Cyclescheme on discounted bikes?

mcj78

Hi all,

Apologies if this has been done to death, but what's the guidelines on purchasing a bike through cyclescheme if it's on sale? I emailed a retailer re. a bike I fancied (last years' model so now discounted everywhere, don't like the new colourscheme) & was told that if using cyclescheme then it would be at full rrp & not the sale price, which would kinda eliminate any financial benefit from using the scheme in the first place - anyone know the ins & out of this, is it some kind of grey area or simply down to the discretion of the shop?

Cheers!
John

jpower10

This is because most employers use Cyclescheme or similar to administer the scheme for them. Such scheme administrators charge the bike shops supplying under the scheme a commission, and so most bike shops won't supply discounted bikes under the scheme - they could end up actually making a loss!

What most employers don't realise is that they can administer the scheme themselves - they just need to draw up suitable rental agreements between themselves and the employees, and buy the bike directly. The employer can then buy any bike, discounted or not - they will just want a VAT invoice for it.

The reason for the £1,000 limit is to do with Consumer Credit Licences (CCLs). CCLs are required to draw up the rental agreements, but there is an exemption of upto £1,000 for this purpose, as most employers do not hold a consumer credit licence. However, as I understand it, if your employer holds a Consumer Credit Licence in their own right, the £1,000 limit does not apply - happy days!

You just need a willing and knowledgeable employer

n_b_t

Cyclescheme charge the shop 10% of the purchase price for "administering", so tha's a hefty chunk of any profit they might make on a discounted bike. Note that "cyclescheme" is a commercial organisation who administer the "cycle to work scheme" which in itself doesn't cost anything

RufusA

Entirely at the discretion of the individual shop as to what price they agree to sell the bike to you at.

However if you choose to use cyclescheme, they charge the retailer a hefty (IMHO) commision for arranging the sale and issuing the voucher. This used to be 10% of the sale price, + VAT, plus some fixed enrolement / admin costs.

Therefore if a shop is already selling old stock at near cost price to clear it, they don't want to hand over an additional chunk to cyclescheme and be heavily out of pocket.

So you will tend to find the majority of shops won't offer bikes at hefty discounts, and/or won't be willing to throw in free accessories to those on cyclescheme.

There are of course exceptions to this rule.

YMMV - Rufus.

mcj78

Ahaaa, I didn't actually realize Cyclescheme charged shops so much for "administration" etc. - I can see their point now! The bike might still be justifiable in any case, i'll have a word with myself

jpower10 - that's an interesting point, i'd never thought of that before - I imagine most employers would see it as extra hassle & therefore be reluctant to administer the scheme themselves when someone else will do it & it won't cost them anything, so the cost for administration ends up back at the door of the bike shop.

Cheers all,
John

meanredspider

Helps explain why my LBS, despite having the sale of 120 bikes put their way this April alone, didn't discount and only gave away a bottle & holder with my 1350 quid bike.

How much margin is in a bike though? There must be far more than 10% else bike shops wouldn't bother signing up to the scheme.

mcj78

meanredspider wrote:

How much margin is in a bike though? There must be far more than 10% else bike shops wouldn't bother signing up to the scheme.

I don't know the answer to that one, although i'm sure there are plenty of folk on here who could give more accurate figures although 20-25% on full rrp. rings a bell for some reason... anyone?

Bikequin

Our cyclescheme at work is run by Evans, and they will let you purchase bikes which have been discounted.

arthur_scrimshaw

Got the same message when I bought my Six, was £200 off RRP but when I mentioned cyclescheme the shop said no discount. They told me they have to pay 10% to cyclescheme - I asked if this was purchase price or cyclescheme amount (max £1000 in my Company), turns out it's the cyclescheme amount. So it would cost them 10% of £1000 or £100, with this reasoning they agreed to reinstate £100 of the discount. Plus I got free bottle cages, spds and 30% off a Cateye Computer. I was happy with that.

The Rookie

Typical retail markup is 25-33%, however you have to factor in certain fixed costs that mean that will usually be circa 15% operating profit, so take off CS's 10% cut and the shop will only be making circa 5% on the deal, unless they can see you walking away and them losing further custom from the sale, not many shops will give you more than a couple of percent discount.

Simon

Drfabulous0

The Beginner wrote:

Typical retail markup is 25-33%, however you have to factor in certain fixed costs that mean that will usually be circa 15% operating profit, so take off CS's 10% cut and the shop will only be making circa 5% on the deal, unless they can see you walking away and them losing further custom from the sale, not many shops will give you more than a couple of percent discount.

Simon

This is spot on, cyclescheme is great because it brings in business, but it is expensive. You will get a better discount by using cyclescheme than the bike shop can give you if you pay cash though.

arthur_scrimshaw

Drfabulous0 wrote:

The Beginner wrote:

Typical retail markup is 25-33%, however you have to factor in certain fixed costs that mean that will usually be circa 15% operating profit, so take off CS's 10% cut and the shop will only be making circa 5% on the deal, unless they can see you walking away and them losing further custom from the sale, not many shops will give you more than a couple of percent discount.

Simon

This is spot on, cyclescheme is great because it brings in business, but it is expensive. You will get a better discount by using cyclescheme than the bike shop can give you if you pay cash though.

As a buyer you might get a better discount but will lose all the benefits of the cycle to work scheme i.e. no Vat to pay, deductions from salary before tax and NI plus 18 months interest free credit. Made the discount issue a non issue for me.

gadgets

I've visited two LBS today and both said they will use the list price rather than the sale price on the 2010. It made me reconsider buying a 2010 if there is no price advantage to the 2011 bike. As with the previous posts, I am not too bothered about not getting the sale price though.

mudcow007

i bought my Kona (stinky) on the cyclescheme, the bike retailed at £1500 i found it for £1200 on tinterweb but i was told i wouldnt be able to buy the bike over the internet using the voucher as i had to physically go to the store.

oh and another thing i got charge a "processing fee" at Winstanley Cycles in wigan for using the cyclescheme voucher!