Go Back  Bike Forums > Bike Forums > Road Cycling
Reload this Page >

Groupset tiers a scam?

Notices
Road Cycling “It is by riding a bicycle that you learn the contours of a country best, since you have to sweat up the hills and coast down them. Thus you remember them as they actually are, while in a motor car only a high hill impresses you, and you have no such accurate remembrance of country you have driven through as you gain by riding a bicycle.” -- Ernest Hemingway

Groupset tiers a scam?

Old 09-11-19, 11:01 AM
  #26  
noodle soup
Senior Member
 
noodle soup's Avatar
 
Join Date: Nov 2015
Posts: 8,922
Mentioned: 20 Post(s)
Tagged: 0 Thread(s)
Quoted: 4717 Post(s)
Liked 1,882 Times in 998 Posts
Originally Posted by noodle soup
At the retail level, the profit margin is much smaller on high-end bikes and components.
As an example, a few weeks ago a kid bought a $300 GT mountain bike with disc brakes, His front wheel got taco-ed in a wreck, and he needed to replace the wheel.

https://activewheel.myshopify.com/pr...SABEgJMHfD_BwE

Retail on the wheel was $108 from Dorel. Dealer cost was $23

We replaced the wheel for no charge.
noodle soup is offline  
Likes For noodle soup:
Old 09-11-19, 11:05 AM
  #27  
Chi_Z
Senior Member
 
Chi_Z's Avatar
 
Join Date: Dec 2013
Posts: 507

Bikes: Niner RLT 9 RDO

Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 263 Post(s)
Liked 69 Times in 50 Posts
Originally Posted by Dean V
I guess calling in a "marketing strategy" would be a more diplomatic thing to call it.
But I just can't see the difference in value or cost of production between say a 105 and Dura Ace groupset.
Sure when you start using Ti (cassettes) or carbon it will cost more to produce, but overall with modern machinery and production methods I can't really see much of a difference.
Dura Ace is clearly not designed or intended for peasants
Chi_Z is offline  
Old 09-11-19, 11:13 AM
  #28  
TimothyH
- Soli Deo Gloria -
 
Join Date: Aug 2015
Location: Northwest Georgia
Posts: 14,782

Bikes: 2018 Rodriguez Custom Fixed Gear, 2017 Niner RLT 9 RDO, 2015 Bianchi Pista, 2002 Fuji Robaix

Mentioned: 235 Post(s)
Tagged: 0 Thread(s)
Quoted: 6844 Post(s)
Liked 736 Times in 469 Posts
Originally Posted by Chi_Z
Dura Ace is clearly not designed or intended for peasants
Right.

No ordinary bottles with Dura Ace. Bidons only.

And Rapha, although Castelli is permitted on weekdays after Labor Day.

It's about self respect.


-Tim-
TimothyH is offline  
Likes For TimothyH:
Old 09-11-19, 11:17 AM
  #29  
seedsbelize 
smelling the roses
 
seedsbelize's Avatar
 
Join Date: Nov 2010
Location: Tixkokob, Yucatán, México
Posts: 15,428

Bikes: 79 Trek 930, 80 Trek 414, 84 Schwinn Letour Luxe (coupled), 92 Schwinn Paramount PDG 5

Mentioned: 104 Post(s)
Tagged: 1 Thread(s)
Quoted: 7081 Post(s)
Liked 901 Times in 612 Posts
Originally Posted by RShantz
Porsche v. Toyota
I need nothing "better" than Toyota and 105.
seedsbelize is offline  
Old 09-11-19, 02:44 PM
  #30  
shelbyfv
Expired Member
 
shelbyfv's Avatar
 
Join Date: Jun 2007
Location: TN
Posts: 11,461
Mentioned: 37 Post(s)
Tagged: 0 Thread(s)
Quoted: 3638 Post(s)
Liked 5,316 Times in 2,701 Posts
Originally Posted by Dean V
I just can't see the difference in value or cost of production between say a 105 and Dura Ace groupset.
This is a good thing! If you can't tell the difference you can happily stick with the lower level components and save lots of $ over your cycling years.
shelbyfv is offline  
Old 09-11-19, 03:31 PM
  #31  
Dean V
Senior Member
Thread Starter
 
Join Date: Oct 2009
Posts: 2,853
Mentioned: 3 Post(s)
Tagged: 0 Thread(s)
Quoted: 1067 Post(s)
Likes: 0
Liked 259 Times in 153 Posts
Originally Posted by shelbyfv
This is a good thing! If you can't tell the difference you can happily stick with the lower level components and save lots of $ over your cycling years.
I am not saying there is no difference, but that I am sure that a DA groupset does not cost Shimano 3 or 4x the amount to produce than 105.
Dean V is offline  
Old 09-11-19, 03:51 PM
  #32  
Kimmo 
bike whisperer
 
