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How do LBS come up with the values/price of used bikes?

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How do LBS come up with the values/price of used bikes?

Old 05-18-20, 12:35 PM
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How do LBS come up with the values/price of used bikes?

Good late morning all (PCT),

As my title of this thread states, where/how do LBS come up with the price and value they put on their used bikes? How accurate is bikebluebook.com? It seems like almost everything I look at is over valued/over priced. How do I educate myself on the current estimated values on the bikes I'm interested in? I have no problem paying the current market value, but like anybody who wants to over pay for something that's over valued?

I know the market is set by the purchaser, but where does that value come from? Is there an industry standard? How do LBS come up with a trade in value? Do LBS's have a system that they use? Or do they just throw out a number and hope someone comes around and pays their price?

Any help "you" could provide me would be greatly appreciated! Thank you in advance.

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Old 05-18-20, 12:44 PM
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I bought a bike recently directly from bicyclebluebook.com at the end of March when the stuff really hit the fan and everyone was in full panic mode. Got a great deal. I’ve noticed since then the blue book value of that same bike has steadily climbed on their website so they do adjust their estimates on a regular basis based on market conditions.

My personal opinion is their estimates are sometimes a little too low and at times a little too high. Some bikes seem like great bargains and others seem way overpriced.

So short answer, who knows? Value is in the eye of the beholder.
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Old 05-18-20, 12:53 PM
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Originally Posted by pedpower View Post
Good late morning all (PCT),

As my title of this thread states, where/how do LBS come up with the price and value they put on their used bikes? How accurate is bikebluebook.com? It seems like almost everything I look at is over valued/over priced. How do I educate myself on the current estimated values on the bikes I'm interested in? I have no problem paying the current market value, but like anybody who wants to over pay for something that's over valued?

I know the market is set by the purchaser, but where does that value come from? Is there an industry standard? How do LBS come up with a trade in value? Do LBS's have a system that they use? Or do they just throw out a number and hope someone comes around and pays their price?

Any help "you" could provide me would be greatly appreciated! Thank you in advance.

Let me address the points in bold, one at a time:

1) It's easy to believe that everything is overpriced when you're the buyer.
2) In the absence of market failures (look up the proper definition of the term if you wish to address it - it actually has a specific meaning), price is set by both demand (which you mention) AND supply (which you ignore).

If used bike prices are rising right now, it is likely because demand for bikes (esp those that are lower-priced) is rising right now (due to Coronavirus) and, at this time of year, supply of new bikes is not rising very much.
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Old 05-18-20, 01:42 PM
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Supply and demand, got it. I realize this is "suppose" to the current marketplace (and with some bikes it is). I understand with COVID-19 more people are buying used bikes. But, I'm assuming here, they are low budget bikes that need some work. Lets face it, you rarely buy a bike that is turn-key (unless you buy new).


Example, if I wanted to trade in a 2008 Trek Madone 5.2, how does the dealership come up with a value for my trade in? Do they look at bicyclebluebook.com and give the client the current rate or do they look at other factors/sites for that info ect? You can't tell me they just pull out a number out of thin air? This bike has a trade in value ($317-327), Private Party value @ ($513-529). How can they list it at $1399? That can't be ALL supply and demand if it just sits there. Is this another episode of pure greed at its best? That's a huge mark up people! Assuming they use this system of bicyclebluebook.com.


Does anyone out there work in the bicycle industry? Can you shed some light on the situation please?
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Old 05-18-20, 02:18 PM
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Originally Posted by Koyote View Post
Let me address the points in bold, one at a time:

1) It's easy to believe that everything is overpriced when you're the buyer.
2) In the absence of market failures (look up the proper definition of the term if you wish to address it - it actually has a specific meaning),
price is set by both demand (which you mention) AND supply (which you ignore).
If used bike prices are rising right now, it is likely because demand for bikes (esp those that are lower-priced) is rising right now (due to Coronavirus) and, at this time of year, supply of new bikes is not rising very much.

​​​​​​
price is set by both demand (which you mention) AND supply (which you ignore).
.

