Where is the bike industry going with pricing

[UnclePolli]

As i have been following the new Epic review and the thread almost derailed into pricing i though it best to start a new one not to impede on the review.  Since there is usually a lot of sandbagging with these things, i put down some numbers.  The same thing happened with the new Scalpel tread.

 

I have done some simple calcs in order to understand what the hell is going on, by no means im a numbers person so dont flame the calcs.  some general assumptions are made so if someone has more accurate numbers, please gooi.

 

For me it is clear as daylight that the demand is driving the exuberant pricing of new bike as well as components.  Lets not forget that some of the distributors are also importers of part and im sure they get factory discounts etc.  Im not in the industry so there will be variables thats unaccounted for like levies tax etc, but as far as i know most importers bring the bikes in as parts and assemble locally to bypass the additional tax. regardless the below is somber reading and i just realized that i will never ever be able to buy a new carbon bike again in my lifetime.   Its by no meas accurate, but a guide non the less.  You decide - I you can afford it great if you want it awesome if you cant, them sorry you cant have it.  I dont judge.  At some point the demand will drop and reality set in.  by example that you can usually buy a brand new bike 2 years later if there is still stock and in your size for up to 45% off the RRP.  just saying.

[ChrisF]

.....  by example that you can usually buy a brand new bike 2 years later if there is still stock and in your size for up to 45% off the RRP.  just saying.

 

September 2018 I bought a "2018 model" bike .... the "2019 models" had arived and stores were moving stock ....

 

R36k for a R54k bike.

 

 

Supply and demand ..... thus far there have been enough people eager enough to buy the latest and greatest, thus the prices keep on "kreeping" up and up and up ....

[Myth]

As i have been following the new Epic review and the thread almost derailed into pricing i though it best to start a new one not to impede on the review.  Since there is usually a lot of sandbagging with these things, i put down some numbers.  The same thing happened with the new Scalpel tread.

 

I have done some simple calcs in order to understand what the hell is going on, by no means im a numbers person so dont flame the calcs.  some general assumptions are made so if someone has more accurate numbers, please gooi.

 

For me it is clear as daylight that the demand is driving the exuberant pricing of new bike as well as components.  Lets not forget that some of the distributors are also importers of part and im sure they get factory discounts etc.  Im not in the industry so there will be variables thats unaccounted for like levies tax etc, but as far as i know most importers bring the bikes in as parts and assemble locally to bypass the additional tax. regardless the below is somber reading and i just realized that i will never ever be able to buy a new carbon bike again in my lifetime.   Its by no meas accurate, but a guide non the less.  You decide - I you can afford it great if you want it awesome if you cant, them sorry you cant have it.  I dont judge.  At some point the demand will drop and reality set in.  by example that you can usually buy a brand new bike 2 years later if there is still stock and in your size for up to 45% off the RRP.  just saying.

 

To be honest, its pretty much anything that's considered a "hobby" or luxury item where this hardcore inflation can be seen.  Some of the various other hobbies I partake in:

 

Bow hunting - high-end bows (lets call it the equivalent to the S-works or hi-mod Cannondale of bikes) - prices tripled from 2011 to 2020

Rifles - prices up but 2.5 times since 2011

High-end golf clubs (top-end drivers) - prices tripled since 2011

 

As you mentioned, its a question of demand driving the sharp increases...but its certainly not limited to bicycles.

 

Edit:  Spelling

Edited June 25, 2020 by Myth

[WIPEOUT 1000]

Every time I read what the newest, latest & greatest bicycle cost, I invariably compare it with motor bike prices and I've yet to see a rational explanation as to why they are so similar.

 

S-Works Epic Evo = R190k

https://community.bikehub.co.za/features/_/gear/reviews/review-2021-specialized-s-works-epic-evo-r8142?source=topic

 

Honda CRF1100L Africa Twin = R210k

https://www.honda.co.za/news/2019/11/the-2020-crf1100l-africa-twin

 

Triumph Tiger 1200 XCx = R220k

https://www.triumph-motorcycles.co.za/motorcycles/adventure/tiger-1200

 

KTM 1290 Super Adventure R = R270k

https://www.ktm.com/en-za/models/travel/ktm-1290-super-adventurer2020.html

 

BMW R1250 GS = R287k

https://www.bmw-motorrad.co.za/en/models/adventure/r1250gs.html

Edited June 25, 2020 by WIPEOUT 1000

[Paul Ruinaard]

Nobody is going back to gyms and as a result the second hand bike market has exploded. You just need to chat to the dealers on this. demand outsrips supply - prices have shot up. It's simple.

