LBS reasonable markup

Keith Vetter said:

I'm all in favor of supporting local bike shops (LBS) but
what do people consider a fair markup?

Last year I needed some Look-type bike cleats. I went to a
bike shop, and, while they didn't have any in stock, the
owner just happened to be on the phone to the supplier and
he added it to their order. When they came in, the store
wanted $27 for them--that seemed expensive but not knowing
better and since they were ordered explicitly for me, I
bought them.

Later I saw that Performance was selling Look cleats (not
clones) for half that price.

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in stock,
but they looked it up in the catalog. The catalog price
was $13 and they said they could sell it to me for $21.
This time I declined.

So what to people consider a reasonable markup? My first
example I feel is clearly too high. The second one seems
to high but by how much?

Keith

A sucessful shop owner once told me "if no one complains
about the price then you're not charging enough". As a
customer you don't want to hear that (I was a little stunned
when I heard it), but the guy ran a great shop.

Retail more or less doubles the price, which they need to
succeed by the way. You walk in and expect them to stock
what you need, but a lot of stuff nobody walks in for.

On the other hand most retail businesses fail, so they have
to guess right what there's a need and a market for.

I abandoned LBSs not for the price so much as that they
stopped carrying a decent inventory.
--
Ron Hardin [email hidden]

On the internet, nobody knows you're a jerk.

Keith Vetter said:

Last year I needed some Look-type bike cleats. I went to a
bike shop, and, while they didn't have any in stock, the
owner just happened to be on the phone to the supplier and
he added it to their order. When they came in, the store
wanted $27 for them--that seemed expensive but not knowing
better and since they were ordered explicitly for me, I
bought them.

Wow! I almost choked when a local shop wanted $16 for them a
couple of years ago. Then I found out all the shops charged
that. But $27 is highway robbery for two pieces of plastic.
Find a good online source and buy several pair.

Quoted message said:

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in stock,
but they looked it up in the catalog. The catalog price
was $13 and they said they could sell it to me for $21.

Yikes! First, why is it that these shops don't carry such a
common item? And how do they justify such a huge markup?

Art Harris

Harris said:

Keith Vetter said:

Last year I needed some Look-type bike cleats. I went to
a bike shop, and, while they didn't have any in stock,
the owner just happened to be on the phone to the
supplier and he added it to their order. When they came
in, the store wanted $27 for them--that seemed expensive
but not knowing better and since they were ordered
explicitly for me, I bought them.

Wow! I almost choked when a local shop wanted $16 for them
a couple of years ago. Then I found out all the shops
charged that. But $27 is highway robbery for two pieces of
plastic. Find a good online source and buy several pair.

Quoted message said:

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in
stock, but they looked it up in the catalog. The
catalog price was $13 and they said they could sell it
to me for $21.

Yikes! First, why is it that these shops don't carry such
a common item? And how do they justify such a huge markup?

I have a couple of extra pair somewhere that came with
shoes. Maybe I should put them on eBay, with a healthy
reserve!

Matt O.

Keith Vetter said:

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in stock,
but they looked it up in the catalog. The catalog price
was $13 and they said they could sell it to me for $21.
This time I declined.

I don't know what catalog they looked in, but that sounds
like a pretty high wholesale price for Taiwanese Look
cleats. Even gen-u-wine Looks don't cost that much.

Still, for small parts, a keystone margin (50%) is pretty
common in retail.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery LaSalle,
Il 815-223-1776 heronbicycles.comheronbicycles.comOpen ↗
tullios.comtullios.comOpen ↗

Harris said:

Yikes! First, why is it that these shops don't carry such
a common item? And how do they justify such a huge markup?

We stock them, but they really aren't a very common item.
Remember that roadies represent a very small part of the
overall bicycle market. Bike shops make their money selling
$350 comfort bikes. The volume is all in the family market,
not the enthusiast market.

We are not a big shop, but we do a fair amount of road stuff
because we own Heron. We sell 3-4 pairs of Look replacement
cleats a year.

Also, if the shop is charging $21 for an item that they buy
for $13, that is not a huge mark-up. Actually, that's a
fairly small mark-up for that type of item.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery LaSalle,
Il 815-223-1776 heronbicycles.comheronbicycles.comOpen ↗
tullios.comtullios.comOpen ↗

Ron Hardin said:

Retail more or less doubles the price, which they need to
succeed by the way. You walk in and expect them to stock
what you need, but a lot of stuff nobody walks in for.

