBS is a cretinous villain, who is bound to upset the delicate balance of things, leaving us with no one to do mediocre repairs or sell us the wrong part at twice the price we would have paid online.
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Let's pose a hypothtical. You bring home your new bike and go for a group ride. The guy next to you has the same new bike and tells you he paid $300 less. How do you feel about that? If you wish you got the lower price, just be advised it didn't happen by accident. The other guy did something to get the better price. If you don't care, that's okay too.
Last edited by rpenmanparker; 10-02-13 at 09:38 AM.
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Margin is profit, and both differ from markup. 30% margin is 47% markup (roughly), and I doubt that bikes have that level.
And Long Tom, your price fixing comments would only be appropriate if multiple suppliers acted in concert to set minimum pricing across a category. An individual manufacturer can set minimum pricing however it wants to its distribution network, and that is in no way "price fixing".
And Long Tom, your price fixing comments would only be appropriate if multiple suppliers acted in concert to set minimum pricing across a category. An individual manufacturer can set minimum pricing however it wants to its distribution network, and that is in no way "price fixing".
What is not legal is for a manufacturer to dictate a sales price to dealers. At least that was true ~10 years ago. In the guitar world, Mesa Boogie was notable for violating this and I'm pretty sure they had to at least rework the language in their dealer contracts. However, it's semantics... or irrelevant... because it happens all the time, and perhaps since it largely serves to protect the dealer's profits by erecting a firewall of sorts, dealers aren't suing, and no government entities are prosecuting.
I could be wrong about this and am open to correction but it was a fairly active topic of conversation in the guitar world back then. The shop I worked in was a Mesa dealer and I heard it from all angles, from customers to the shop owner. Where it'd chap the shop owner's ass was how it prevented him from marking down stale inventory to move it along.
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What's interesting, if we accept that Specialized sets minimum discounts, is that the consumer is then the ONLY party in the equation not allowed to negotiate, and I'm talking taking it all the way back to the extraction of the raw minerals, the smelting and processing of the metals, the creation of the polymer resins, the factories making the carbon fiber fibers and epoxy resins, and so on, right up through the whole process. There's negotiated deals all through it. Yet it's pure eeeeevil for a consumer to negotiate, or somehow immoral....?
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What, I don't get to set up a straw man?!
You have to admit, it's been an undercurrent to the conversation... bordering on the overt at times...
You have to admit, it's been an undercurrent to the conversation... bordering on the overt at times...
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If you pay attention to the language used to discuss negotiation, it has definitely been overt. Phrases like, "grind..down." Or someone saying negotiating a bike price makes him "uncomfortable." Those are overt references to the disrepute in which negotiation is held by a large segment of the public. And it is a total misunderstanding of the true nature of the beast. Negotiation is the way that fair pricing and terms are settled. Any other way of doing business can only avoid being disadvantageous to one or the other participants in the deal fortuitously. That is no way to make or spend money.
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If you pay attention to the language used to discuss negotiation, it has definitely been overt. Phrases like, "grind..down." Or someone saying negotiating a bike price makes him "uncomfortable." Those are overt references to the disrepute in which negotiation is held by a large segment of the public. And it is a total misunderstanding of the true nature of the beast. Negotiation is the way that fair pricing and terms are settled. Any other way of doing business can only avoid being disadvantageous to one or the other participants in the deal fortuitously. That is no way to make or spend money.
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Not just LBS but grocer, gas vendor, utilities, doctor, and hardware store. I am understanding that I am wrong to not negotiate every transaction at every commercial exchange. They are going to hate me at toll booths on the interstate, because those devils have a huge margin, and I'm not pulling through until I get most of it back.
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Not just LBS but grocer, gas vendor, utilities, doctor, and hardware store. I am understanding that I am wrong to not negotiate every transaction at every commercial exchange. They are going to hate me at toll booths on the interstate, because those devils have a huge margin, and I'm not pulling through until I get most of it back.
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That makes no sense... Your LBS is running a business, and you can be sure they don't do charity. They are giving discounts to help themselves get more customers and move old stock, and not for any altruistic reasons. I rarely pay full retail price on any cycling gear-always, someone has a discount running, and I'm including online shops like CompetitveCyclist, JensonUSA, etc.
But, like I said. Tomorrow, I will go in a say "keep your damn discount", all I want is your love. Can you say that to your online retailers and get a hug in the bargain?
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You as a consumer have the right and responsibility to make those decisions for yourself, just like OP does. No one is advocating asinine behavior. Why does this discussion always have to be reduced to absurdity.
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Not just LBS but grocer, gas vendor, utilities, doctor, and hardware store. I am understanding that I am wrong to not negotiate every transaction at every commercial exchange. They are going to hate me at toll booths on the interstate, because those devils have a huge margin, and I'm not pulling through until I get most of it back.
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Not sure what you mean by the "price on the box". Do you mean the price marked by the LBS owner or an MSRP? If the former, I can't be sure the price is as good as I can do, but such goods aren't commonly negotiated. Small potatoes, but the principal is there. If MSRP, it is the LBS owner who is likely disadvantaged.
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OP, everyone here, from page 1 on, has said to negotiate with one or more dealers. Remember my first post was to use the phone. But you kept asking for the straight dope, the inside skinny, the down low, which some people gave you. Seems like this was a successful thread, as I understood your original post. So how do we get to negotiating is evil?
Honestly, and I mean no offense by this, the way I understood your original post, you want to buy an exact and specific luxury item, that is unlikely in anyone's stock at this moment, and you want a significant discount on it. You can't wait for the normal sale events (annual sales or product clearances) by which most folks pick up ridiculous deals, but want the price that they get now.
Honestly, and I mean no offense by this, the way I understood your original post, you want to buy an exact and specific luxury item, that is unlikely in anyone's stock at this moment, and you want a significant discount on it. You can't wait for the normal sale events (annual sales or product clearances) by which most folks pick up ridiculous deals, but want the price that they get now.