With ALL due respect, not every make and model is "currently in demand". That's a very loose term/staement. Just because bicycles are selling really well right now, doesn't mean "everything" should go up. We need further data to tell us what is selling (the kind of bikes/brands/models) at what price point, before we just put a "demand" on the bicycle industry as a whole. Just saying. ​​​​​​​
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Old 05-18-20, 02:25 PM
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Part of it has to be that the LBS has overhead operating costs that a private seller doesn't (rent, utilities, insurance, etc.). This just means it's costing them money by simply being in the building until it gets sold. In addition to that, when they take in a used bike, they'll invest some labor and material in getting it ready for the showfloor.

They may overprice used bikes with the expectation that a buyer will try to haggle them down; I don't know.
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Old 05-18-20, 02:27 PM
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Knowledge of their local market, customer base, and carrying cost.
I find BBB to worthless as far as prices as local market conditions really do matter.
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Old 05-18-20, 02:30 PM
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Originally Posted by pedpower View Post
​​​​​​.

With ALL due respect, not every make and model is "currently in demand". That's a very loose term/staement. Just because bicycles are selling really well right now, doesn't mean "everything" should go up. We need further data to tell us what is selling (the kind of bikes/brands/models) at what price point, before we just put a "demand" on the bicycle industry as a whole. Just saying.
My broader point is that you seem to have some personal interest in this, you are looking at either buying or selling some particular bike and you want to see a certain price. And, as often happens when we have personal interests at stake, you are engaging in some faulty logic in trying to understand the situation.
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Old 05-18-20, 02:39 PM
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Originally Posted by Koyote View Post
My broader point is that you seem to have some personal interest in this, you are looking at either buying or selling some particular bike and you want to see a certain price. And, as often happens when we have personal interests at stake, you are engaging in some faulty logic in trying to understand the situation.
Exactly! If selling and the offer is too low - don't take it. If buying and the price is too high - don't buy it (or make an offer). It's really that simple. Some internet pricing guide won't change these simple truths.
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Old 05-18-20, 02:43 PM
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Originally Posted by pedpower View Post
if I wanted to trade in a 2008 Trek Madone 5.2, how does the dealership come up with a value for my trade in? Do they look at bicyclebluebook.com and give the client the current rate or do they look at other factors/sites for that info ect? You can't tell me they just pull out a number out of thin air? This bike has a trade in value ($317-327), Private Party value @ ($513-529). How can they list it at $1399? That can't be ALL supply and demand if it just sits there. Is this another episode of pure greed at its best? That's a huge mark up people! Assuming they use this system of bicyclebluebook.com.
If you trade that bike into your dealer you will get $300 to $350 for it, maybe a little bit more if you promise to buy a new bike from them but that just means they will make it up by charging you more on the purchase.

If you do a search on bikes sold on EBay that same basic model bike has sold for $1200, $1100, $900 and $650 recently. Condition and aftermarket add ons affect the value as well but that should give you an idea of what the real private party value is worth.

So is the LBS making a profit? Of course, but he has to cover his overhead and sales staff and inventory carry and just the convenience of allowing you to walk into his shop and test ride a bunch of bikes.

If you want top dollar don’t trade in your bike. And if you want a deal and can stand a little risk then do a little hunting on EBay or craigslist instead of going to the bike shop.
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Old 05-18-20, 02:56 PM
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Originally Posted by dedhed View Post
Knowledge of their local market, customer base, and carrying cost.
I find BBB to worthless as far as prices as local market conditions really do matter.
I think this is correct. I tried to sell a bike awhile back through a local shop, the owner is a cordial acquaintance. It didn't sell, though it was a very nice bike for the price, good components, etc. According to the shop owner, the brand was the problem. I'd call it perhaps a third tier brand, maybe a step above BD bikes. Raleigh Tamland gravel bike, FWIW. I bought it because it was a nice grade of steel, had a proper bottom bracket and decent 105 components. I liked the color.... Anyway, these positives did not outweigh the fact that it was not Trek, Specialized, Cervelo, etc. Shop owner said his customers just weren't interested in something that wasn't a well known brand. So a lightly used, two year old bike at about 1/3 replacement cost just sat. TL;DR, unless you are on ebay, market is subject to local preferences and "blue book " value doesn't mean much.
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Old 05-18-20, 03:54 PM
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The economy is shot to hell, but the bike industry has blowed up!

