How does a road bike cost 10k...

keef66

The actual cost of production rarely comes in to it. I've worked with products which have a 98% profit margin.

It's hilarious seeing how cheaply generic manufacturers can make something once the patents expire. Look at ibuprofen; when Nurofen was launched and enjoyed a monopoly courtesy of patent protection is was reassuringly expensive, and Boots recouped the costs of development and registration. Now it's off patent Tesco are knocking them out for a penny a go.

oldbazza

It's nice to be able to easily buy kit the pros use though;try buying Lewis Hamiltons McLaren or Rossis Yamaha M1*.


*Ok you can probably buy boots similar to Messi and a racket like Murrays but they are not proper sports though are they :roll:

mrb123

keef66 wrote:

The actual cost of production rarely comes in to it. I've worked with products which have a 98% profit margin.

It's hilarious seeing how cheaply generic manufacturers can make something once the patents expire. Look at ibuprofen; when Nurofen was launched and enjoyed a monopoly courtesy of patent protection is was reassuringly expensive, and Boots recouped the costs of development and registration. Now it's off patent Tesco are knocking them out for a penny a go.

Bizarrely some people still buy Nurofen though!

danny788

Having a £10k bike in the range, makes the £2k bike they're selling you, look a desirable bargin. Saying that, I can't even convince the wife my £330 bike was cheap

keef66

MrB123 wrote:

keef66 wrote:

The actual cost of production rarely comes in to it. I've worked with products which have a 98% profit margin.

It's hilarious seeing how cheaply generic manufacturers can make something once the patents expire. Look at ibuprofen; when Nurofen was launched and enjoyed a monopoly courtesy of patent protection is was reassuringly expensive, and Boots recouped the costs of development and registration. Now it's off patent Tesco are knocking them out for a penny a go.

Bizarrely some people still buy Nurofen though!

Bizarrely an awful lot of people must still buy Nurofen, if the number of TV adverts is anything to go by. It clearly works on some people and they refuse to believe that the cheap, generic stuff works just the same. It's also been amusing to see the bewildering range of "specialised" painkillers; Nurofen Back Pain / Nurofen Elbow Pain / Nurofen @rse Ache etc.

Tiesetrotter

keef66 wrote:

MrB123 wrote:

keef66 wrote:

The actual cost of production rarely comes in to it. I've worked with products which have a 98% profit margin.

It's hilarious seeing how cheaply generic manufacturers can make something once the patents expire. Look at ibuprofen; when Nurofen was launched and enjoyed a monopoly courtesy of patent protection is was reassuringly expensive, and Boots recouped the costs of development and registration. Now it's off patent Tesco are knocking them out for a penny a go.

Bizarrely some people still buy Nurofen though!

Bizarrely an awful lot of people must still buy Nurofen, if the number of TV adverts is anything to go by. It clearly works on some people and they refuse to believe that the cheap, generic stuff works just the same. It's also been amusing to see the bewildering range of "specialised" painkillers; Nurofen Back Pain / Nurofen Elbow Pain / Nurofen @rse Ache etc.

Damn

ben@31

It's all down to capitalist greed, trying to con as much money out of the consumer for a cheap product made in a Chinese sweat shop.

How does a bike frame cost £6500 ? When it's made in the same Taiwan factory as a £500 frame. Certainly not made by an Italian artisan in a shed.

I don't buy into the R&D excuse. There's only so many ways you can make a bike frame, the overall shape hasn't changed much. Then there's economy of scale, for a production run of thousands of bikes, you only need to design it once, build the factory once, they buy raw components in bulk, share transportation costs, so there's no way it all costs £10,000 x 1000

What I have always wondered is.... If a shop stocks these really expensive bikes, where do they go if the bikes don't sell within 2 or 3 years ? I can never find them

bristolpete

ben@31 wrote:

It's all down to capitalist greed, trying to con as much money out of the consumer for a cheap product made in a Chinese sweat shop.

How does a bike frame cost £6500 ? When it's made in the same Taiwan factory as a £500 frame. Certainly not made by an Italian artisan in a shed.