In this case, the OP did not expect them to stock what he
needed, or even if he did, they failed to do so. At that
point, what's the difference if the bike shop orders it or
he orders it from Performance?
--
Rick Onanian

Quoted message said:

My first example I feel is clearly too high. The second one
seems to high but by how much?

A guy on ebay was selling them 10/pair shipped from England.
For things like this buy a couple sets to last a year at
nashbar etc. Cheaper than being ripped by a shop. Markups
vary from industry to industry- autos are 5 to 10% markup
while clothing can have a 100% markup(yes the Gap still
makes money when you buy a shirt on sale for 9.99)

kantspel said:

A sucessful shop owner once told me "if no one complains
about the price then you're not charging enough". As a
customer you don't want to hear that (I was a little
stunned when I heard it), but the guy ran a great shop.

That's a great way to look at it! And if enough customers
don't like it, they will seek alternatives. The shop will
then lower prices, find ways to cut costs, or go out of
business. That's the system! I'm new to this group, but
recently kicked off a flame-a-thon in alt.mountain-bike for
posting letter to an LBS where I complained about a mickey
mouse charge and crappy customer service. You'd think I'd
insulted the Pope while visiting Rome!

Ironically, I support both sides on this one. Shops should
charge as much as they think they can get away with, and
customers shouldn't let 'em get away with it! That's why
competition -- in bike parts, airlines, or breakfast cereal
-- is good. If forces innovation and gives buyers options.

Tom

For that price they should've at least offered to replace
them for you. If shops want to charge you for their so-
called "better customer service", then they should provide
it. Otherwise, why be loyal? Secondly, I don't think any
formula for a mark up is fair. Not 50%, not double. What's
fair is what's competitive. If they can't compete with
Performance, then they should at least base their price on
what the going market price for the product is, even if it's
barely worth their while. Did you ever get the line from a
salesman when you bought a car that "for that price we won't
make any money"? Well, the truth is, that not the consumer's
problem if a business can't make enough money at a certain
price. The consumer's problem is getting a fair market
price. You don't have to shop around for the lowest price on
earth, but you'd be nuts to treat your LBS like it's a
charity and just give them extra money out of your pocket.

"Keith Vetter" <[email hidden]> wrote in message
"]news:[email hidden]...

Quoted message said:

I'm all in favor of supporting local bike shops (LBS) but
what do people consider a fair markup?

Last year I needed some Look-type bike cleats. I went to a
bike shop, and, while they didn't have any in stock, the
owner just happened to be on the phone to the supplier and
he added it to their order. When they came in, the store
wanted $27 for them--that seemed expensive but not knowing
better and since they were ordered explicitly for me, I
bought them.

Later I saw that Performance was selling Look cleats (not
clones) for half that price.

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in stock,
but they looked it up in the catalog. The catalog price
was $13 and they said they could sell it to me for $21.
This time I declined.

So what to people consider a reasonable markup? My first
example I feel is clearly too high. The second one seems
to high but by how much?

Keith

Quoted message said:

[email hidden] (Keith Vetter)

Quoted message said:

I'm all in favor of supporting local bike shops (LBS) but
what do people consider a fair markup?

Last year I needed some Look-type bike cleats. I went to a
bike shop, and, while they didn't have any in stock, the
owner just happened to be on the phone to the supplier and
he added it to their order. When they came in, the store
wanted $27 for them--that seemed expensive but not knowing
better and since they were ordered explicitly for me, I
bought them.

Later I saw that Performance was selling Look cleats (not
clones) for half that price.

Last month, I needed another pair and I went to a different
bike shop. Again they didn't have them in stock, but they
looked it up in the catalog. The catalog price was $13 and
they said they could sell it to me for $21. This time I
declined.

So what to people consider a reasonable markup? My first
example I feel is clearly too high. The second one seems to
high but by how much?

