Is a 10% admin fee on Cycle to work vouchers normal?

Kkeen

Is a bike company charging a 10% fee for use of a cycle to work voucher normal practice? I was leaning towards a Planet X London Road bike which was right at the top/over my budget but looks great for my needs and the cycle scheme discount brought the cost down to almost realistic territory if I eat only baked beans for a month.

But I noticed their 'admin' fee of 10% for any voucher used. They say the 3rd party organisations in the transaction charge them a 10% fee for each bike Planet X supplies to a customer and they're just passing that on to us. They can't absorb it because their margins are too low.

I can understand this but doesn't it defeat the purpose of a discounted bike (with the discount being provided via government stuff) when it costs the bike company an additional 10%, and which in this case, is being passed to the customer also?

I'm getting roughly a 20% discount with the scheme, but being charged a 10% admin fee. Which means it's almost pointless!

Regardless of the rights/wrongs of the above, it does unfortunately put this particular bike ( http://www.planetx.co.uk/i/q/CBPXLDNRDAPEX/planet-x-london-road-sram-apex-urban-bike ) out of my reach monetarily. Can anyone recommend another fulfils a similar purpose?

The commute is 7+ miles and will go through the center of Manchester. As in most UK cities the roads are full of pot holes and studded with glass.

The London Road has:
- slightly relaxed geometry
- wider, more substantial tyres.
- only 10 gears
- can fit mudguards
- and potentially a pannier rack
- disk breaks / carbon fork are a bonus

There's already enough to consider so I liked that I don't have to faff about buying from more than one place, the mudguards etc are all guaranteed to fit and can be bought alongside the bike etc.

Thanks.

prawny

PX always have, their reasoning is that there isn't enough profit in the bikes to cover it, not sure how true that is these days, but there you go.

The Rookie

Most retailing outlets (in all fields) mark up by circa 33% to cover costs and create a profit, a direct model like PX's (and it creates cheaper bikes so there must be reduced overall margins) could well mean their margins are so small that losing 10% means it's not worth selling the bike, they aren't the only direct model retailer to do this, if the bike is still good value then base it on that fact and not some arbitrary number, and for me even adding 10% on versus other similar bikes the LR is still great value.

bendertherobot

I'm not sure whether you're serious about the beans option. It's £39 a month (ish) net and a £69 down payment. Without wishing to come across in the wrong way, if that is stretching your finances then I'd avoid it anyway. There's the cost of maintenance, spare bits, clothing etc.

Remember that that £699 bike is only costing you around £510 ish. That's still a considerable saving.

drummer_boy

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19723086#p19723086]bendertherobot[/url] wrote:

Remember that that £699 bike is only costing you around £510 ish. That's still a considerable saving.

Except for the end of scheme purchase cost, which never gets factored into any calculations.

It is still cheaper, but it's very marginal after 12 months. Less so after 3/4 years, but then you have an old bike, if you use it a lot.

bendertherobot

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19723116#p19723116]Drummer_Boy[/url] wrote:

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19723086#p19723086]bendertherobot[/url] wrote:

Remember that that £699 bike is only costing you around £510 ish. That's still a considerable saving.

Except for the end of scheme purchase cost, which never gets factored into any calculations.

It is still cheaper, but it's very marginal after 12 months. Less so after 3/4 years, but then you have an old bike, if you use it a lot.

Then keep it. No-one charges you after 3 years. Indeed, most employers don't bother at all.

zypher20

my understanding of the cycle to work scheme is your employer pays the full cost of the bike to the shop do any additional fee is just profiteering. is its due to low margins this would be the same if you paid in cash.

Money saved via cycle to work schemes are actually paid for by the government via a reduced tax liability, and I've your in the civil service you can bet your life your gonna have to pay the end of contact option to buy payment meaning that if your a Base rate tax payer your gonna save very little but may miss out on sales etc as they are not often accepted on sale bikes.

Snakebite the 2nd

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19724949#p19724949]zypher20[/url] wrote:

my understanding of the cycle to work scheme is your employer pays the full cost of the bike to the shop do any additional fee is just profiteering. is its due to low margins this would be the same if you paid in cash.

Money saved via cycle to work schemes are actually paid for by the government via a reduced tax liability, and I've your in the civil service you can bet your life your gonna have to pay the end of contact option to buy payment meaning that if your a Base rate tax payer your gonna save very little but may miss out on sales etc as they are not often accepted on sale bikes.

I think this is spot on.

The full price of the bike goes to the retailer, all that happens is that the government do not get the tax on the bike.

Well that's my understanding.

thistle_

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19721552#p19721552]Kkeen[/url] wrote:

Is a bike company charging a 10% fee for use of a cycle to work voucher normal practice?

When C2W first started there were complaints from people where I worked about some bricks and mortar bike shops charging an extra 10% to use the vouchers.

The excuse was always that it was an administration fee, however when I got my bike the person putting the transaction through the till explained it to me and all the bike shop had to do was enter the voucher code on their system, print the receipt and post off the Cyclescheme so there didn't seem to be enough extra admin at the bike shop end to justify it (there could be some complex back office work needed, but the bike shop didn't mention this).
The charge would make more sense if the C2W scheme provider charges the bike shop for redeeming the voucher. I suppose someone has to pay for the financing of the project?

bompington

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19725798#p19725798]Snakebite the 2nd[/url] wrote:

[url=http://www.bikeradar.com/forums/viewtopic.php?p=19724949#p19724949]zypher20[/url] wrote:

my understanding of the cycle to work scheme is your employer pays the full cost of the bike to the shop do any additional fee is just profiteering. is its due to low margins this would be the same if you paid in cash.

Money saved via cycle to work schemes are actually paid for by the government via a reduced tax liability, and I've your in the civil service you can bet your life your gonna have to pay the end of contact option to buy payment meaning that if your a Base rate tax payer your gonna save very little but may miss out on sales etc as they are not often accepted on sale bikes.

I think this is spot on.

Not quite.
In theory, the employer buys the bike from the retailer at the normal price, and then passes that on, less tax, to the employee.
In practice, a lot of employers use intermediaries like cyclesheme.co.uk. This is because it saves them the admin, and also acts as a source of credit, so they don't have to pay up front.
It's these middle men who charge the 10% to the shops. So you could say it's the middlemen who are profiteering, but they do provide a service that the employer is happy for you to pay for. If your company doesn't use them it doesn't happen: when I worked for a small school I bought a bike on the scheme by persuading them to give me the dosh as petty cash, meant I could get a cash discount