The Trump effect?

My guess is, the Russians have something to do with all of this!
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Old 05-18-20, 04:00 PM
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Lets compare it to the automotive Blue Book, which is pretty accurate and see what the differences are.
Why is the automotive Blue Book more accurate than the bicycle Blue Book? I think there are two reasons.
  1. Statistics. There are lots of cars sold every week, averages out to around 800,000 per week.
  2. Those sales consist of relatively few models. I'm guessing that the vast majority of sales cover fewer than 500 models.
  3. The price of sale is relatively accurate, centrally recorded, and publicly available through DMV records.
So without getting needlessly mathematical, I assert that the average price of sale is statistically significant for most models.

Bikes have fewer sales, there are lots of manufacturers and models, and there is no central source of data for the sales price. So it is a lot harder to come up with numbers. You can cross your eyes and compare it to buying a 1922 Ford pickup. Certainly it has a value, but there are so few sales that it just boils down to what an individual buyer is willing to pay.
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Old 05-18-20, 04:06 PM
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Makes sense, thank you for that reply.

I think we can now put this post to bed. Thank you everyone who participated! Ride safe and be safe out there!
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Old 05-18-20, 04:30 PM
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Originally Posted by MadKaw View Post
Lets compare it to the automotive Blue Book, which is pretty accurate and see what the differences are.
Why is the automotive Blue Book more accurate than the bicycle Blue Book? I think there are two reasons.
  1. Statistics. There are lots of cars sold every week, averages out to around 800,000 per week.
  2. Those sales consist of relatively few models. I'm guessing that the vast majority of sales cover fewer than 500 models.
  3. The price of sale is relatively accurate, centrally recorded, and publicly available through DMV records.
So without getting needlessly mathematical, I assert that the average price of sale is statistically significant for most models.

Bikes have fewer sales, there are lots of manufacturers and models, and there is no central source of data for the sales price. So it is a lot harder to come up with numbers. You can cross your eyes and compare it to buying a 1922 Ford pickup. Certainly it has a value, but there are so few sales that it just boils down to what an individual buyer is willing to pay.
And the wear and tear on a car is easily quantified by its odometer reading. A bike has nothing comparable.
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Old 05-18-20, 05:58 PM
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Originally Posted by shelbyfv View Post
I think this is correct. I tried to sell a bike awhile back through a local shop, the owner is a cordial acquaintance. It didn't sell, though it was a very nice bike for the price, good components, etc. According to the shop owner, the brand was the problem. I'd call it perhaps a third tier brand, maybe a step above BD bikes. Raleigh Tamland gravel bike, FWIW. I bought it because it was a nice grade of steel, had a proper bottom bracket and decent 105 components. I liked the color.... Anyway, these positives did not outweigh the fact that it was not Trek, Specialized, Cervelo, etc. Shop owner said his customers just weren't interested in something that wasn't a well known brand. So a lightly used, two year old bike at about 1/3 replacement cost just sat. TL;DR, unless you are on ebay, market is subject to local preferences and "blue book " value doesn't mean much.
I think of Trek as the Toyota of bicycles, there’s a ton of them on the road, they always seem to carry a premium in the used market and love em or hate em they’re built to an incredibly high standard. Older Trek carbon frames are tanks, virtually indestructible. You see a ton of them from 10, 15, 20 years ago with thousands and thousands of miles on them still plugging away and rolling along.

So am I surprised a 12 year old Madone is selling for $1400 at this LBS? Not really. It’ll continue to function and carry a premium for its entire life. Just like that Toyota. And they’re popular enough so that someone will come along and buy it.
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Old 05-18-20, 07:57 PM
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Probably 50 years ago I asked my dad for advice about how to price something I was trying to sell. He told me to just pick a price. A month from now if I still had it, my price was too high. If I had sold it, my price was too low.

