LBS reasonable markup

Seems most people here are in favour of supporting the
local shop - some regardless of price, and others within
reason. Even though my post wasn't well liked, I assure the
group that I too shop at the LBS more often than mail
order. I've never made a major purchase, such as a bike,
through mail order.

The whole topic got me wondering... how many on this group
who are gung-ho on supporting the LBS don't support the
local guy in other areas of their consumerism? I'll bet some
of you here are on a Dell computer - bought through
mailorder. Why not go to the local computer guy? You
would've gotten much better service. Some of you probably
buy your books and CDs on Amazon. Why not spend full-price
at the mom and pop book store down on Main Street? Ever send
flowers or candy through 1-800-Flowers.com, or FTD.com? Why
not go personally to the local florist or candy shop? Even
when you're not using mail order, sometimes your shopping
patterns have just as much impact. Ever notice how the local
hardware shop is now almost extinct? Yet we all willingly go
to Home Depot because we know that their prices will always
be the best and we can get everything we need in one
shopping trip. How many of us go to Starbucks instead of the
small, privately owned coffee shop? The list goes on and on.

"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

"GS" <[email hidden]> wrote in message
news:UTjzc.12$0z6.7@fed1read07...

Quoted message said:

Seems most people here are in favour of supporting the
local shop - some regardless of price, and others within
reason. Even though my post wasn't well liked, I assure
the group that I too shop at the LBS more often than mail
order. I've never made a major purchase, such as a bike,
through mail order.

The whole topic got me wondering... how many on this group
who are gung-ho on supporting the LBS don't support the
local guy in other areas of their consumerism? I'll bet
some of you here are on a Dell computer - bought through

mailorder.

Quoted message said:

Why not go to the local computer guy? You would've gotten
much better service. Some of you probably buy your books
and CDs on Amazon. Why not spend full-price at the mom and
pop book store down on Main Street? Ever send flowers or
candy through 1-800-Flowers.com, or FTD.com? Why not

go

Quoted message said:

personally to the local florist or candy shop? Even when
you're not using mail order, sometimes your shopping
patterns

have

Quoted message said:

just as much impact. Ever notice how the local hardware
shop is now almost extinct? Yet we all willingly go to
Home Depot because we know that their prices will always
be the best and we can get everything we need in one
shopping trip. How many of us go to Starbucks instead of
the small, privately owned

coffee

Quoted message said:

shop? The list goes on and on.

Okay, I have no idea where this computer came from, but I
can tell you I have never found anyone here in the silicon
valley that can take care of my computer as well as my
husband. But I do hit the downtown bookstores first before
Amazon, just because then I can bring them home. I like the
little downtown area near my house and buy from the local
stores any thing I can. I hate going to Home Depot, and much
prefer the local hardware store owned by one of the parents
at my kids school because they can help you find stuff, even
if they have less inventory. So actually, my order of
shopping preference is 1) any store I can walk or bike to 2)
internet shopping 3) Nice malls 4) big box stores.

That said, for really good service I've been known to drive
to little local stores. But the service and products have to
be really good. And they need to have plentiful, easy
parking. I hate searching for parking, that's up there on
one of the reasons I ride a bike.

In article <UTjzc.12$0z6.7@fed1read07>,
[email hidden] says...

Quoted message said:

Seems most people here are in favour of supporting the
local shop - some regardless of price, and others within
reason. Even though my post wasn't well liked, I assure
the group that I too shop at the LBS more often than mail
order. I've never made a major purchase, such as a bike,
through mail order.

The whole topic got me wondering... how many on this group
who are gung-ho on supporting the LBS don't support the
local guy in other areas of their consumerism?

IMO, the reason for supporting your LBS is so that they
will be there later on when you need them to answer
questions, touch up your wheel, or figure out what that
strange noise is.

Quoted message said:

I'll bet some of you here are on a Dell computer - bought
through mailorder. Why not go to the local computer guy?
You would've gotten much better service.

Buying a computer doesn't need the level of personal
attention that buying a bike does. We all know that the most
important part of buying a bike (after deciding what general
type you want) is to get the correct fit. Sizing and
adjusting a bike needs personal interaction. Getting a
computer with the specs you want does not (usually).

Quoted message said:

Some of you probably buy your books and CDs on Amazon. Why
not spend full-price at the mom and pop book store down on
Main Street?

