Retail margin / Room for negotiation
01-13-14, 01:21 PM
#1
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Retail margin / Room for negotiation
I'm looking for a second bike and am currently shopping (more like trying to schedule test rides when there is no ice on the road).
I'm curious about what the retail margin on bikes is and how much room there is for negotiation on current year models.
I'm keen on 2014 models as I'd like the 11sp.
Most of the local stores don't even seem to have 2014 bikes in the shop yet - I imagine that will impact ability to negotiate.
Thanks,
V
I'm curious about what the retail margin on bikes is and how much room there is for negotiation on current year models.
I'm keen on 2014 models as I'd like the 11sp.
Most of the local stores don't even seem to have 2014 bikes in the shop yet - I imagine that will impact ability to negotiate.
Thanks,
V
01-13-14, 01:36 PM
#2
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Negotiation isn't unheard of but don't be surprised if the IBD shuts you down cold. The margins are generally low.
Source
Originally Posted by NBDA
AVERAGE EXPENSES FOR SPECIALTY BICYCLE RETAILERS
(From NBDA Cost of Doing Business Survey,
expressed as a percentage of gross annual sales)
Payroll Expenses — 20.5%
Occupancy Expenses — 7.7%
Advertising/Promotion — 3.%
Auto and Delivery — 0.5%
Depreciation — 0.9%
Insurance — 0.8%
Licenses/Other Taxes — 0.5%
Professional Services — 0.5%
Office Supplies/Postage — 1.2%
Telephone — 0.6%
Travel/Entertainment — 0.4%
Other operating expenses— 1.3%
TOTAL OPERATING EXPENSES — 37.7%
NET INCOME BEFORE TAX — 4.2%
GROSS MARGIN ON BICYCLE SALES — 36%
GROSS MARGIN ON CLOTHING SALES — 43%
GROSS MARGIN OTHER EQUPT. — 48.1%
We can recommend some additional resources to you:
-- The NBDA Cost of Doing Business Survey, from the NBDA for $150 ($75 for NBDA members). Detailed financial study of bicycle retailing, complete with average costs, profit margins and more.
(From NBDA Cost of Doing Business Survey,
expressed as a percentage of gross annual sales)
Payroll Expenses — 20.5%
Occupancy Expenses — 7.7%
Advertising/Promotion — 3.%
Auto and Delivery — 0.5%
Depreciation — 0.9%
Insurance — 0.8%
Licenses/Other Taxes — 0.5%
Professional Services — 0.5%
Office Supplies/Postage — 1.2%
Telephone — 0.6%
Travel/Entertainment — 0.4%
Other operating expenses— 1.3%
TOTAL OPERATING EXPENSES — 37.7%
NET INCOME BEFORE TAX — 4.2%
GROSS MARGIN ON BICYCLE SALES — 36%
GROSS MARGIN ON CLOTHING SALES — 43%
GROSS MARGIN OTHER EQUPT. — 48.1%
We can recommend some additional resources to you:
-- The NBDA Cost of Doing Business Survey, from the NBDA for $150 ($75 for NBDA members). Detailed financial study of bicycle retailing, complete with average costs, profit margins and more.
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01-13-14, 01:42 PM
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I eat carbide.
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While this plays on averages across the entire industry....essentially.
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01-13-14, 01:44 PM
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I see previous or even older year models advertised for anywhere between 20 - 35% below MSRP.
Clearly, for a current year bike, the appetite to reduce sale price is low - I'm just trying to get some idea of what is worth negotiating for without wasting anyone's time
Clearly, for a current year bike, the appetite to reduce sale price is low - I'm just trying to get some idea of what is worth negotiating for without wasting anyone's time
01-13-14, 01:55 PM
#7
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Take Robs advice as he is a current business owner, and I'm not.
I will point out what I see in my area. The Specialized dealer sells bikes for full MSRP unless it is NOS.
The C'dale dealer always, even with new bikes sells below MSRP, but they do very well selling merchandise and bike Maintenance.
Trek dealer also doesn't discount new bikes much but again do well enough to cover slow bike sales.
I will point out what I see in my area. The Specialized dealer sells bikes for full MSRP unless it is NOS.
The C'dale dealer always, even with new bikes sells below MSRP, but they do very well selling merchandise and bike Maintenance.
Trek dealer also doesn't discount new bikes much but again do well enough to cover slow bike sales.
01-13-14, 02:21 PM
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OP I make it a habit not to negotiate with the LBS I'd prefer to use that good will for things like can you replace these spoke like right now.
01-13-14, 03:04 PM
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I did that when I bought my current bike.. Paid full retail, bought new pedals, shoes, etc ...
A couple weeks later, someone I know bought the same bike from same store for 20% less...... That is what I'm trying to avoid.
A couple weeks later, someone I know bought the same bike from same store for 20% less...... That is what I'm trying to avoid.
01-13-14, 03:07 PM
#10
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The average figure quoted above likely includes losses and discounts for previous year's inventory. Shop and manufacturer guidelines can also effect pricing and negotiating. There's more room to negotiate if you need accessories like helmet, shoes, pedals, etc.
01-13-14, 03:17 PM
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A good shop that knows you are a good customer will give you some sort of deal as long as you aren't a prick.
01-13-14, 03:30 PM
#12
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The old adage goes "how to you make a million bucks in the bike biz go in with two million"
01-13-14, 03:50 PM
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I'm doing it wrong.
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I get 10% off listed price at my LBS. I generally buy a lot of stuff from them, just bought some thousand dollar wheels from them, the family has purchased about ten bikes from them, buncha clothes, shoes, pedals, other misc. stuff, and I do a lot of work for their charity rides they put on too. I'm pretty sure I am in the friend/brother-in-law level of discount right now and I don't negotiate beyond that.
01-13-14, 04:27 PM
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I've never understood why I'm supposed to feel sorry for a bike shop. There are many low margin industries out there that I guarantee most people here couldn't care less about.
01-13-14, 04:37 PM
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I think asking for discount on a new bike from you LBS is fine as long as you're a regular customer and support them with other purchases. Someone who always buys off the internet and only visits their LBS to grind pricing on a new bike? There's lots of names for that but I think "d&%k" fits nicely. I don't we need more industries to go the way of car dealerships.
01-13-14, 04:42 PM
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This thread comes up often, and the clear answer from the culmination of those threads is that bikes are marked up somewhere between 3% and 500%. Typically this will be followed by discussions of whether markup and margin are the same thing.
Hope this helps.
Hope this helps.