What margin do dealers make on bikes?

[foliedouce]

Just idle curiosity really, I've just been the painful process of trying to source a new bike for immediate delivery and it seems like the dealers can't get new stock quick enough to keep up with demand.

On the model I bought, it was advertised by most dealers at £5k, I managed to get it for £4.5k for delivery next week.

I was just wondering how much fat is in it.

[zasker]

I’d say they are probably still making a decent margin. About 25 years ago I bought a Rocky Mountain Blizzard when I was in Canada. I understand there is import duty etc but I paid just under £900 and the UK price at the time was £1800.

[millen]

Two years ago I got a cardboard Trek box from a LBS for sending my bike by air. LBS had left the original invoice in the box. From memory they paid upper 50's % of the retail price, on a £1k bike. Don't know if that's typical, but sounds reasonable to me - they've got their overheads + time spent advising on bike, rudimentary bike fit, some assembly work and checks prior to sale, maybe swapping 1 or 2 components to suit customer.

I shouldn't generalise though!

[leyorkie]

Look at the prices of last years bikes and upto 50% makes sense
I have bought a couple of “bargains “ £2500 for £1500 and this year £3400 for £2500 and the dealers were still happy.

[foliedouce]

Sounds about right. And maybe a bit more right now with huge demand

[Centurion07]

zasker said:

I’d say they are probably still making a decent margin. About 25 years ago I bought a Rocky Mountain Blizzard when I was in Canada. I understand there is import duty etc but I paid just under £900 and the UK price at the time was £1800.

Dealer would've been lucky to be paying that trade!

I used to work in an industry that is massive in Canada and the States and I was paying more over here trade price than retail customers were paying over there.

Over there shops could obviously deal with the suppliers direct; over here you have to go through at least one distribution company which quite possibly have already had to deal with ANOTHER distribution company in the country of origin.

That's not even mentioning how outrageous the trade prices were anyway before the retailer's mark-up was added.

Comparing retail price in another country with retail over here isn't fair.

[TAZ 215]

You’re being very optimistic.

The bike industry is low margin.

Dealers being happy with those deals is largely due to turning stock into cash rather than making a decent profit

[esuuv]

In 2013 i bought a frameset from a business going bust. Retail was just over 5k, i paid 2 - there was an invoice in the box for £2200 - so around half.

This margins are slim is valid on low end bikes - you pay £500 they probably paid £250 - they have to build it, pay for the shop / staff / insurance / taxes etc - make you feel nice, demo bikes, first service......on higher end stuff they’re doing ok - all about volume though......how many 5k bikes get bought.........

[Centurion07]

esuuv said:

In 2013 i bought a frameset from a business going bust Retail was just over 5k, i paid 2 - there was an invoice in the box for £2200 - so around half.

This margins are slim is valid on low end bikes - you pay £500 they probably paid £250 - they have to build it, pay for the shop / staff / insurance / taxes etc - make you feel nice, demo bikes, first service......on higher end stuff they’re doing ok - all about volume though......how many 5k bikes get bought.........

Depends on all sorts of things but a single invoice isn't necessarily indicative of much.

The manufacturer/distributor may have had some kind of offer on that frameset and it could've been £3.5K usually...

[Crippo]

Depending upon Brand and the Dealer level the margin on bikes is typically between 25% and 40%. At the moment bike suppliers are asking for huge commitment to stand any chance of shops receiving stock.
Shops that a clearing huge volumes of discount bikes will have bought at a discount from the suppliers usually. This is dependent upon numbers left at the Suppliers and the ability to take huge numbers by the retailer/discounter. So the prices you see on discounted bikes are not representative of the trade margins operated by shops.
The margin on bikes is irrelevant until you have factored in the other costs which can be substantial. It all boils down to Net margins within the shops to be around 5% on average

[hantsxlg]

And 20% vat in the final sales price to take out to...

[Centurion07]

In short, the retail part is most definitely not the where the money is made.

[neilr]

Centurion07 said:

In short, the retail part is most definitely not the where the money is made.

I don't doubt you're correct. Seeing as thats the case it's a shame that most LBS dont put any effort into actual customer service to make you want to, you know, buy stuff other than brand new bikes from them.

Without fail every LBS Ive ever used has had a woeful attitude. In several cases they might as well have stood there and said "if you're not buying a bike or booking a sevice then f&** off"

So guess what, I buy everything online now, fk em. It's a shame, id rather buy some higher priced stuff from an actual shop, shorts or jerseys for instance for fairly obvious reasons. Still, the attitude they have has relieved them of the tiresome job of taking my money forever.

Im sure there are some good LBS somewhere but ive yet to find one. I dont mean a LBS where they are nice to you if you are 'part of the gang' either. (A bit like a lot of music shops really.).

[foliedouce]

Centurion07 said:

In short, the retail part is most definitely not the where the money is made.

Just for fun, I looked at the accounts for Saddle Safari (bike shop in Marlow) - they give good service and are very helpful so deserve to make money

They're abbreviated accounts so don't give turnover, but they've paid £25/6k in Coporation Tax each of the last 2 years so that infers a profit of circa £135k per annum.

They have between £100-125k of stock and over £200k in cash, so although you can't see margin, the profit as a proportion of stock investment seems positive.

I suspect they get terms from their suppliers, but get paid on sale from their customers, so if they are turning stock around quickly, it looks quite cash positive.

I know when looking for an eBike, they were sold before they even came into stock, not sure how that reflects on other lines.

[Dannbodge]

My LBS told me that they make less than 5% on S-Works components and bikes.

[Retiredandcycling]

Years ago I had a friend that worked for universal cycles in Basildon, they paid £12 for a bike that was £150 in toysrus.
That was the cost price to them, they then had to import it, store it in a massive warehouse, distribution etc etc.

[anonymous-user]

Also relevant to the OP is that the major manufacturers frown at the idea of discounted prices being advertised

So, even if your local LBS is prepared to sell a bike with an RRP of £5k for £4.5k, the agreement she has with that brand will probably discourage her from advertising that discount as far as the law allows

The agreements have become much more complex in recent years. They aren't as complex as the franchise agreement that car brands have with their dealerships (you ask a Porsche Dealer Principal about the hoops she has to jump through), but some are certainly going that way. Giant, for instance, is heading this way. This is Giant York http://www.giant-york.co.uk/gb/about-the-store

[foliedouce]

JPJPJP said:

Also relevant to the OP is that the major manufacturers frown at the idea of discounted prices being advertised

So, even if your local LBS is prepared to sell a bike with an RRP of £5k for £4.5k, the agreement she has with that brand will probably discourage her from advertising that discount as far as the law allows

The agreements have become much more complex in recent years. They aren't as complex as the franchise agreement that car brands have with their dealerships (you ask a Porsche Dealer Principal about the hoops she has to jump through), but some are certainly going that way. Giant, for instance, is heading this way. This is Giant York http://www.giant-york.co.uk/gb/about-the-store

I took the view that the £5k places had put the prices up, rather than the £4.5k place putting the price down

I could be wrong, but I have an e-commerce business, and when we’re running low on stock, we put prices up to chock demand.