Kimmo's Avatar
 
Join Date: Dec 2009
Location: Melbourne, Oz
Posts: 9,533

Bikes: https://weightweenies.starbike.com/forum/viewtopic.php?f=10&t=152015&p=1404231

Mentioned: 15 Post(s)
Tagged: 0 Thread(s)
Quoted: 1520 Post(s)
Liked 716 Times in 508 Posts
Originally Posted by noodle soup
At the retail level, the profit margin is much smaller on high-end bikes and components.
Yeah, but retail isn't all that relevant here - I don't suppose anyone has inside knowledge on the profit margins at the wholesale level...
Kimmo is offline  
Old 09-11-19, 03:55 PM
  #33  
redlude97
Senior Member
 
Join Date: Sep 2011
Posts: 4,764
Mentioned: 28 Post(s)
Tagged: 0 Thread(s)
Quoted: 1975 Post(s)
Liked 232 Times in 173 Posts
Originally Posted by Dean V
I am not saying there is no difference, but that I am sure that a DA groupset does not cost Shimano 3 or 4x the amount to produce than 105.
You lack an understanding of economics then. The goal is not to sell an equal number each groupset.
redlude97 is offline  
Old 09-11-19, 04:04 PM
  #34  
mstateglfr 
Sunshine
 
mstateglfr's Avatar
 
Join Date: Aug 2014
Location: Des Moines, IA
Posts: 16,538

Bikes: '18 class built steel roadbike, '19 Fairlight Secan, '88 Schwinn Premis , Black Mountain Cycles Monstercross V4, '89 Novara Trionfo

Mentioned: 123 Post(s)
Tagged: 0 Thread(s)
Quoted: 10902 Post(s)
Liked 7,393 Times in 4,148 Posts
Originally Posted by noodle soup
At the retail level, the profit margin is much smaller on high-end bikes and components.
Between the two of us, you are in the know more, so not challenging- just clarifying here...

So a $12000 bike has a smaller margin than a $450 bike?

An entry level Trek fx1 has a higher margin than a Trek SLR(pick one)?

If the fx1 costs $300 and sells for $450, the margin is 33%.
So an SLR must cost over $8k to the dealer.


But even then, it seems a bit like a useless number because even if the margin is higher on cheaper bikes, the operating costs for each are the same(rent, salary, utilities, etc). Add all the carrying costs in for both and it's a different story, right?

Just surprising.
mstateglfr is offline  
Old 09-11-19, 04:07 PM
  #35  
Sy Reene
Advocatus Diaboli
 
Sy Reene's Avatar
 
Join Date: Feb 2015
Location: Wherever I am
Posts: 8,613

Bikes: Merlin Cyrene, Nashbar steel CX

Mentioned: 14 Post(s)
Tagged: 1 Thread(s)
Quoted: 4717 Post(s)
Liked 1,526 Times in 997 Posts
Originally Posted by noodle soup
At the retail level, the profit margin is much smaller on high-end bikes and components.
Just curious, how does the gross profit compare to the gross margin for these examples? They take up the same amount of shelf space (in theory).
Sy Reene is offline  
Old 09-11-19, 04:38 PM
  #36  
noodle soup
Senior Member
 
noodle soup's Avatar
 
Join Date: Nov 2015
Posts: 8,922
Mentioned: 20 Post(s)
Tagged: 0 Thread(s)
Quoted: 4717 Post(s)
Liked 1,882 Times in 998 Posts
Originally Posted by Kimmo
Yeah, but retail isn't all that relevant here - I don't suppose anyone has inside knowledge on the profit margins at the wholesale level...
That’s correct, and I suspect that no one here knows the profit margins of the big 3 component manufacturers.
noodle soup is offline  
Old 09-11-19, 04:40 PM
  #37  
seypat
Senior Member
 
Join Date: Oct 2010
Posts: 8,758
Mentioned: 69 Post(s)
Tagged: 0 Thread(s)
Quoted: 3192 Post(s)
Liked 2,460 Times in 1,489 Posts
I don't think group set tiers are a scam. I know everytime I look at the cost of a new high end group set, it brings real tears to my eyes. I also have to get a tissue and blow my nose. Nothing scamy about that.
seypat is offline  
Old 09-11-19, 06:03 PM
  #38  
RShantz
Senior Member
 