I don't buy into the R&D excuse. There's only so many ways you can make a bike frame, the overall shape hasn't changed much. Then there's economy of scale, for a production run of thousands of bikes, you only need to design it once, build the factory once, they buy raw components in bulk, share transportation costs, so there's no way it all costs £10,000 x 1000

What I have always wondered is.... If a shop stocks these really expensive bikes, where do they go if the bikes don't sell within 2 or 3 years ? I can never find them

Bought on projected sales and built in build/volume windows. For example, let say Giant are moulding frames for a.n.other brand as they do, you buy a window of production, project forward how many you may need globally They are built and moved on. If you have a 3 week window and then a.n.other bike brand are due in on day one of week four so be it. The window shuts till the next years production line. This is why bikes sell out and customer find it hard to source as you simply cannot phone Mr. Wong in Tawain and say knock us out another ten, it has sold quite well. Quite an interesting subject and to see it in action in the big guns i.e Merida, GIant and so on is immense.

ben@31

bristolpete wrote:

Bought on projected sales and built in build/volume windows. For example, let say Giant are moulding frames for a.n.other brand as they do, you buy a window of production, project forward how many you may need globally They are built and moved on. If you have a 3 week window and then a.n.other bike brand are due in on day one of week four so be it. The window shuts till the next years production line. This is why bikes sell out and customer find it hard to source as you simply cannot phone Mr. Wong in Tawain and say knock us out another ten, it has sold quite well. Quite an interesting subject and to see it in action in the big guns i.e Merida, GIant and so on is immense.

I've heard they're made in the same factory. However I would have thought they'd keep the tooling / casts to do another production run.
Maybe if an expensive bike isn't sold the frame is painted differently and used to build a lower end version. I remember a bike manufacturers concept store telling me one of their models shares the same frame across the price range, it's just the paint that's different

Man Of Lard

ben@31 wrote:

I've heard they're made in the same factory. However I would have thought they'd keep the tooling / casts to do another production run.

You're missing out that to change the tooling etc costs in manpower to make the change and also in lost production.

So it is more financially efficient to spend week 1-4 knocking out frame type A for the year, 5-8 frame type B for the year, 9-12 frame type C.... than it is to keep chopping & changing them and in a cut throat business like contract frame making, cost management is king.

darkhairedlord

Man Of Lard wrote:

ben@31 wrote:

I've heard they're made in the same factory. However I would have thought they'd keep the tooling / casts to do another production run.

You're missing out that to change the tooling etc costs in manpower to make the change and also in lost production.

So it is more financially efficient to spend week 1-4 knocking out frame type A for the year, 5-8 frame type B for the year, 9-12 frame type C.... than it is to keep chopping & changing them and in a cut throat business like contract frame making, cost management is king.

hence some generic brand frames go up in price over the year (as stock dwindles quicker than expected) then drop suddenly when the next batch arrives. Others may do the opposite.

keef66

I've always been fascinated by the way it's possible to elevate a particular brand in the mind of the customer so they are happy to pay more for it. Apple, Audi, and the bewildering rise of designed clothing brands for instance.

I have an A3 as a company car, and I do like the personal attention / comfy chairs / splendid espresso / muffins etc when I take it in for work (even though the place seems to be run by well dressed 12 year olds...)
But I'm not sure I'd spend the extra for an Audi if it was my own money...The equivalent VW, Seat, Skoda would likely be good enough.

pblakeney

keef66 wrote:

I've always been fascinated by the way it's possible to elevate a particular brand in the mind of the customer so they are happy to pay more for it. Apple, Audi, and the bewildering rise of designed clothing brands for instance.

I have an A3 as a company car, and I do like the personal attention / comfy chairs / splendid espresso / muffins etc when I take it in for work (even though the place seems to be run by well dressed 12 year olds...)
But I'm not sure I'd spend the extra for an Audi if it was my own money...The equivalent VW, Seat, Skoda would likely be good enough.

VAG are smart enough that each level up gets a slightly better this, a slightly better that. Enough that there is not a like for like but noticeable enough. Whether you think it is value for money or not is a judgement call.

King_Pin_Rich

danny788 wrote:

Having a £10k bike in the range, makes the £2k bike they're selling you, look a desirable bargin. Saying that, I can't even convince the wife my £330 bike was cheap

Interesting point, maybe the real expensive stuff is there as a more of a showcase in the range and they don't really expected to sell many.

Can't say I buy into the R+D cost excuse either.

PBlakeney wrote:

keef66 wrote:

I've always been fascinated by the way it's possible to elevate a particular brand in the mind of the customer so they are happy to pay more for it. Apple, Audi, and the bewildering rise of designed clothing brands for instance.

I have an A3 as a company car, and I do like the personal attention / comfy chairs / splendid espresso / muffins etc when I take it in for work (even though the place seems to be run by well dressed 12 year olds...)
But I'm not sure I'd spend the extra for an Audi if it was my own money...The equivalent VW, Seat, Skoda would likely be good enough.

VAG are smart enough that each level up gets a slightly better this, a slightly better that. Enough that there is not a like for like but noticeable enough. Whether you think it is value for money or not is a judgement call.

I've always been curious as to how much profit is actually made off each car after all is said and done. But I guess that would give the game away!