UnderDawgAl

When I decided to get a road bike in 2013, I figured I'd get a decent new bike at my arbitrary threshold of $1K. Boy, was I in for a surprise. I paid $2200 for a NOS 2012 bike, and was glad I did. I remember one bike shop had a "sold" tag on a bike marked at $13.5K.

Road biking with a modern new bike isn't for the working class.

I'd like to ride a vintage road bike in good shape soon just to compare with mine.

If I had taken my time and explored more options, I probably would have just bought used -- and perhaps vintage used.

I-Like-To-Bike

No, having bought 5 and sold 4 houses in the last42 years I would not equate their purchase with the purchase of bicycles and did not do so. I'm just waiting for you to explain away your sanctimony about the need for others to defer gratification for their purchases, but not yourself.

Koyote

This has been a long thread, so perhaps I am mistaken - and if so, someone will throw my own words back in my face! But I don't think that I ever suggested that borrowing money to buy a house is a bad idea. In fact, I don't think I've even suggested that borrowing is bad even for other objects. "Bad" is a subjective judgment, and we all get to make our own financial decisions. I have suggested that, if a person can only get a bike by going into debt, the person probably can't afford the bike.

And if you ask me why it's different for a house than for a bike, well, then I won't be able to take you seriously.

livedarklions

What you're suggesting is a complete non sequitur. Obviously, one can put one's self in too much debt than one can service, but in that regard, a bicycle debt is NOT different from a mortgage. People can and do buy more house than they can afford, hence foreclosures.
You are basically making an argument that one shouldn't go into debt to pay for consumer goods. That's a moral judgment, not an economic principle. We are not immortal, delayed gratification is actually a cost as it is also reduced gratification since our time on this planet is finite. Buying on credit allows a person to enjoy the use of the item while it's being paid for and the cost for this benefit may or may not be more than one can afford. We balance such costs and benefits all the time.

Maelochs

Yup, @Koyote, your bit about how one shouldn't buy a bike on credit was a value judgment, not an economic one. You know it, we all know it, quit fighting it. It is what it is.

Facts? Whatever. But ideas .... yeah, Not buying on credit is potentially a valid idea for certain people in certain situations .... but actually nowadays buying stuff on credit and paying it off before interest accrues makes a lot of sense. You can often get bonuses for your purchase (as one poster mentioned) and you also strengthen your credit score, which can help getting better credit rates on future purchases.

Also, one gets the benefits and value of owning the whatever right now, instead of waiting for a few years

The economy is changing, and economics is changing. All the old ideas about what one can and should save, afford, buy .... I don't know how old some of you are, but can any of you remember, back around the time of the Pyramids .... Banks gave Compound Interest on Savings Accounts? It used to be that smart people put money in the bank and earned six or so percent, compounded quarterly or whatever, and it was a serious chunk of change---a legitimate Investment.

Nowadays you can't even buy CDs that pay worthwhile interest. Index funds seem to be the safest way to go---easy to get money in or out, pretty much guaranteed returns. But back when I was learning all that "wisdom" from people who thought they understood economics, "Put your paycheck in a savings account" was pretty much the standard wisdom.

Nowadays, I'd say, get no-fee credit cards with good cash-back rewards, buy stuff on credit, pay it off before interest accrues, and reap the rewards when you need a car loan or a mortgage or whatever.

As for "delayed gratification," that is something you tell children and childish people. Anyone smart enough to be worth talking to can already make a budget and can calculate what s/he can afford over what time frame. The fact that so many adults seem incapable of critical analysis, and actually believe what people tell them in commercials, has nothing to do with delayed gratification---it is some sort of self-inflicted (word starting with "R" meaning "delayed mental development") or chronic immaturity or some mild psychosis, whereby people think what they see on TV is more real than life. Nothing any of us can do for those people. They will end up bankrupt and we can buy their goods at auction and scoop up their foreclosed houses.

Koyote

You are correct: it is a value judgment; I have never argued that it is some sort of universal principle. Hence all of this arguing is pointless, as value judgments are subjective – you can’t prove that one is superior to another.

UnderDawgAl

So, why are road bikes so expensive?

burnthesheep

If I had to give a legit answer...........for the name brands you've got personnel in design, marketing, management, and HR in 1st world countries making 1st world wages for those jobs.

You're paying some engineers near 6 figures or at 6 figures, paying for a headquarters building, all the overhead..............yeah..........it's going to cost!

The cheap Chinese stuff have almost zero overhead like that. They copy something and then it's just the couple folks you need to manage production and distribution and a pitiful level of customer support.

genejockey 

Are they?

