It seems pretty popular at the moment to lambast the cycling industry for making its bikes too expensive; YouTube in particular is full of vloggers ready to pontificate on the scandalous price of some bikes. The problem with this statement is that it’s a sweeping generalisation.
I think if you’re going to truly understand this topic, we need to drill down into what goes into the price of a bike. The cost of any product is fundamentally made up of the same components, so let’s take a look at a simple breakdown of what we are paying for.
Cycling Weekly’s Undercover Mechanic will be publishing his thoughts on the state of the industry once a month. He’s been working with bikes for over two decades, offering servicing on models from some of cycling’s best (and worst) marques. You’ll find him at all major trade shows and events, just don’t expect him to make himself known.
Let’s imagine a road bike that retails for £1000. I’ve chosen this price point because it’s a high volume category. First we have to remove VAT which in the UK at 20% means that the store receives £833. Based on a typical margin for this sort of bike, it will cost the shop somewhere in the region of £650. This leaves £183 gross profit, to fund the mechanic’s time to build the bike, time taken to actually sell it, and store overheads. That’s before there’s any discussion about discounts to match online competitors – or – the Cycle to Work scheme.
It’s clear that stores aren’t making huge profits from bike sales, so what about the manufacturers? Well, we’re not quite there yet, because between the manufacturers and the local bike shop is usually a distributor, they might purchase the bike from the brand for around £450, giving them £200 to cover their operations and overheads. This is where direct only brands (such as Canyon and Ribble) are able to offer such good value, as they cut out this tier.
So really, good value is all down to what the manufacturer is doing with their piece of the pie: £450. There are a range of business costs to consider, but the real formula for “how good value a bike is” comes down to the percentages the brand chooses to invest in labour, materials, quality control and marketing.
There is definitely a segment of the market where the sums don’t seem to add up: the flagship models which retail well into five figures. I stand up for pricing within the bike industry generally, but there are bikes out there which emerge from the same moulds as much cheaper models, with justifications such as a “different layup” accounting for thousands of pounds on top of the RRP. Material costs alone do not explain the higher price of these bikes. There’s an argument that here, what you’re paying for is the likes of pro-team sponsorship and advertising which makes that bike quite so aspirational.
Of course, there are development costs which also need to be accounted for, and these developments will eventually trickle down and be applied to more accessible models. Someone has to pick up the bill for that, and at the moment, it’s the customer who enjoys the tech before it becomes mainstream.
My stance would be that for the same price as some of these flagship bikes, you could buy something far more unique, from an independent frame builder or boutique business. For five figures (or close to), you’ll take home a lower margin bike that stands out in the crowd.
“Bikes are an emotional purchase”
But is there any tangible benefit in spending over £10,000 on a bike? Once you get over around £6,000 there is a law of diminishing returns in terms of actual performance.
I think the best way of explaining this is by using a recent customer of ours as an example. He bought a bike from us that retailed in excess of £20,000 and he had to wait six months for it to arrive. He wasn’t a rich man and he wasn’t a pro rider. So why did he need a bike costing this much?
In his own words (and I’m paraphrasing), “I’m passionate about cycling and this is my chance to own something that is state of the art and beautiful. If I was into cars I couldn’t afford a McLaren, but in cycling, my dream is attainable.”
So I think this price debate boils down to a couple of simple ideas. Bikes are an emotional purchase. None of us need a bike worth more than £600 but we want more. Ultimately anything is only worth what you are willing to pay for it and if you have always wanted that 1090’s Klein Attitude then maybe your pleasure at finally owning one is priceless.