# "Dealer Cost" on Specialized bikes? All bikes?



## Black_Cat (Jun 29, 2015)

What does a 2016 Specialized Camber cost the dealer?

Or, any other bike.

Is it the standard 100% markup?


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## 06HokieMTB (Apr 25, 2011)

Not 100%. They most definitely do not make MSRP 2x dealer cost.


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## mtnbikej (Sep 6, 2001)

And I imagine that not all dealers pay the same amount. High volume dealers may get price breaks that the lower volume dealers don't....same with financing terms.


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## Derek200 (Jun 16, 2015)

100% markup? That would be awesome. I'm in retail. I would love 100 margin. Haha


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## Rock Surf (Aug 28, 2010)

The markup is not high at all. Most dealers make their money in parts and labor.


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## cjsb (Mar 4, 2009)

Markup is not profit. There is a cost to the dealer for the inventory, which might be financed, and then the dealer has to charge a higher price to cover the dealer's retail and overhead costs, and hopefully pay himself.

A 100%markup on some models wouldn't shock me, but it might indicate either crazy demand or not much competition in the area or both.


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## Derek200 (Jun 16, 2015)

I don't know but I imagine of markup was truly 100% the bike shop would die. That leaves too much room for other brands to undercut by thousands of dollars direct. 

100% markup would mean they make half the dollars of the bike. It could be but I don't see it. 

I work in a business where we think 22 margin is ridiculously high!


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## syl3 (Apr 23, 2008)

Here in my corner of europe shops pay 65 to 70 cents on the dollar. Then they have to pay rent, employees, utilities, compete with internet shops, come up with a lot of cash for preorders... it's a tough business. I know Giant in England owns all inventory and shops can have bikes on the showroom floor without having to pay for them, but they make a smaller margin. That option would make business a bit easier, but sadly the market is way smaller so distributors can't afford that over here.


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## cjsb (Mar 4, 2009)

Derek200 said:


> I don't know but I imagine of markup was truly 100% the bike shop would die. That leaves too much room for other brands to undercut by thousands of dollars direct.
> 
> 100% markup would mean they make half the dollars of the bike. It could be but I don't see it.
> 
> I work in a business where we think 22 margin is ridiculously high!


I agree with you in the sense that 100% would be the exception. It wouldn't shock me for a high end model that has a first in kind of something. It may take a season for the competition to get their version to the market. Markups are going to be much higher on higher end models but still 100% would be the exception and it shouldn't last long if the market is competitive.

For a Camber, a dime a dozen type bike, the markup is going to be much lower and they have to sell lots of qvolume.


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## J.B. Weld (Aug 13, 2012)

35-40% margins on pretty much all bikes, and as mentioned high volume dealers do the best.


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## Derek200 (Jun 16, 2015)

*"Dealer Cost" on Specialized bikes? All bikes?*

In syl13 example they are making 30-35 margin. (Some businesses calculate margin differently - in my world the markup divided into retail).

In my experience, markup is fairly consistent in a given Category of merchandise. With the exception of very high end product.


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## TiGeo (Jul 31, 2008)

More like 40%.

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## TiGeo (Jul 31, 2008)

Price minus cost divided by price.

1800 price. 1000 cost. 800 mark up. 44%.

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## Derek200 (Jun 16, 2015)

I was using syl13 example of 65 cents on the dollar. Assuming she meant the dollar was the retail and the 65 was the cost.


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## TiGeo (Jul 31, 2008)

When I hear someone say "100% markup" I assume them mean buy something for $1000, sell for $2000. Most clothing and accessories are marked up like this, bikes are not. Parts are a crap-shoot as this is where online has really eroded LBSs margin so while they may want to double the cost for retail price, they can't really be competitive there so many are selling things with less margin.


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## Derek200 (Jun 16, 2015)

Yeah. But I don't think the problem with component costs is anyone charging too much markup. 

My suspicion is that the supply chain in the US just has too many partners all taking their cut. 

You can order shimano XT Groupset from bike 24 for almost half he price of getting it in the uS. 

Their are tariffs, and distributors etc. it seems like shimano and others would try to cut out distributors to better serve customers. But they probably like the simplicity of dealing with smaller number of customers.


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## nauc (Sep 9, 2009)

are the close out prices at the end of the year more inline with what the dealers paid?

always wondered the same question... nice thread!


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## Derek200 (Jun 16, 2015)

Close out is probably different by dealer. My local specialized dealer told me he owns his inventory. So it is a liability. At some point u sell it at a loss to free up cash. When and how is probably up to the dealer. My shop has several 2 and 3 year old models. I bet on those you could make an offer


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## LMN (Sep 8, 2007)

Mark on bikes: 33%.
$1500 bikes, cost the dealer $1000.