UnderDawgAl

Well, it depends on the definition of "expensive", and whether you pay for it all up front or finance it on cred.....AHHHHHHHHHH!!!!! NOT DOWN THAT HOLE AGAIN!!!!!!

Many levels of bikes--if not all non-department store bikes--are in the realm of luxury goods. The world of bikes available to the US really just speaks to how wealthy we are as Americans and Europeans compared to most of the world. It's a certainty that the average Bolivian or Cambodian or Liberian will never be able to afford what we call an entry level bike, brand new.

wphamilton

Best answer in my opinion. While some manufacturers may have r&d costs, they also benefit from an economy of scale and I do not agree that cost differences are enough to drive the relatively higher prices.

Road bike prices are higher because enough people will pay them.

BoraxKid

That was entirely my point in that post you quoted; I'm glad we can agree on this as it is exactly why financial advice from 50 years ago is no longer relevant today--because markets have changed. As you said, interest rates are much lower today than they were in the past (and that's true of loans and investments, btw). Given that a lot of people don't even have $2000 in cash saved, advising people to just hand over their cash for big-ticket items really doesn't make much sense at all, since doing so would leave them more exposed to calamity.

It is much safer to make sure you can afford the payments, take the loan, and then try to pay if off ahead of schedule. Then if calamity hits, you might lose the item you financed to repossession, but you'll at least have your cash reserves intact to help weather the storm. It's really amazing that some people don't see the wisdom in that approach, simply because they are scared of paying interest.

Koyote

If repossession is your fallback plan, then your main plan may be flawed.

Oh, wait, sorry -- I'm too old to understand this new-fangled modern finance.

BoraxKid

oof.

skidder

Same for me in 2010. I wanted to get a new touring bicycle and was surprised I couldn't find one (other than the Fuji Touring) for under $1K. I ended up buying a used mid-1990s rigid MTB that had rack mounts on the front fork (!!!). Eventually I built my own bicycle, bought a frame and used mostly parts I had hanging around, maybe spent $600 on it.

skidder

Demand exceeds supply, so the prices go to a level where demand tapers off. Also new technology can demand higher prices due to the company recouping investment costs (engineering, production, marketing) and the consumer's demand for the latest tech.

Nope, I won't be buying a $3000 road bike. That exceeds my spending threshold, so I won't create more demand, so I'm keeping the price down for those who will pay that price for a bicycle.

tomato coupe

I remember hearing something similar about the stock market just before the dot-com bubble burst. And then again, just before the housing bubble burst ...

dedhed

You have to be ready to pounce on deals and have cash in hand. I bought my Radonee tourer for $600 REI "scratch & dent" as the rear wheel was replaced and mismatched to the front. Wasn't looking for a touring bike when I walked in REI but saw the bike and made them an offer they accepted. I built my '91 Trek 400 commuter with a complete 10speed Ultegra groupset for around $1200 including the bike I stripped to use the frame.

livedarklions

So you DO see putting money into a savings account as an investment strategy?

And the housing bubble is a really weird example--investing in real estate was traditionally THE prudent strategy.

genejockey 

I think that road bikes are about as expensive now as they were in 1995, adjusting for inflation, but there's an expanding marked for ungodly expensive road bikes that there wasn't then.

My first serious road bike, purchased in 1997, was a 1995-ish Ritchey Road Logic with full 7410 Dura Ace kit, which had listed for $3000. (I got it for $2000, since 7700 had come out). Run those numbers through an inflation calculator, and you get about $6000. These days, $6000 will buy you a really, really nice bike, probably the quality/prestige equivalent of my Ritchey. What seems to have happened is the growth of a market for even more expensive bikes, ones that go over $10,000 dollars, sometimes WAY over $10,000. This is like how the price of the average new car is now $33K (per Kelley Blue Book), which is about the same in constant dollars as the $20,000 it was in 1995. But there's a proliferation of ungodly expensive cars available now that there wasn't then.

genejockey 

At current interest rates, it's more of a parking strategy.

Hence the bubble and subsequent collapse.

phughes

He lost me with the premise. I didn't click because I thought it pointless and ridiculous. I also hate listening to people blabber on for five to six minutes instead of writing something coherent that I could read in under a minute.

livedarklions

Yes, so using the housing bubble as an example where people had gotten burned by abandoning conventional wisdom was therefore pretty weird. Outside of the word "bubble", the dot com bubble and the housing bubble were really opposite sides of the coin. Dotcom was betting too hard on intangible "magic" innovations, the housing bubble was too many people chasing the same very tangible assets, and lenders wildly overestimating the value of the tangible security.

livedarklions

I regret not consulting you before I clicked.

phughes

I'm here for you if you need me in the future.