Dealer mark-up on bikes is 35%?
09-23-16, 05:20 PM
#1
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Dealer mark-up on bikes is 35%?
Yesterday I happened to walk by a Specialized store in the city so I stopped in to see if they had the new Roubaix to demo. No luck, but we looked through their dealer system and while looking at availability all the prices were listed too. Retail price for the Expert $4000, 'Dealer cost: $2600.' I've read so many times about how small margins are for dealers, but even with overhead and other costs this seems quite generous. That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
09-23-16, 05:35 PM
#2
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That seems like an awfully high margin. Was it a Specialized-only store? If Specialized owns the store, they probably get a cut of all sales anyway? Just guessing.
09-23-16, 05:42 PM
#3
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Yesterday I happened to walk by a Specialized store in the city so I stopped in to see if they had the new Roubaix to demo. No luck, but we looked through their dealer system and while looking at availability all the prices were listed too. Retail price for the Expert $4000, 'Dealer cost: $2600.' I've read so many times about how small margins are for dealers, but even with overhead and other costs this seems quite generous. That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
How many going out of business do you know. They deserve every penny they get.
09-23-16, 05:42 PM
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OP, Inthink you mean margin, not markup. 33% margin is a 50% markup. Margin is the portion of the retail price that is above the dealers' cost. Markup is the fraction of the dealer's cost thst is added to it to make the retail price. Not the same thing.
09-23-16, 05:57 PM
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Yesterday I happened to walk by a Specialized store in the city so I stopped in to see if they had the new Roubaix to demo. No luck, but we looked through their dealer system and while looking at availability all the prices were listed too. Retail price for the Expert $4000, 'Dealer cost: $2600.' I've read so many times about how small margins are for dealers, but even with overhead and other costs this seems quite generous. That almost all dealers won't negotiate on current model bikes is a little ridiculous considering.
09-23-16, 06:03 PM
#7
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Thread Starter
I guess I should have expected to get flamed. I certainly don't expect dealer cost or close to to it, but that they won't budge even a little irks me a bit. Makes me grateful to have gotten nearly 20% off during the Spring sale for my 2016 (courtesy Specialized 
).
They sell Specialized, Cannondale, Giant, Colnago, Fuji, GT, Jamis, among a number of other brands.
Thanks for the correction.
).Thanks for the correction.
09-23-16, 06:05 PM
#8
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I bought my Giant for $2200 (retail price $3000) and my cross bike for about $1300 (retail price around $1700).
Best time to buy a new bike is when the new years models come out and the shops need to unload all the old stock. Which is right about now actually.
If you are paying full retail then you need to be a better consumer.
Best time to buy a new bike is when the new years models come out and the shops need to unload all the old stock. Which is right about now actually.
If you are paying full retail then you need to be a better consumer.
09-23-16, 06:18 PM
#9
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You only have to pay full retail if you really want a current model during a non-sale.
Also keep in mind that the cost includes assembly, sales, bike shop space, and some amount of guaranteed post-sale service. For cheaper bikes at least, all this can justify a pretty substantial increase over dealer cost.
Also keep in mind that the cost includes assembly, sales, bike shop space, and some amount of guaranteed post-sale service. For cheaper bikes at least, all this can justify a pretty substantial increase over dealer cost.
09-23-16, 06:31 PM
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Sounds about right. I had a team deal at a Cannondale dealer and team price for CAAD10 Ultegra and SuperSix Red were about 28% off of MSRP and I'm sure the shop was still making some money. It's a business
09-23-16, 06:38 PM
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I don't begrudge them that - there is a lot of overhead.
Gouging is selling a dollar's worth of epinephrine in a $30 to manufacture self-injecting pen for $600 while paying the CEO who doubled the retail cost from $300 to $600 a $17 million bonus.
Gouging is selling a dollar's worth of epinephrine in a $30 to manufacture self-injecting pen for $600 while paying the CEO who doubled the retail cost from $300 to $600 a $17 million bonus.