Keith

Before deciding what a "reasonable markup" is you have to
consider the total cost of just staying in business and
where the profits come from. For example, have you ever
wondered why it is so much more expensive to have a car
repaired at a new car dealer than at the garage down the
street? It's because the dealer's service department profits
pay the entire cost of the daily operation of that dealer-
utilities, salaries for all the hourly wage employees, the
new carpet in the showroom, property taxes on the football
field sized car lot, even a good part of the dealer's "floor
plan". The markup on the cars they sell is where their
profit is generated so the best deal for the individual
consumer is to buy the car there but have it serviced
elsewhere. Your LBS works in a similiar way. They probably
don't make a lot of money on the bikes they sell. They stay
in the black on the profits from the accessories they sell.
That's not to say you have any kind of duty to subsidize
them. Just realize that it's not a "rip off".

Regards, Bob Hunt

Quoted message said:

Last month, I needed another pair and I went to a
different bike shop. Again they didn't have them in stock,
but they looked it up in the catalog. The catalog price
was $13 and they said they could sell it to me for $21.
This time I declined.

So what to people consider a reasonable markup? My first
example I feel is clearly too high. The second one seems
to high but by how much?

My guess is that you're dealing with a shop that has very
little, if any, expertise in road bike equipment. It was
simply not something they wanted to get involved in, and
they may not be buying from the best source either. He might
even be special-ordering them from a source he doesn't buy
anything else, and charging you for freight as well.

We sell "real" Look cleats for about $13 if I recall
correctly (not at the shop right now so don't have the exact
amount handy). We buy them in significant qty (probably 50
at a time) because we sell lots of them.

If someone needed an obscure (to us) BMX part that we had to
special order only that part from a distributor, we wouldn't
be very competitive on it either. By the time we paid
freight (which we don't have to pay on large shipments from
our regular suppliers) and a likely minimum-order surcharge,
the price kicks up pretty nastily. However, we'd also
recommend that someone try a shop that regularly deals in
such merchandise.
--
--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

GS said:

Well, the truth is, that not the consumer's problem if a
business can't make enough money at a certain price. The
consumer's problem is getting a fair market price. You
don't have to shop around for the lowest price on earth,
but you'd be nuts to treat your LBS like it's a charity
and just give them extra money out of your pocket.

of course when they close because of cheapskates like you,
then you'll whine because there's no local shop. what a
buncha horse puckey.

GS said:

Secondly, I don't think any formula for a mark up is fair.
Not 50%, not double. What's fair is what's competitive. If
they can't compete with Performance, then they should at
least base their price on what the going market price for
the product is, even if it's barely worth their while.

It's true that the correct price for a product is whatever
the market will bear. You DO need to look at competition.
However, it's difficult for most shops to do a competitive
analysis on every item that they stock. So, certain formulas
will generally get you in the ballpark.

A shop's pricing strategy also has to take into account
their overall business plan. It's very difficult to run any
business based solely on price. Someone else can always
find a way to be cheaper, even if they have to sell the
item at a loss.

So, most shops try to combine a fair price with convenience,
expertise, service, etc. In this regard, the primary market
for most bike shops is NOT the same market targeted by
Performance and the like.

Performance actually sells to a very small portion of the
overall bicycle market. I'd bet that fewer than 5% of
customers are even aware that Performance exists. Mail order
operations are best at serving experienced customers who
already know what they want and simply are looking for the
best price. That is NOT the typical LBS customer.

So, many enthusiasts find their LBS lacking. That might be
because that particular LBS is not pursuing the enthusiast
market for the bulk of their business.

Speaking for myself, selling a Heron loaded touring bike is
a lot of fun and can be a fairly large individual sale, but
$350 comfort bikes keep the lights on. Of course, I am in a
rural area without any other full-line bicycle shops for 45
minutes in any direction. So, we need to be all things to
all people.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery LaSalle,
Il 815-223-1776 heronbicycles.comheronbicycles.comOpen ↗
tullios.comtullios.comOpen ↗

Todd Kuzma said:

So, most shops try to combine a fair price with
convenience, expertise, service, etc. In this regard, the
primary market for most bike shops is NOT the same market
targeted by Performance and the like.

Performance actually sells to a very small portion of the
overall bicycle market. I'd bet that fewer than 5% of
customers are even aware that Performance exists. Mail
order operations are best at serving experienced customers
who already know what they want and simply are looking for
the best price. That is NOT the typical LBS customer.

Too right.