When you look at parts there is a lot going on. Some times the price you can get mail order is significantly better then the shops price. 

Manufactures purchase parts at way lower cost then shops, some times they order too many parts and they sell them super cheap to mail order companies.


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## TiGeo (Jul 31, 2008)

nauc said:


> are the close out prices at the end of the year more inline with what the dealers paid?
> 
> always wondered the same question... nice thread!


Once the model year is over (going with what Specy does), the dealer can mark-down the bike to whatever he needs to move it. This is just basic supply/demand- they are only going to mark them down enough to move them, no more. They don't just mark them down to cost the minute they are a year old...plenty of folks will pay full-price for a one-year old bike b/c they don't know/care.


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## owensjs (May 21, 2009)

LMN said:


> When you look at parts there is a lot going on. Some times the price you can get mail order is significantly better then the shops price.


I see this pretty often working in a shop. Just recently a guy asked us to price match a Shimano 105 groupo and when I looked up the parts and compared them to the online seller, he was able to get them online for a little less than what our dealer cost was.


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## TiGeo (Jul 31, 2008)

I think the big win for LBSs in the parts dept. is to do the installs for free/v. deeply discounted when you buy your more expensive parts from them. If you order online and walk in, great, happy to install at full-price. Otherwise, than just can't get the sales from folks like me (and many others here) that can install their own stuff, have a good understanding of what they need, etc.


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## TSpice (May 15, 2015)

The trick is knowing what the dealer/LBS actually paid the manufacturer. Those costs are generally locked down pretty tight or people would haggle the hell out of LBS's to the point of going out of business. Granted just because you know what the dealer paid, doesn't necessarily you can do anything with that information. 

Regardless, I would say the minimum on brand new merchandise (current or future model year) is likely 20-50% mark up. MSRP is likely around the 50% mark up value, but depending on the clientele the dealer has a buffer zone to increase the likelyhood of sales. 

Case and point, I just picked up a 2016 SuperSix EVO from Cannondale out of my LBS. I am up to 4 bikes with them now, and know all of the staff pretty well. They didn't have it on the floor, they had to order it specifically. So you know they weren't at all in any hurry to move the material as it was costing the LBS literally ZERO as it was an order. They chopped almost $500 off the MSRP for customer loyalty. I am sure they still made money on me over the invoice cost of acquring it, even after set up costs from their mechanics, but still. They had wiggle room from Cannondale, extended some of that to me as a gift, and took the rest.

Win win. I got a bike cheaper than any other dealer was even remotely offering for it. They got the guaranteed business as it was an order I placed with THEM (as opposed to with the manufacturer). Not to I talk about that LBS to friends, so now they got some free marketing. 

Take care of your LBS, they take care of you.


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## richde (Jun 8, 2004)

Derek200 said:


> Yeah. But I don't think the problem with component costs is anyone charging too much markup.
> 
> My suspicion is that the supply chain in the US just has too many partners all taking their cut.
> 
> ...


Regional pricing (and when they set that pricing) and currency fluctuations are probably the reason for dirt cheap Shimano stuff from Europe.

The Euro has lost ~11% in the last year vs the Dollar, the GBP has also had some pretty big fluctuations.


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## TiGeo (Jul 31, 2008)

Dealers can only sell current model year bikes within a specific price range (Specialized I know has this as part of the dealer arrangement) so deep discounts aren't typical until the bike is a model year old.

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## tehllama (Jul 18, 2013)

richde said:


> Regional pricing (and when they set that pricing) and currency fluctuations are probably the reason for dirt cheap Shimano stuff from Europe.
> The Euro has lost ~11% in the last year vs the Dollar, the GBP has also had some pretty big fluctuations.


Ironically, part of the reason SRAM has had so much success with the XX1->X01->X1->GX trickle-down effect is that the weakening Euro made the prices on those groupsets comparatively lower than other alternatives, which helped sell more of them outright (more market share), so they've already recouped their R&D costs, but most people assume it's because their kit was the most liked, and forget that exchange rates really made it easy for product managers and retailers to carry those sets at lower costs and include them on more builds.

When dealing with MAP pricing, I find that haggling over the price itself isn't anywhere I feel like I'm making much traction - but I always need more support equipment and parts of some kind (pedals, dropper post, water bottles, bottle cages, sealant, tools, spare parts, etc.) and getting those at steep discounts when I'm buying the bike itself at MAP price comes back as a win all around. Anything the shop can afford to part with at such a low price I feel silly not getting it, I get. They make a bigger sale, move a bike, and I'm an even happier customer. Considering that I'm such a 'tight' online price comparison shopper about so many things, this is really the best possible outcome.