09-23-16, 06:55 PM
#12
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Mine works in a former flower shop building, raises two young sons and had water pipes burst upstairs earlier this year. The toilet has no jewel encrusted handle.
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09-23-16, 07:19 PM
#13
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When you figure rent, utilities, employee wages and benefits, capital tied up in stock, investment in repair department tools, etc., their pricing is fair. Not many bike shop owners get rich.
If you want to go cheap, buy from BD. I patronize my LBS so they'll hopefully be there when I need something.
Here's Schwinn's 1988 dealer price list with suggested retail. The margin hasn't changed much.
If you want to go cheap, buy from BD. I patronize my LBS so they'll hopefully be there when I need something.
Here's Schwinn's 1988 dealer price list with suggested retail. The margin hasn't changed much.
Last edited by Scooper; 09-23-16 at 07:29 PM.
09-23-16, 07:22 PM
#14
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All while her Democratic Senator father wrings his hands and winks over his shoulder.
09-23-16, 07:31 PM
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In before the move to P&R.
09-23-16, 07:36 PM
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I don't know about other brands but I know about trek. When I bought my 2011 FX 7.7 hybrid bike, the retail price was $1800 but my dealer showed me the website where they order from and their cost was something like $1140. I saw the dealer cost on a whole range of fx models and I could not believe it. I recall that the lower end fx 7.2's cost was in the 200s yet it's sold for ~400-500. %'s vary but yes the markup is insane. That's why a $15,000 bike to me doesn't make sense when their cost is LITERALLY THOUSANDS LESS.
09-23-16, 07:41 PM
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I bought my Giant for $2200 (retail price $3000) and my cross bike for about $1300 (retail price around $1700).
Best time to buy a new bike is when the new years models come out and the shops need to unload all the old stock. Which is right about now actually.
If you are paying full retail then you need to be a better consumer.
Best time to buy a new bike is when the new years models come out and the shops need to unload all the old stock. Which is right about now actually.
If you are paying full retail then you need to be a better consumer.
I understand about overhead but biking season = VOLUME SALES. I'm sure the amount I saved didn't prevent them from paying the electric bill. Moreover, now they have a long term customer that leaves good reviews!
09-23-16, 08:14 PM
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3 shops near me have closed in the past few years, so I assume margins/profits are not very high in total.
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09-23-16, 08:21 PM
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Everybody thinks gas stations rake in big money but that margin is so low that you either fix a lot of cars or sell beer and burritos.
In the end my dad went back to working for somebody else's station.
In the end my dad went back to working for somebody else's station.
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09-23-16, 08:48 PM
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The markup is accurate. The bigger shops with high volume do really well, while the smaller ones do okay.
09-23-16, 08:51 PM
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Regardless of margins bikes aren't a high volume sale. Why do you think most shops have left over stock at the end of the year?
09-23-16, 08:55 PM
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35% is a great deal if you consider that most other non-bike stuff you buy is marked up 100%.
09-23-16, 09:48 PM
#24
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Close-outs are usually exempt from minimum pricing, since they're last year's model.
09-23-16, 10:08 PM
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A lot of people don't understand that when something is on "sale" the business is STILL making money (well, usually). I bought my new Specialized Diverge for 15% off and they obviously still made profit (even if they sold it at cost they'd make a small amount on me coming back for services and buying accessories).
So basically I paid 15% above cost to have the perk of trying around 5 bikes back-to-back (and riding each multiple times) and trying multiple saddles and helmets out with them (all of which I wouldn't have been able to do if I purchased straight from the manufacturer at cost somehow). That's fair IMO.
So basically I paid 15% above cost to have the perk of trying around 5 bikes back-to-back (and riding each multiple times) and trying multiple saddles and helmets out with them (all of which I wouldn't have been able to do if I purchased straight from the manufacturer at cost somehow). That's fair IMO.