unterhausen

If you think something is too expensive, don't buy it and if you're right other people won't buy it either so the price will come down. I expect the price of bikes will come down sometime over the next few years. Right now, there are any number of legitimate reasons why bikes have increased so much in the last year. It's not like the '70s, when bike shops were adding to the price of bikes, or like what car dealers do whenever there is a popular vehicle where demand exceeds supply.

Koyote

You're correct, it's not quite the same: prices are rising now because supply has fallen and demand has risen. But even back when car dealers were tacking premiums onto the prices of the most desirable cars, the same principles applied: when the quantity demanded exceeds the quantity supplied, prices will rise. How else should markets operate when people want more bikes than are available? Should they be allocated based on skin color, or personal relationships with shop owners, or...? And if the prices don't rise, what incentive do bike shops (and manufacturers) have to work overtime to produce more of them in order to satisfy that high demand? It doesn't matter whether we're talking about bikes, or cars, or anything else under the sun.

"Price gouging" is a myth - in a world of voluntary transactions, it simply doesn't exist. If you think that bikes are too expensive, the market is telling you to walk, or drive a car, or jog, or whatever. If enough people decline to buy those bikes, the prices will come down; if enough people do buy them, well, that just tells you that bikes are more popular now -- and things that are more popular tend to be scarcer and hence more expensive.

SkinGriz

^ This.
OP, if prices do not increase when demand is high and supply is low, how do producers know to make more product?

Would you prefer a centralized committee just set prices?

Koyote

Yes, that worked so well in the USSR.

SkinGriz

Hey! The product was free! But at least they weren’t “gouged”.

I guess that’s one way to deal with scarcity. Just give it away until nothing is left.

OP, in that situation, are you sure you would be first in line?

Mojo31

The only time “gouging” is an issue is when it involves things necessary to survival. We saw it in limited cases when hand sanitizer and mask prices were jacked up by some at the height of COVID, and it was done to prey on peoples’ fear of dying.

Bikes are not necessaries, and the market determines their value and price. That’s completely fair, except perhaps to those who want to buy something they can’t afford.

is Mercedes unfairly price gouging when it sells a four door car for twice as much as Ford does?

SkinGriz

No such thing as gouging. Even during an emergency.^ Above graph explains food shortage line Koyote posted. If the sellers had a product the buyers were willing to buy at a price they are willing to pay... If the buyers are freaking out over a virus with a median age of death at 88 years old, then you might have what’s called a sellers information advantage. Also recall small distillers stepping up to the plate before uncle sugar slapped their hands.

MAK

During the pandemic, it's not over but seems to be close, many companies had to temporarily close or limit their hours and lay-off workers. Bicycle companies are not only reliant on their own workers, but are dependent on their suppliers.. Aside from the frame, how many parts are actually made by the company itself? Some wheels, spokes, tires, stems, brakes, pedals, etc. are made by the company, but often are obtained from other companies like Shimano, Shram, etc. Do you have Trek, Specialized, etc. brakes, derailleurs or cranks? Remember that if the supplier raises prices, the bike brand must cover their costs and raise theirs. Take an inventory of your own bike and see how many different brands contributed to its make-up. Just a few supplier problems can affect everything. Supply and demand then becomes paramount.

This is a pet peeve and I've opined about this before:
Those who complain about bicycle and parts prices should be required to state their job and company. I'd bet that many who are complaining are doing (or their company is doing) exactly what they are complaining about. I'll go first...I'm a retired university professor from small school. My salary was about half the salary of huge schools. Faculty have little or no say in tuition costs and depending on the school, little or no say in costs accrued by the institution (which can legitimately be very high). While I often didn't agree with what my institution did, decisions could often be justified on some level.

Koyote

Ditto, though I am only mostly retired - still working a bit.

The people who complain about higher ed costs, and also most in the media who report on this so-called "crisis," also virtually always get this part wrong: they hysterically report the sticker prices (i.e., full prices) of colleges and universities, not the prices paid by the typical students. In the world of small private colleges, discount rates (= institutional aid, which is called "scholarships" when presented to the students) often are as high as 65% -- meaning that the average student pays 35% of the full price. Add in Pell Grants and state aid, and the students' costs are even lower. Public schools don't have as much institutional aid, but many students similarly pay less than the full prices that are used to illustrate the rapid inflation in higher ed costs.

As this thread demonstrates, there is a lot of economic illiteracy out there.

unterhausen

Okay, this isn't about hybrids. Go ride your bike. Closing