Join Date: Mar 2015
Posts: 609
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 278 Post(s)
Liked 29 Times in 19 Posts
Originally Posted by seedsbelize
I need nothing "better" than Toyota and 105.
Hopefully I didn't insult you or anyone - not my intention. I just meant his question is similar to any comparison between mid-level and top tier items. Some will see the benefit of the top-tier stuff while others will not.
RShantz is offline  
Old 09-11-19, 06:23 PM
  #39  
noodle soup
Senior Member
 
noodle soup's Avatar
 
Join Date: Nov 2015
Posts: 8,922
Mentioned: 20 Post(s)
Tagged: 0 Thread(s)
Quoted: 4717 Post(s)
Liked 1,882 Times in 998 Posts
Originally Posted by RShantz
Hopefully I didn't insult you or anyone - not my intention. I just meant his question is similar to any comparison between mid-level and top tier items. Some will see the benefit of the top-tier stuff while others will not.
I don't think you offended anyone.

I can't afford to drive a Ferrari, but I can afford Dura Ace Di2.

If I could afford a Ferrari, I'd probably drive a Toyota, and have an insane collection of bikes.
noodle soup is offline  
Likes For noodle soup:
Old 09-14-19, 05:38 AM
  #40  
rubiksoval
Senior Member
 
Join Date: Nov 2015
Location: Music City, USA
Posts: 4,444

Bikes: bikes

Mentioned: 52 Post(s)
Tagged: 0 Thread(s)
Quoted: 2622 Post(s)
Liked 1,429 Times in 711 Posts
Originally Posted by mstateglfr
I own and have ridden 105 from the early 90s, early 00s, late 00s, and mid-late 10s.
I also own and have ridden Ultegra from the late 90s when it was 600tricolor, early 90s when it was 600Ultegra, late 90s when it was 9sp, and current late 10s.

I cant figure how either is more or less durable than the other. Both seem to work perfectly fine in all iterations thru the years. The 105 certainly seems to have the longevity of Ultegra, and even if it isnt exactly the same, it lasts as long as many riders will ever want(the life of their bike).

The internet is full of examples of people using 105 for decades without issue.
.
Well, no, it's not. Parts don't last decades unless those decades are spent riding 100 miles a year.

I haven't had 105 parts make it past the 15,000 mile mark, myself, whereas I've had multiple groups of Ultegra (shifters and derailleurs) go well into the upper 20s.

So aside from your hyperbole, I guess your post regresses to the point of your anecdote differing from mine. Neat.
rubiksoval is offline  
Old 09-14-19, 11:20 AM
  #41  
mstateglfr 
Sunshine
 
mstateglfr's Avatar
 
Join Date: Aug 2014
Location: Des Moines, IA
Posts: 16,538

Bikes: '18 class built steel roadbike, '19 Fairlight Secan, '88 Schwinn Premis , Black Mountain Cycles Monstercross V4, '89 Novara Trionfo

Mentioned: 123 Post(s)
Tagged: 0 Thread(s)
Quoted: 10902 Post(s)
Liked 7,393 Times in 4,148 Posts
Originally Posted by rubiksoval
So aside from your hyperbole, I guess your post regresses to the point of your anecdote differing from mine. Neat.
Unless there is some longterm study, all of this is one person's observations differ from another person's observations.
Neat.
mstateglfr is offline  
Old 09-14-19, 12:11 PM
  #42  
Athens80
Senior Member
 
Join Date: Aug 2007
Posts: 1,207
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 138 Post(s)
Liked 16 Times in 13 Posts
Originally Posted by rubiksoval
Well, no, it's not. Parts don't last decades unless those decades are spent riding 100 miles a year.

I haven't had 105 parts make it past the 15,000 mile mark, myself, whereas I've had multiple groups of Ultegra (shifters and derailleurs) go well into the upper 20s.

So aside from your hyperbole, I guess your post regresses to the point of your anecdote differing from mine. Neat.
To add an anecdote, my 105 has 21,509 miles since I started recording, with a few thousand miles earlier. I've replaced chains, cassettes, cables and probably prematurely, one chain ring. At a rate of more than 100 miles a year, though less than many BFers. I don't see any indications that this same 105 won't keep working for another 20,000+ miles.
Athens80 is offline  
Old 09-14-19, 12:18 PM
  #43  
Sy Reene
Advocatus Diaboli
 