Actually, I go to the Barnes and Noble down on West Main St.

Quoted message said:

Ever send flowers or candy through 1-800-Flowers.com, or
FTD.com? Why not go personally to the local florist or
candy shop? Even when you're not using mail order,
sometimes your shopping patterns have just as much impact.
Ever notice how the local hardware shop is now almost
extinct? Yet we all willingly go to Home Depot because we
know that their prices will always be the best and we can
get everything we need in one shopping trip. How many of
us go to Starbucks instead of the small, privately owned
coffee shop? The list goes on and on.

The Starbucks is still a local shop, hiring people from the
local area. The same applies to the Home Depot.

....

--
Remove the ns_ from if replying by e-mail (but keep posts in
the newsgroups if possible).

tcmedara said:

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

you got flamed because in your original post you made it
look like you assumed you should get something for nothing.

David Kerber said:

The Starbucks is still a local shop, hiring people from
the local area. The same applies to the Home Depot.

But the profits depart for the pockets of distant
shareholders and extravagantly paid senior management. If
you patronize a local shop, more money stays in your
community and improves the health of the local economy.

Reid

In article <[email hidden]>,
[email hidden] says...

Quoted message said:

David Kerber said:

The Starbucks is still a local shop, hiring people from
the local area. The same applies to the Home Depot.

But the profits depart for the pockets of distant
shareholders and extravagantly paid senior management. If
you patronize a local shop, more money stays in your
community and improves the health of the local economy.

That is true to some extent, but many locals are also likely
to be shareholders.

--
Remove the ns_ from if replying by e-mail (but keep posts in
the newsgroups if possible).

Todd Kuzma <[email hidden]> wrote in message news:<[email hidden]>...

Quoted message said:

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

I spent 20 years working in retail and understand that
retailers like to call keystone markup 50%. If you pay $5
for an item and sell it for $10, I think most people will
call that 100% markup.

My big concern is how much markup the wholesaler adds. I am
not entirely sure that wholesalers are all that necessary
any more. They add nothing to the value of the product.

[censored] Durbin

Well I am not a big fan of only buying.

I am a member of Columbia House for both CDs and DVDs and I
have trouble completing my membership dues because I can
always find locally for about half the price. When you take
shipping and handling into account the deals are usually
not as sweet.

I purchased my bike from a sports chain and I regret it. I
am sure I would have had a lot less trouble if I purchased
it from a LBS... of course it would have cost more but now I
have to pay for the problems I am having so in the end it
would have costed about the same but without the headaches.

And being a regular customer means that sometimes you go in
for minor adjustments and it's done free of charge. So you
save a little on that. The place I go for repairs know me
because once a week I am there, on saturday for some minor
purchases and some adjustments. Funny too, they are now
saying "Ah there you are, we were wondering if you would
come by today" 😉 Hehheeh

"GS" <[email hidden]> wrote in message
news:UTjzc.12$0z6.7@fed1read07...

Quoted message said:

Seems most people here are in favour of supporting the
local shop - some regardless of price, and others within
reason. Even though my post wasn't well liked, I assure
the group that I too shop at the LBS more often than mail
order. I've never made a major purchase, such as a bike,
through mail order.

The whole topic got me wondering... how many on this group
who are gung-ho on supporting the LBS don't support the
local guy in other areas of their consumerism? I'll bet
some of you here are on a Dell computer - bought through

mailorder.

Quoted message said:

Why not go to the local computer guy? You would've gotten
much better service. Some of you probably buy your books
and CDs on Amazon. Why not spend full-price at the mom and
pop book store down on Main Street? Ever send flowers or
candy through 1-800-Flowers.com, or FTD.com? Why not

go

Quoted message said:

personally to the local florist or candy shop? Even when
you're not using mail order, sometimes your shopping
patterns

have

Quoted message said:

just as much impact. Ever notice how the local hardware
shop is now almost extinct? Yet we all willingly go to
Home Depot because we know that their prices will always
be the best and we can get everything we need in one
shopping trip. How many of us go to Starbucks instead of
the small, privately owned

coffee

Quoted message said:

shop? The list goes on and on.

"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

(censored Durbin) said:

My big concern is how much markup the wholesaler adds. I am
not entirely sure that wholesalers are all that necessary
any more. They add nothing to the value of the product.