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## RVbldr (Sep 10, 2015)

I'm looking at dropping some $$ into a new Stumpie as well, and this thread is pretty interesting. Since we're not dealing with a $500 bike, is there some wiggle room between the MSRP, MAP, and dealer cost? Normally, I'm seeing local dealers (and we have at least 4 Spec dealers local) are selling for MSRP. I'm very curious if I have some room to deal if I'm spending multiple $K. I also deal in the scuba business and we tend to have some maneuvering room to make a sale.


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## Finch Platte (Nov 14, 2003)

Derek200 said:


> In syl13 example they are making 30-35 margin. (Some businesses calculate margin differently - in my world the markup divided into retail).
> 
> In my experience, markup is fairly consistent in a five. Category of merchandise. With the exception of very high end product.


Well, thank you for proofreading that.


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## AndrwSwitch (Nov 8, 2007)

From the outside, it didn't look like my local Specialized dealer had much room to negotiate on bike price at all. He offered me a training watch to try to sell a Stumpjumper, a couple days after I'd asked about flexibility on price. Why would it matter to him if he gave me a watch or took its cost to him off the bike? I think the big brands are trying to set themselves up in a different market space from bikesdirect et al. It's hard to imagine how they could compete directly with that model - people need to choose them for things that are hard to quantify, like believing they fit and handle better or that there's some extra value to new components. Otherwise, LBS bikes lose to catalog bikes every time.

I think price controls are the brands exercising their power to give up bottom line customers rather than letting their prices erode. Whether that ultimately protects the shops or makes it an even harder business remains to be seen. I'm actually sympathetic to the idea that it's protecting them from a race to the bottom.


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## TiGeo (Jul 31, 2008)

RVbldr said:


> I'm looking at dropping some $$ into a new Stumpie as well, and this thread is pretty interesting. Since we're not dealing with a $500 bike, is there some wiggle room between the MSRP, MAP, and dealer cost? Normally, I'm seeing local dealers (and we have at least 4 Spec dealers local) are selling for MSRP. I'm very curious if I have some room to deal if I'm spending multiple $K. I also deal in the scuba business and we tend to have some maneuvering room to make a sale.


You won't know until you ask. What I was saying is that they do have wiggle room, but its within a narrow band per their dealership agreement with Specy. Once the bike is one model year old, all bets are off and the dealer can pretty much do what they want to move it.


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## Derek200 (Jun 16, 2015)

Finch Platte said:


> Well, thank you for proofreading that.


Fixed! Proof reading isn't my thing.

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## Black_Cat (Jun 29, 2015)

It worked for me.

Here's what I did.

I located all the Specialized dealers in SoCal.

EMAILED each of them.
Told them I had cash and was ready to buy.

Most gave me the standard replky of non negotiation.


But, one send me a low ball price.
There's always one who can't follow the rules.

I asked my LOCAL dealer if he would/could "price match"?

Specialized, apparently, allows a dealer to match a lower price.


They can and he did.


2016 Specialized Camber

Blast out a bunch of emails to your local dealers and even not so local dealers.

It's free and you have nothing to lose.

If one comes back with a hot price, you can use it to "help" you local dealer lower his/her price and sell you the bike.


PM me if you're in SoCal and I can fill you in on the details.


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## ELBURRO (Jun 3, 2006)

I recently arranged to demo a 2016 S Works Stumpy 27.5. MSRP 8600.00 Upon arrival to pick up demo bike, sales guy said they would need credit card for full amount of bike price. I expressed doubt my card would handle that much and he said "oh,we'll only put our cost on your card". All good. Later I saw on my CC statement that 5670.00 had been tagged for demo security. If that is in fact their cost [massive Spesh dealer] , it may give some idea of markup.

Also, there is more room to move $ wise on frame up builds vs. SBC factory builds, no surprise.

Joe


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## TiGeo (Jul 31, 2008)

I don't think folks understand retail mark ups. In your example above, this is how the numbers look (table below). I think many think shops are charging 100% mark up (double the wholesale..common with parts, accessories, and clothing) which is not the case on bikes. Yes, the profit is large comparably to a less expense bike, but the margin is not outstanding and its all about margin in retail. Just because they have more money in their gross profit doesn't mean they are willing to move b/c they are looking at this as a percentage game.

Wholesale	$5,670
Retail	$8,700
Profit	$3,030
Mark up	53.4%
Margin	34.8%


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## Derek200 (Jun 16, 2015)

And I would add that their ability to wiggle is less related to the rate and more related to volume. If hey sell one bike a week in your example they have 3k to pay rent, electricity, wages, etc. 