 

I saw a Colnago C40 second hand on the hub for R 14k two years ago - now you are seeing them for R 35k.

 

At N Farm on Saturday on the coldest day of the year the parking lot was full. Never mind the amount of new ebikes etc as well as high end very new looking machines. And then all the noobs out there for the first time.

 

I think you are going to see a protracted bubble in prices owing to this more than anything. Annuitize a gym membership payment over 3 years and you will see what people are using to finance these purchases.

 

[Yyyy]

i am actually interested in the cost model of bike manufacturers in general.

 

Not to judge or criticize but purely academic reasons.

 

How much of "insert bike" does a manufacture need to sell at current prices to break even and what the demand is like at the different price points?

 

controversial point:

Like a monopoly in any industry can destroy quality and pricing that customers receive, has the biking industry gone too far in the other extreme that it completely missed the  "perfect competition" .

 

Perhaps the ratio of bike manufacturers to bike buyers is not perfect and thus each individual manufacturer is selling too few bikes to lower the price in order to cover the costs?????

If we had fewer manufacturers, thus producing at a higher scale would that reduce the cost model of a bike????

[BaGearA]

I have realized this long ago and spend money on parts I adore like HOPE, cotic, ohlins ect

 

And the rest I have found great joy in buying and restoring old parts

 

This all yields good bikes (in my eyes at least) that I can pedal and handle past 95% of the cycling market in this country and I'm happy doing it

 

There are more important things in my life I'll sink more money into.

Edited June 25, 2020 by BaGearA

[BaGearA]

i am actually interested in the cost model of bike manufacturers in general.

 

Not to judge or criticize but purely academic reasons.

 

How much of "insert bike" does a manufacture need to sell at current prices to break even and what the demand is like at the different price points?

 

controversial point:

Like a monopoly in any industry can destroy quality and pricing that customers receive, has the biking industry gone too far in the other extreme that it completely missed the "perfect competition" .

 

Perhaps the ratio of bike manufacturers to bike buyers is not perfect and thus each individual manufacturer is selling too few bikes to lower the price in order to cover the costs?????

If we had fewer manufacturers, thus producing at a higher scale would that reduce the cost model of a bike????

I think their break even price is absurdly low

 

But so is the price they sell their bikes to distributors for

 

 

It's just a theory

[Headshot]

The Spesh dealers had and may still have great specials on old models a few weeks ago. Its always possible to pick up a good deal if you are prepared to wait so the list prices are really only applicable to the wealthy early adopters. 

[Duane_Bosch]

Every time I read what the new latest & greatest bicycle cost, I invariably compare it with motor bike prices and I've yet to see a rational explanation as to why they are so similar.

 

Same. The first thing people pull out of their erses is economies of scale. I call bullcrap on that. All of the components are mass produced in the east in batches of tens of thousands.

 

I always look at Motocross bikes when comparing pricing to MTB's. Similar customer base ITO earnings. Also subject to currency fluctuation. Similar lack of road application so it's a toy.

 

A 2020 Kawasaki KX450 F will cost you R120k Amazing suspension, Electric Start etc etc. 

 

If we want to go more exotic a KTM 450 arm schredder is CHEAPER than the Kawasaki at 112k. Brembo brakes. Hydraulic clutch. Electric start.

 

My theory is twofold.

 

1. There are too many bit players and "niche" manufacturers skewing the perception of value. There are also manufacturers that a most certainly NOT niche but hang on grimly to that model. Santa Cruz spring to mind

2. The industry is upside down. The component makers call the shots. Not the bike manufacturers. In the motorcycle industry the big players own the component brand. E.g. Nissin brakes is owned by Kawasaki. Kayaba and Showa are owned by Honda.

Edited June 25, 2020 by Duane_Bosch

[Paul Ruinaard]

FWIW: You do eventually work out that the need to upgrade to the latest is really just a fallacy and if you are naive enough to want the latest and be on this treadmill then you are going to get the money from your wallet removed.