Wholesalers exist to serve the manufacturer. Manufacturers
do not want to deal with a slew customers - they want to
sell to a wholesaler or volume retailer who will pick up the
detail load.

kantspel said:

tcmedara said:

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

you got flamed because in your original post you made it
look like you assumed you should get something for
nothing.

And I'm a better person today for it! 🙂

Tom

"GS" <[email hidden]> wrote in message
news:UTjzc.12$0z6.7@fed1read07...

Quoted message said:

Seems most people here are in favour of supporting the
local shop - some regardless of price, and others within
reason. ...

Good questions

Quoted message said:

The whole topic got me wondering... how many on this group
who are gung-ho on supporting the LBS don't support the
local guy in other areas of their consumerism? I'll bet
some of you here are on a Dell computer - bought through

mailorder.

Quoted message said:

Why not go to the local computer guy? You would've gotten
much better service.

This computer was bought at a local Gateway store. However,
Gateway has since closed their local stores. Since then I've
bought a Dell mail order, and a Compaq at a big-box store. I
think the local guys have been pretty much squeezed out of
the new equipment market.

Quoted message said:

Some of you probably buy your books and CDs on Amazon. Why
not spend full-price at the mom and pop book store down on
Main Street?

A book is a book is a book. No need for adjustments or
repairs. Besides, I buy mostly technical books, which aren't
profitable to stock locally.

Quoted message said:

Ever send flowers or candy through 1-800-Flowers.com, or
FTD.com? Why not

go

Quoted message said:

personally to the local florist or candy shop?

I'm confused here. Doesn't FTD just act as a middleman and
pass along your order to a local shop for fulfillment?
Besides, it's a lot easier to order FTD than to try to
contact a local florist in another city.

Quoted message said:

Even when you're not using mail order, sometimes your
shopping patterns

have

Quoted message said:

just as much impact. Ever notice how the local hardware
shop is now almost extinct? Yet we all willingly go to
Home Depot because we know that their prices will always
be the best and we can get everything we need in one
shopping trip.

Home Depot has better prices -- if that's really what you
need. I find that in the long run the old guy at the local
"Do It Best" hardware can save me the big bucks. The old
hardware veterans can tell you whether you need a new one,
or just a replacement part. Home Depot staff aren't on
commission, but they aren't paid to care, either.

Quoted message said:

How many of us go to Starbucks instead of the small,
privately owned

coffee

Quoted message said:

shop? The list goes on and on.

Yes, it does. You've barely touched on local restaurants
versus chains.

Frankly, capitalism is a rough, dynamic business and in many
cases new ways of doing business achieve significant
advantage and should replace all or part of older patterns
because they are more efficient.

Examples abound even if we are talking about the local bike
shop world. There are a lot of parts, and nobody is going
to carry them all. If I need a replacement S-6 tire for an
old Schwinn, my local LBS carries them, but most don't any
more -- and as somebody else (Mike J?) pointed out, they
may not have an efficient source even for ordering them.
So, why not order them on-line from somebody who's set up
to take that business?

(in this case, you're probably out of luck at Nashbar or
Performance, but Sheldon Brown has them:
sheldonbrown.com597.htmlOpen ↗ )

in article [email hidden], [censored] Durbin at
[email hidden] wrote on 6/14/04 4:01 PM:

Quoted message said:

Todd Kuzma <[email hidden]> wrote in message
news:<[email hidden]>...

Quoted message said:

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

I spent 20 years working in retail and understand that
retailers like to call keystone markup 50%. If you pay $5
for an item and sell it for $10, I think most people will
call that 100% markup.

Note that I said "margin" not "markup." Those of us still in
retail typically know the difference.

Todd Kuzma Heron Bicycles Tullio's Big Dog Cyclery
LaSalle IL

Todd Kuzma <[email hidden]> wrote in message news:<[email hidden]>...

Quoted message said:

Quoted message said:

I spent 20 years working in retail and understand that
retailers like to call keystone markup 50%. If you pay
$5 for an item and sell it for $10, I think most people
will call that 100% markup.

Note that I said "margin" not "markup." Those of us still
in retail typically know the difference.

I recall learning that little semantic trick to avoid
letting the consumer know that we took 100% markup on just
about everything. I don't object to a store taking keystone
markup. It is generally necessary to make any profit at all.
I just prefer that a retailer I do business with call a
spade a spade.