If they sell 10 - at the same rate and dollars, then they have 30k to pay those same bills. Except some bills are variable and get more expensive with more volume. 

In general you get more efficient with volume though. So net operating income would go up. 

Anyway. The market isn't an emotional thing. It's very brass tacks. 


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## TiGeo (Jul 31, 2008)

Also keep in mind they don't sell that many $8K bikes. They are only making $175 for every $500 bike they sell and I would wager most shops are selling 10 cheaper bikes to 1 expensive bike.


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## cjsb (Mar 4, 2009)

Yeah, retail markup is not profit. You have to cover your costs and make a profit from your markup. Those that can operate at lower cost or spread fixed overhead over larger volumes have an advantage.


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## tehllama (Jul 18, 2013)

I'll pull this from somewhere else (another very dude-centric activity that has massive stratification in equipment and lots of high dollar marginal performance type of things:

Why do people complain about the markup of something in the 20-80% range where there is marked improvement on the higher end and visible progression being funded by purchase of cutting edge stuff - when industries like Furniture sales typically run 300-400% markup? 

As much as a shameless cheap-arse as I am, I understand that there needs to be some profit margin to offset the risks associated with running a shop (high inventory value, the need to keep overqualified people on staff as mechanics, and god forbid the planned obsolescence that seems to come in so hard from some of the bigger names).

I'm still an advocate of instead pushing for that margin to be made up by getting the shop to make up that difference with stuff you're going to buy or want anyway -- pumps, gauges, sealant, grips, seat, dropper posts, riding gear, tires, and follow-on tune-up work is a way better negotiation tool. Why not make yourself a happier customer and give the shop the opportunity to roll in some of their typically higher margin stuff at a phenomenal value - they still move inventory, and the rider is taking maximum advantage of having knowledgeable and well-stocked LBS.


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## cjsb (Mar 4, 2009)

tehllama said:


> I'll pull this from somewhere else (another very dude-centric activity that has massive stratification in equipment and lots of high dollar marginal performance type of things:
> 
> Why do people complain about the markup of something in the 20-80% range where there is marked improvement on the higher end and visible progression being funded by purchase of cutting edge stuff - when industries like Furniture sales typically run 300-400% markup?
> 
> ...


The shops I first frequented did that heavily. The higher margin items were decimated by Internet retailers. Still what you say has validity, it is an ongoing option value. It is just a lot more competitive and a lot harder now.

I have no issue with markup it has to be there I don't expect ansshop to be there for free.

In general consumers can make very short sighted decisions


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## RS VR6 (Mar 29, 2007)

ELBURRO said:


> I recently arranged to demo a 2016 S Works Stumpy 27.5. MSRP 8600.00 Upon arrival to pick up demo bike, sales guy said they would need credit card for full amount of bike price. I expressed doubt my card would handle that much and he said "oh,we'll only put our cost on your card". All good. Later I saw on my CC statement that 5670.00 had been tagged for demo security. If that is in fact their cost [massive Spesh dealer] , it may give some idea of markup.
> 
> Also, there is more room to move $ wise on frame up builds vs. SBC factory builds, no surprise.
> 
> Joe


LOL...you should have just taken off with the bike. You just got an S-Works Stumpy for cost!


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## TiGeo (Jul 31, 2008)

I agree that the best away to approach getting a "deal" at your LBS when you buy a bike is to simply first politely ask "Is this is the best price you can do on this bike?" and two, ask if they can give you a discount on accessories etc. at the time of sale. The poster above is correct, the reason shops often toss in a bottle, a cage, a XX% discount on pedals etc. is that those bits have a much higher margin and give them a bit more room to work without getting the lights shut off.


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## Ailuropoda (Dec 15, 2010)

I don't haggle that much for new bikes. I have a really good LBS and I just bought my fifth bike from them in four years, a 2016 Specialized FSR 650b Fattie that has an MSRP of $3500. 

Without even asking the owner cut the price to $3200. He ordered it for me so maybe I could have gotten a lower price but he has a business to run and I have enough money where I don't mind paying what he asked. It's a nice bike. Since cycling is a hobby spending money on it doesn't make me angry.


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## RVbldr (Sep 10, 2015)

Ailuropoda said:


> Without even asking the owner cut the price to $3200. He ordered it for me so maybe I could have gotten a lower price but he has a business to run and I have enough money where I don't mind paying what he asked. It's a nice bike. Since cycling is a hobby spending money on it doesn't make me angry.


Seems pretty much in line with what I found on a new SJ FSR 6F (Comp). Discount was slightly less, but certainly in the same ballpark. Overall, I was happy with that.


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