Sy Reene's Avatar
 
Join Date: Feb 2015
Location: Wherever I am
Posts: 8,613

Bikes: Merlin Cyrene, Nashbar steel CX

Mentioned: 14 Post(s)
Tagged: 1 Thread(s)
Quoted: 4717 Post(s)
Liked 1,526 Times in 997 Posts
Originally Posted by Athens80
To add an anecdote, my 105 has 21,509 miles since I started recording, with a few thousand miles earlier. I've replaced chains, cassettes, cables and probably prematurely, one chain ring. At a rate of more than 100 miles a year, though less than many BFers. I don't see any indications that this same 105 won't keep working for another 20,000+ miles.
Confused here.. you're saying you've had to replace half of your groupset, but you don't any indications it won't keep working for another 20k miles? IOW parts do wear out
Sy Reene is offline  
Old 09-14-19, 12:42 PM
  #44  
Athens80
Senior Member
 
Join Date: Aug 2007
Posts: 1,207
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 138 Post(s)
Liked 16 Times in 13 Posts
Originally Posted by Sy Reene
Confused here.. you're saying you've had to replace half of your groupset, but you don't any indications it won't keep working for another 20k miles? IOW parts do wear out
You're aware that chains and cassettes are consumables, like cables and bar tape. They have to be replaced on every bike with every groupset. (Some of the chains were DuraAce, fwiw. I just bought what was cheapest at the time.) They are also not half of a groupset anyway, certainly not in terms of cost.

The 105 shifters and derailleurs and crankset are all fine. I did switch the Tektro brakes for Ultegra, and they're fine too. None show any problems from wear.
Athens80 is offline  
Old 09-14-19, 01:21 PM
  #45  
Psimet2001 
I eat carbide.
 
Psimet2001's Avatar
 
Join Date: Jan 2006
Location: Elgin, IL
Posts: 21,627

Bikes: Lots. Van Dessel and Squid Dealer

Mentioned: 25 Post(s)
Tagged: 0 Thread(s)
Quoted: 1325 Post(s)
Liked 1,306 Times in 560 Posts
Originally Posted by Sy Reene
Just curious, how does the gross profit compare to the gross margin for these examples? They take up the same amount of shelf space (in theory).
That's always a fun armchair exercise. In reality stocking any high dollar component is a fools errand.

A friend and customer of mine has been looking at new high end bikes. S-Works or Moots is his current dilemma. In the shop I just do service so I could care less which is why he is always asking me for an opinion. "You know I have told the guy there that I am buying one or the other and honestly it seems like he couldn't care less. He seems to hate spending time talking to me and would much rather go talk to the family that just came in looking at $800 bikes."

"That's because those customers will convert to a sale with much less work than hand holding your handwringing over your bike and the margins on those $800 bikes result in an actual money to the bottom line. "

High dollar parts in this industry are little more than an extremely risky money moving activity with little to no net gain.
__________________
PSIMET Wheels, PSIMET Racing, PSIMET Neutral Race Support, and 11 Jackson Coffee
Podcast - YouTube Channel
Video about PSIMET Wheels

Psimet2001 is offline  
Old 09-14-19, 01:27 PM
  #46  
Psimet2001 
I eat carbide.
 
Psimet2001's Avatar
 
Join Date: Jan 2006
Location: Elgin, IL
Posts: 21,627

Bikes: Lots. Van Dessel and Squid Dealer

Mentioned: 25 Post(s)
Tagged: 0 Thread(s)
Quoted: 1325 Post(s)
Liked 1,306 Times in 560 Posts
Whats more the high dollar parts are only there to be attractive to a certain customer and that customer is really just going to buy them online.

The real customers that do want to buy those kind of things and they don't want to ever do any work themselves can be easily serviced within a day as almost any part is 1 day away via a wealth of distributor options.
__________________
PSIMET Wheels, PSIMET Racing, PSIMET Neutral Race Support, and 11 Jackson Coffee
Podcast - YouTube Channel
Video about PSIMET Wheels

Psimet2001 is offline  
Old 09-14-19, 03:29 PM
  #47  
Sy Reene
Advocatus Diaboli
 
Sy Reene's Avatar
 
Join Date: Feb 2015
Location: Wherever I am
Posts: 8,613

Bikes: Merlin Cyrene, Nashbar steel CX

Mentioned: 14 Post(s)
Tagged: 1 Thread(s)
Quoted: 4717 Post(s)
Liked 1,526 Times in 997 Posts
Originally Posted by Psimet2001
Whats more the high dollar parts are only there to be attractive to a certain customer and that customer is really just going to buy them online.

The real customers that do want to buy those kind of things and they don't want to ever do any work themselves can be easily serviced within a day as almost any part is 1 day away via a wealth of distributor options.
Is this still the case with SRAM and now Shimano actually instituting more effective global price controls? I would also there really aren't that many folks interested in actually putting all the parts on the bike, so if you want to upgrade or build a bike, there might be somewhat more recent uptake in volume of people doing this more fully thru the LBS that sells the frameset brand they want?
Sy Reene is offline  
Old 09-16-19, 10:19 AM
  #48  
Psimet2001 
I eat carbide.
 