[censored] Durbin

In article <[email hidden]>,
[email hidden] says...

Quoted message said:

Well I am not a big fan of only buying.

I am a member of Columbia House for both CDs and DVDs and
I have trouble completing my membership dues because I can
always find locally for about half the price. When you
take shipping and handling into account the deals are
usually not as sweet.

I purchased my bike from a sports chain and I regret it. I
am sure I would have had a lot less trouble if I purchased
it from a LBS... of course it would have cost more but now
I have to pay for the problems I am having so in the end
it would have costed about the same but without the
headaches.

And being a regular customer means that sometimes you go
in for minor adjustments and it's done free of charge. So
you save a little on that. The place I go for

Between that and the advice they give for free, it's
worth a lot.

....

--
Remove the ns_ from if replying by e-mail (but keep posts in
the newsgroups if possible).

censored Durbin said:

Todd Kuzma <[email hidden]> wrote in message
news:<[email hidden]>...

Quoted message said:

Quoted message said:

I spent 20 years working in retail and understand that
retailers like to call keystone markup 50%. If you pay $5
for an item and sell it for $10, I think most people will
call that 100% markup.

Note that I said "margin" not "markup." Those of us still
in retail typically know the difference.

I recall learning that little semantic trick to avoid
letting the consumer know that we took 100% markup on just
about everything. I don't object to a store taking
keystone markup. It is generally necessary to make any
profit at all. I just prefer that a retailer I do business
with call a spade a spade.

This is no semantic trick. In running a business, "markup"
is not a useful accounting term. "Margin" is. If you look at
a profit and loss statement, it shows you margin, not
markup. Margin is the number used in profitability
calculations. Gross margin is the number used in industry
benchmark comparisons. Nobody uses "markup" in any sort of
business analysis.

However, thanks for giving us an insight into your character
by telling us that you tricked your customers. Just don't
accuse me of the same.

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

"GS" <[email hidden]> wrote in message
news:UTjzc.12$0z6.7@fed1read07...

Quoted message said:

Seems most people here are in favour of supporting the
local shop - some regardless of price, and others within
reason. Even though my post wasn't well liked, I assure
the group that I too shop at the LBS more often than mail
order. I've never made a major purchase, such as a bike,
through mail order.

The whole topic got me wondering... how many on this group
who are gung-ho on supporting the LBS don't support the
local guy in other areas of their consumerism?

Book store: I'm lucky enough that I have a used bookstore in
my neighborhood, and a branch of the public library, as well
as a Barnes & Noble. The library and the used bookstore get
the first crack, but the B&N is there as back-up.

Tea: I go to my LTS when I can actually make the hike up
there from my office. If I want tea on the cheap, I go
shopping at Pal-Do World, a Korean supermarket chain, where
I can buy a pound of golden tippy Assam for $6.97/lb. But
the LTS is like going to LBS -- there's the knowledgeable
shop owner; they let me sniff everything before I buy; it
has a pleasant, feminine atmosphere; the place smells nice;
they have an unbeatable selection; and accessories you can't
get elsewhere. There's another LTS about the same distance
but it has a masculine feel -- wood paneling, the owner
yelling at his suppliers in Chinese -- maybe that's where
I'd shop if I were a guy.

Flowers: If I'm buying for my desk, I get them at the
flower shop near my office. Deliveries I do on-line -- it's
just easier.

Restaurants: corporate food is awful. The list of chains I
won't eat at gets longer all the time: Chili's, Outback, Red
Robin...ironically, I'd rather eat at a Wendy's, because at
least the food is not expensive. But you can drop a lot of
money at an Outback, and what's the food you're getting? We
do eat at Pho Hoa, which is a Vietnamese restaurant chain,
because they offer a kids' meal. I guess little ethnic
places don't think about kids' meals, and it's daunting to
explain what your kid might want (half portion pho, no
greenery or onions) to someone who doesn't have English as a
first language or might come from a culture where special
requests are rude. It's a market, though, that would
probably help their small businesses.

Nursery: Land prices have made two local
gardening/landscaping places disappear. Kimura's was my
favorite -- now the homes on that property are selling for
$550K a piece. I mostly shop at the remaining place, even
though I've known the owner for more than 20 years and I
think he's a jerk with his employees.