I think that works for buying things like used bikes too: Establish in your own mind what you think each bike ought to be worth. A month from now, if you're still looking, your value judgement is unrealistically low. If you've bought a bike, your judgment was too high.
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Old 05-18-20, 07:59 PM
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If the bike is popular and up-scale enough so that shipping is a fairly small fraction of cost, eBay gives you a good indicator of market price.

The LBS's price is whatever they think that the market will bear. May be influenced by whether you're a good customer or not.

Right now the low end market may be being influenced by what I seem to recalled is the negative price elasticity of inferior goods*. When the average wage drops so that folks no longer buy a car (or a really top end bike) but they need transport, this increases the price of low-end models.

*Any economists can correct my terminology or skewer my explanation, as you wish.
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Old 05-18-20, 08:51 PM
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Depends on if the owner has a boat payment coming up.....

Same for cars. I sold 2 cars privately within a week of advertising. Each for $9,000 cash. So I guess a dealer would have sold them for $11,000 plus some financing and insurace where they make extra hidden money. What did dealers originally offer me for those cars as trade-in? $5K, and they acted like they do me a favor and lose money on my cars. BTW, all dealers were relatively consistent with the $5K, so they must use the same cheater book.

Same probably goes on with bicycles.
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Old 05-18-20, 09:26 PM
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Part of the LBS business is to sell bikes. They have past sales to refer to when pricing a used bike.

Bicycle blue book is way off on their prices since there is no public record for used bike sales. They have an algorithm that under values bikes in many markets. They are also in the business to buy and sell, so of course they want to buy low.
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Old 05-18-20, 10:51 PM
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Old 05-18-20, 11:11 PM
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Originally Posted by WizardOfBoz View Post
If the bike is popular and up-scale enough so that shipping is a fairly small fraction of cost, eBay gives you a good indicator of market price.

The LBS's price is whatever they think that the market will bear. May be influenced by whether you're a good customer or not.

Right now the low end market may be being influenced by what I seem to recalled is the negative price elasticity of inferior goods*. When the average wage drops so that folks no longer buy a car (or a really top end bike) but they need transport, this increases the price of low-end models.

*Any economists can correct my terminology or skewer my explanation, as you wish.
Bingo! I think your on to something there!
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Old 05-18-20, 11:14 PM
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Originally Posted by HerrKaLeun View Post
Depends on if the owner has a boat payment coming up.....

Same for cars. I sold 2 cars privately within a week of advertising. Each for $9,000 cash. So I guess a dealer would have sold them for $11,000 plus some financing and insurace where they make extra hidden money. What did dealers originally offer me for those cars as trade-in? $5K, and they acted like they do me a favor and lose money on my cars. BTW, all dealers were relatively consistent with the $5K, so they must use the same cheater book.

Same probably goes on with bicycles.
I hear you on the dealers. They lowball you and then flip it for a tremendous profit. Crooks!
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Old 05-18-20, 11:18 PM
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Old 05-18-20, 11:41 PM
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Originally Posted by pedpower View Post
I hear you on the dealers. They lowball you and then flip it for a tremendous profit. Crooks!
Yep you nailed us, we are out to plunder and pillage from the locals. How dare someone buy your used bike, put money into fixing it and floor space and time and effort to selling it and charge someone else more money then they paid? Employees should starve and they should use candle lights.

You want to make more money, try and sell the bike yourself, you enjoy the hassle or you can let someone else do it and you might not make as much but all you have to do is hand them the bike and they hand you the cash. No responding to emails and calls and people saying they want the bike who fall through and multiple people lowballing you and the constant trying to list it and re list ...it sounds absolutely wretched to me but my time is valuable. I would rather make a little less but not have any hassle, that is why I am teaming up with a co-worker to sell a bike, I could do it myself and make more but I would rather have him do the selling and get some commish and I am still coming out on top (though just a bit lower down) with a lot less work.

Luckily I never have to deal with selling used bikes at the shop, we aren't a pawn shop and don't want to be one.
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