jccaclimber

It's been a while, but we got parts at cost. There was an expectation that they were for our own personal use unless we were say buying something as a birthday gift for a close family member. Nobody ever abused it where I was, so strict rules were never formalized at the time.

Mark-up varies greatly. Something inexpensive and purchased bulk like cable housing off of a roll often has really high markup. Expensive items purchased individually like a full bike have much lower markup, especially if your shop puts any more labor than a basic assembly into them, those direct and overhead costs have to come from somewhere. Some of the small items that you can get anywhere are losses. One place I worked at bought some of their energy bars at Sam's Club because the price was lower than in their wholesale catalog. They didn't make any money on it, but people always asked for them and they didn't want to give people yet another reason to stop shopping at the small local place.

Often prices at the online discount places weren't that different from my price. Part of this is volume. The big guys who buy a lot of stuff get it at a lower wholesale price than the little guys who buy only a few things here and there. Depending on the pricing structure the result can be the big guys making almost as much margin as a little guy, while setting their retail price near the little guy's wholesale cost.

As for direct vs. through wholesale, both have costs. Say you sell to wholesale (who makes margin) then to retail (who makes margin), then decide to sell direct and keep all of that. All those people who waste 20 minutes of employee time at the LBS because they don't know how to put air in the tire, no your problem. All the questions about how to put on a quick release because you're new to bikes, now your problem. Something goes wrong? You don't need to get it to a local shop for inspection, it needs to go back to the parent company at their cost. Those people who want to verify the price of each item and then cancel their order at the last minute, now your problem instead of the wholesaler's. That higher margin comes with more risk and work, which is what justifies the existing system.

Lazyass

I used to manage a Cycle Gear store. CG is a big retail chain similar to Performance Bike except it's for motorcycles. And they don't sell motorcycles but all the parts and gear. The best part of the job for me was the employee discounts, some things were like 50%. So if/when I bought a leather track suit I would save hundreds of dollars and I could get new tires for dirt cheap. But there was no set number, it was dependent on each item and manufacturer. Manufacturers won't allow items to be sold below a certain number. I never really knew how they came up with the exact price employees could buy things. I would assume bicycle shops are no different.

cpach

Cost+10% is normal for orders placed through the shop. I've had employers that were OK with me making a cart in QBP and calling in and paying it on my credit card at cost. The +10% is to pay for dealing with your order, and also to discourage excessive shopping off the floor. Many bike brands offer a limited number of purchases at below dealer cost to employees. A pretty common stipulation is not to resell for a year, but a pretty common habit for some shop employees is to buy a new bike at below cost every year and resell it for a small profit yearly, and stay on a fresh bike. This is sort of a feature for the bike companies: they want their shop staff on shiny new stuff to help them sell it, and to be personally familiar with what they're trying to sell. I for whatever reason find managing lots of sales annoying and haven't really done this.

My shop is pretty great to work for for a number of reasons. Apparently getting some ~$200 custom ski boot insoles is considered an employment perk.

Regarding markup, with Shimano in particular, there can be an astounding gap between online parts and retail MSRP. A lot of this is getting redirected gray market from parts intended for OEM customers. I qualify for Shimano's deepest discount, which is below dealer cost, and occasionally I'll find something cheaper than that online from the UK. Bike shops need to have a certain, sane margin to make a sale worthwhile, even if it isn't super competitive with online. If you're seriously considering ordering parts online instead of your shop, particularly if you're having the shop do the work, give 'em a chance to try and compete on that price. They may literally not be able to offer as low as you can find online, but sometimes it can make sense to discount to a low price to be able to win a significant amount of labor charges. I do understand that people are going to shop around and am happy to work on parts from anywhere, although it annoyingly leads to customers buying a lot of stuff that doesn't actually work.

oldbobcat

And then there are the pro deals, which can go as low as 30 percent below standard dealer wholesale.