Hardware: All the little hardware places we used to have are
*gone*. You have to drive out to Home Despot even for the
tiniest nut or bolt. Feh.

--
Warm Regards,

Claire Petersky Please replace earthlink for mouse-potato
and .net for .com Home of the meditative cyclist:
home.earthlink.netWelcome.htmOpen ↗ See the
books I've set free at:
bookcrossing.comCpeterskyOpen ↗

On Tue, 15 Jun 2004 11:04:18 -0500, Todd Kuzma <[email hidden]>

Quoted message said:

This is no semantic trick. In running a business, "markup"
is not a useful accounting term. "Margin" is. If you look
at a profit and loss statement, it shows you margin, not
markup. Margin is the number used in profitability
calculations. Gross margin is the number used in industry
benchmark comparisons. Nobody uses "markup" in any sort of
business analysis.

I've put in more inventory systems than the average
accountant and 'markup' is most certainly a usefull
accounting term. That it is predicated on your overall
margin may or may not be true. Margin on a per-item basis
would be as simplistic and probably more incorrect in fact
than 'markup', as applying the expense items that create
margin to individual items generally isn't worth the time
and effort, unless you sell large items.

They serve different purposes in any event. One (margin) is
an accounting calculation, primarily used at the financial
reporting level, and speaks to the status of the business or
process. Markup is a mechanism for pricing - and extremely
commonly used in businesses from retail to manufacturing,
purchased goods, kits and assemblies. I have at least one
example of each sitting on my laptop that is an actual - and
successful - business.

Curtis L. Russell Odenton, MD (USA) Just someone on
two wheels...

Curtis L. Russell said:

Markup is a mechanism for pricing - and extremely commonly
used in businesses from retail to manufacturing, purchased
goods, kits and assemblies.

It's a mechanism, but not necessarily a good one. Retail
price should be based on the market, not the wholesale cost.
As I mentioned before, however, it can often be used to get
a good estimate of the market price.

My point was that, as a business owner, margin is a much
more useful figure for me. I don't think in terms of markup
at all, and I resent being accused of doing so as part of a
plot to fool my customers.

I am willing to put up with a lot of baloney on the
internet. However, I take offense at the suggestion that I
run my business in a manner that is less than honest. I
don't know Mr. Durbin personally, and perhaps he is just
being a smart-ass, but I do take my reputation seriously.

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

In article <[email hidden]>,
[email hidden] says...

Quoted message said:

Curtis L. Russell said:

Markup is a mechanism for pricing - and extremely
commonly used in businesses from retail to
manufacturing, purchased goods, kits and assemblies.

It's a mechanism, but not necessarily a good one. Retail
price should be based on the market, not the wholesale
cost. As I mentioned before, however, it can often be used
to get a good estimate of the market price.

My point was that, as a business owner, margin is a
much more useful figure for me. I don't think in terms
of markup

That makes sense, but how do you determine a basis cost
(including your rent, salaries, etc) for setting your
selling price on (for example) individual bearing balls? It
seems like trying to allocate all of your expenses to little
stuff like this is far more effort than it is worth, and
that it would be much more efficient for you to simply set a
markup amount.

...

--
Remove the ns_ from if replying by e-mail (but keep posts in
the newsgroups if possible).

On Tue, 15 Jun 2004 14:14:31 -0500, Todd Kuzma <[email hidden]>

Quoted message said:

It's a mechanism, but not necessarily a good one.
Retail price should be based on the market, not the
wholesale cost.

The first sentence is correct - not necessarily. It depends
on the business and item/class of item. OTOH, the second is
not meaningful. Very few people survey the market except in
a cursory manner before setting prices, therefore it makes a
better concept than a pricing mechanism - and when you are
pricing 10,000 or more items over six or more market groups,
you need a meaningful mechanism.

I doubt that any serious business uses one single pricing
mechanism. Markup is useful in most businesses for a
significant number of items, often a majority. Many of these
are brought closer to market through customer discounts,
price level discounts and other adjustments. OTOH many items
are inherently unsuited for markup, beginning with joint
products that have poor underlying numbers.

That said, markup on purchased inventory is easily the most
common starting point for pricing retail items. It is also
the easiest way to add a mandatory margin level across a
wide number of items in inventory. Margin and markup are
hardly exlusive of each other.

Curtis L. Russell Odenton, MD (USA) Just someone on
two wheels...