 

I can get 95% of the current R 120k bikes functionality for R 30k in classifieds. And for the average rider those 3 year old models are 120% more than their capabilities. 

 

What's the difference between an R 18k hand built set of carbon Nextie rims or a R 30k to R 60k Enve or Zipp or Mavic or Whatever brand. 

 

We are our own worst enemies - people will buy at these prices and that's the bottom line.

 

Complaining about the price increases implies you actually have contemplated buying at these prices which IMO is grave insanity.

 

 

 

 

[quintonb]

I saw a Colnago C40 second hand on the hub for R 14k two years ago - now you are seeing them for R 35k.

 

In all fairness, a C40 is a collectors item nowadays so stands to reason the prices will climb and the return on investment over time is favorable. 

Few of the top end mountain bikes that cost 200k will ever become collectible, so return on investment is not great.

Hence the reason I only spend money on "collectable" bikes, have yet to loose on one yet.

[Headshot]

Same. The first thing people pull out of their erses is economies of scale. I call bullcrap on that. All of the components are mass produced in the east in batches of tens of thousands.

 

I always look at Motocross bikes when comparing pricing to MTB's. Similar customer base ITO earnings. Also subject to currency fluctuation. Similar lack of road application so it's a toy.

 

A 2020 Kawasaki KX450 F will cost you R120k Amazing suspension, Electric Start etc etc. 

 

If we want to go more exotic a KTM 450 arm schredder is CHEAPER than the Kawasaki at 112k. Brembo brakes. Hydraulic clutch. Electric start.

 

My theory is twofold.

 

1. There are too many bit players and "niche" manufacturers skewing the perception of value. There are also manufacturers that a most certainly NOT niche but hang on grimly to that model. Santa Cruz spring to mind

2. The industry is upside down. The component makers call the shots. Not the bike manufacturers. In the motorcycle industry the big players own the component brand. E.g. Nissin brakes is owned by Kawasaki. Kayaba and Showa are owned by Honda.

Your second point is interesting but how does that fit in with the R63k frame price for the latest Epic? On some of these models you could get a frame and build a better bike for less paying retail for components. Manufacturers must get fantastic pricing on component packages surely? 

[BenGraham]

First rule of business. A product is worth exactly what your customer is willing to pay for it. If this number is higher than the cost price you're running a business. If its lower then you're running a charity. 2nd rule of business bundle items to hide the individual costs and increase profits due to economies of scale. Select high perceived value items and bundle with low cost low perceived value items. Price according to high perceived value items. Figure out what your client is looking at and make that amazing; make everything they're not paying attention to ****.

 

And this is why I buy my parts individually and build my own bikes.

[Shebeen]

Every time I read what the newest, latest & greatest bicycle cost, I invariably compare it with motor bike prices and I've yet to see a rational explanation as to why they are so similar.

 

S-Works Epic Evo = R190k

https://community.bikehub.co.za/features/_/gear/reviews/review-2021-specialized-s-works-epic-evo-r8142?source=topic

 

Honda CRF1100L Africa Twin = R210k

https://www.honda.co.za/news/2019/11/the-2020-crf1100l-africa-twin

 

Triumph Tiger 1200 XCx = R220k

https://www.triumph-motorcycles.co.za/motorcycles/adventure/tiger-1200

 

KTM 1290 Super Adventure R = R270k

https://www.ktm.com/en-za/models/travel/ktm-1290-super-adventurer2020.html

 

BMW R1250 GS = R287k

https://www.bmw-motorrad.co.za/en/models/adventure/r1250gs.html

surely they're not that similiar?

 

You can buy a specialized bike for R4k, yet you're showing the top of the range CEO richwanker SWorks version that is R190k. I'm sure the top of the range BMW GS goes for silly like ~R500k, which would be a more apples with apples comparison.

[EddieV]

The acquisition of the Ferrari’s of cycling ie. top of the range Spez, Cannondale, Willier etc. all became possible once the industry started financing ….. suddenly you could have your R80K dream MTB at R2500 per month.

 

Easier to sell at R2K per month than R70K once off?

 

Imagine a bicycle market without financing ..... would look very different?