Quoted message said:

So, many enthusiasts find their LBS lacking. That might be
because that particular LBS is not pursuing the enthusiast
market for the bulk of their business.

Speaking for myself, selling a Heron loaded touring bike
is a lot of fun and can be a fairly large individual sale,
but $350 comfort bikes keep the lights on. Of course, I am
in a rural area without any other full-line bicycle shops
for 45 minutes in any direction. So, we need to be all
things to all people.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery
LaSalle, Il 815-223-1776 heronbicycles.comheronbicycles.comOpen ↗
tullios.comtullios.comOpen ↗

My local bike shop always charges more than the big stores.
However - they are always ready to discuss the pros and cons
of various styles and brands. They ask for feedback on items
like tires and brake pads, so they can stock what keeps
customers happy. They know their regular customers (by
name!) and will install small items at no charge. Things
like pedals, computers, a new chain... That's a treat for
the mechanically inept, like meself. Service and help is
competetive. Try to get it at a big box store.

I find the personal service extremely helpful and have never
felt like they were playing me in order to get a few more
bucks in the till. They get first shot at any bike or
accessory that I want to buy. Best regards, Bernie

Quoted message said:

You don't have to shop around for the lowest price on
earth, but you'd be nuts to treat your LBS like it's a
charity and just give them extra money out of your pocket.

There needs to be some reasonable combination of price &
service for the LBS to exist. That combination will be
different for different people; no single LBS (or mail-order
outfit) is going to have all the answers for everyone.

As I previously pointed out, the shop that special ordered
the LOOK cleats for $20+ probably wasn't the right place to
be buying road bike parts from. That's not a crime, it's
just a fact. There may be somebody else in the area that
would be a better choice, just as the original shop might
have been the best place had the customer needed something
for a high-end mtn bike or perhaps BMX, who knows?

If I were choosing a shop to buy something from, the first
red flag would be that a relatively-common road bike part
(LOOK cleats) wasn't a normally-stocked item and had to be
special-ordered. Pricing would be a secondary thing.

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

Sun, 13 Jun 2004 12:38:19 -0700, <[email hidden]>,

Bernie said:

I find the personal service extremely helpful and have
never felt like they were playing me in order to get a few
more bucks in the till. They get first shot at any bike or
accessory that I want to buy.

Bike Dr.? First time I went there they sent me to another
shop that had exactly what I was looking for. I of course
went back there later to buy their stuff.

Good people. Good service. Good selection of commuter type
gear. And now they're opening a third store on Kingsway in
Burnaby. No wonder.
--
zk

Zoot Katz said:

Sun, 13 Jun 2004 12:38:19 -0700, <40CCAD2B.9080806@mouse-

potato.com said:

I find the personal service extremely helpful and have
never felt like they were playing me in order to get a few
more bucks in the till. They get first shot at any bike or
accessory that I want to buy.

Bike Dr.? First time I went there they sent me to another
shop that had exactly what I was looking for. I of course
went back there later to buy their stuff.

Good people. Good service. Good selection of commuter type
gear. And now they're opening a third store on Kingsway in
Burnaby. No wonder.

Well, no it was not Bike Dr. No slur on them tho! They are
first class, and extremely helpful. Very good inventories
too. I've spent money there with no regrets. In fact I'd
give them 100% confidence. Get it, they are ok? Alright. I
dont' like to namedrop on this group, but since you
started... I live near Edmonds Cycle on Edmonds St Burnaby.
A real old fashioned Momma Poppa operation, with couple of
hard working wrenches in the back workshop. Nice people,
good service. I just wish they carried more lines. They are
a Norco dealer, also carry a selection of near new decent
bikes at good prices. Shops like this are always struggling
to survive. Long may they prosper, I say. Best, Bernie

Quoted message said:

We sell "real" Look cleats for about $13 if I recall
correctly (not at the shop right now so don't have the
exact amount handy).

Gee Mike, that is very similar to the price they charge at
the bike shops around here. I have found that the LBS prices
are very close to Performance on most common items like
tires, chains, cleats and so on. I get some things from
Performance because of the ease of purchase and availability
but given the shipping costs, I generally do not save much
money ordering mail order.

On quite a few things, I buy them from the LBS because if
something goes wrong with my bike mechanically that I can
not cope with, they will. Performance won't do that.