Psimet2001's Avatar
 
Join Date: Jan 2006
Location: Elgin, IL
Posts: 21,627

Bikes: Lots. Van Dessel and Squid Dealer

Mentioned: 25 Post(s)
Tagged: 0 Thread(s)
Quoted: 1325 Post(s)
Liked 1,306 Times in 560 Posts
Originally Posted by Sy Reene
Is this still the case with SRAM and now Shimano actually instituting more effective global price controls? I would also there really aren't that many folks interested in actually putting all the parts on the bike, so if you want to upgrade or build a bike, there might be somewhat more recent uptake in volume of people doing this more fully thru the LBS that sells the frameset brand they want?
Not sure exactly what you're asking or saying. In our shop more people are buying high end components through the shop instead of online BUT due to the immense number of variants now almost no one is stocking anything in the shop. Everything is ordered for the customer and delivered next day.

There's just no reason to ever put anything high dollar on the shelf. If someone wants it I order and deliver next day. If they don't like that because they can do it themselves then so be it. I understand and it doesn't hurt my feelings. I didn't get into this business to try and get every component sale in this area. Even with better pricing controls the margins are still not really worth it. Buy it yourself and bring it to me and I will make money on the install. That's where my expertise is.

Most shops aren't trying to "compete" in that regard anymore. I had another shop owner in here the other day. He was going on about a new series done by Vosper over at BRAIN. "Rob, I decided right then and there that enough was enough. I stopped caring about who was selling what for what and went around and re-priced everything in the shop to be what I needed it to be in order to do well as a business. It's the best thing I ever did. The real customers haven't even noticed a difference and some have told me they are happy to see me selling things at prices I need in order to survive. Fact is people are going to buy from you because they want you around or they aren't. You can't fight it either way."

Another great example: tires. I sell the cheapest level of tire and then top end tires. On cheap tires I sell piles. someone comes in with a 50 yr old Schwinn and they need new tires. Each tire is roughly a $20 bill. No one even remote bats an eye. That's a basic unit of commerce - $20 bill. Margins on that are roughly 90%. Meanwhile someone comes in for the latest and greatest "Fz12000" tire and I'm going to net out a few bucks or about 10%-15% tops. What's more - those customers buying the nice tire are the ones that are going to hang in my shop for 2 hours talking to me about gear and riding. Taking all of the information they can from my brain and keeping me from really doing anything else. While i like those people and they are my people it doesn't make for a good business model. It starts to begin to describe why non of us care much about nailing that top end component sale. It's not about that.

So back to the thread: is there much of a difference in tiers? Yes. Saying there isn't just kind of ignores the reality. The real question is whether you notice enough of a difference to "justify" the price difference to yourself. To state there is no difference is incorrect though.

There is nothing better than riding really nice DuraAce that is tuned well. Is Ultegra great? Absolutely. Can 105 get the job done? Of course. With SRAM it gets muddier. Red - meh. Force? Sure. Rival? in most cases. Apex.....like Tiagra and Ultegra had a baby. There's just not much of a functional difference in the SRAM lineup at all. Big weight and material differences though. Sometimes huge differences.
__________________
PSIMET Wheels, PSIMET Racing, PSIMET Neutral Race Support, and 11 Jackson Coffee
Podcast - YouTube Channel
Video about PSIMET Wheels

Psimet2001 is offline  
Likes For Psimet2001:
Old 09-16-19, 11:26 AM
  #49  
djs42
Member
 
Join Date: Aug 2019
Posts: 26
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 17 Post(s)
Likes: 0
Liked 10 Times in 7 Posts
Originally Posted by RShantz
Porsche v. Toyota
Exactly. The Toyota is cheaper, more reliable, and has higher resale value.

Last edited by djs42; 09-16-19 at 11:36 AM.
djs42 is offline  
Old 09-16-19, 11:41 AM
  #50  
wle
Senior Member
 
wle's Avatar
 
Join Date: Jan 2004
Location: atlanta ga
Posts: 245

Bikes: road: 1999 GT road:40Kmi+ // 2001 fuji finest AL:9Kmi+//1991 schwinn paramount ODG:0.1Kmi+

Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 19 Post(s)
Likes: 0
Liked 10 Times in 7 Posts
Originally Posted by noodle soup
That's not how it works.
I also doubt the 'trickle down'. Ultegra has never looked like D-A, no matter how long you wait.
wle is offline  

Thread Tools
Search this Thread

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.