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Discussion Starter · #1 ·
I was curious,in this time of recession, if much of the high end bike gear is being sold. I see bikes going for $5000, groups for $2500, and wheels for $1500 and its way beyond my means! My last washer and dryer only cost $700 so a wheelset for $1500 seems way out of wack. Do you think prices will come down if unsold supplies start to sit in the warehouse? I appreciate your comments.
 

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So you're not complaining about the state of the industry so much as high prices?

The prices are what they are so that the company that makes the product can also make a profit. There's a lot of R&D involved in making bike parts, especially safe ones. The market is a lot smaller than for a washer/dryer. That means the costs have to be recovered from smaller numbers in sales. Translates to (relatively) high prices. It's how economics works.

That said, if parts sit, shops may sell them at a discount just to get them out to make room for other stuff.
 

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I think supply and demand pressures do affect the bicycle industry just as much as anything else. In order to know whether prices will be forced down, you would need to know whether manufacturers are in a state of oversupply. An indication of this would be whether you see a lot of "super hot clearance sales" on websites or at your LBS.

With all due respect, I would have to disagree with your wheels to laundry machine comparison. Not only are the two products completely unrelated, but a $700 laundry pair would hardly be considered equivalent to a $1500 wheelset, given their relative "good, better, best" position within their own categories.
 

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I read an article in a Sacramento Newspaper a few months ago. Some bike shops are selling more lower end bikes but pricey road bike once a month or so. Some folks are using bikes more for transportation and less for recreational use. I imagine prices will continue to rise, everything is just more expensive. I do see big sales on discontinued items. Best prices now seem to be the U.K. online shops. Which does our American economy no good..
 

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All I know is what I see at my LBS. They are busier than ever. Mostly lower end and repairs. But their high end business seams strong as well.
 

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I read in the local paper that bike shops are doing very good business--- more people are commuting by bike.

Dinosaur said:
I read an article in a Sacramento Newspaper a few months ago. Some bike shops are selling more lower end bikes but pricey road bike once a month or so. Some folks are using bikes more for transportation and less for recreational use. I imagine prices will continue to rise, everything is just more expensive. I do see big sales on discontinued items. Best prices now seem to be the U.K. online shops. Which does our American economy no good..
 

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Cheaper than golf

I started riding last year for fitness and fun. A buddy of mine asked me recently if he could join me on some rides. He used to play golf as a way to get out of the house. He said that riding would be alot cheaper than golf. He was just going to have to put air in the tires of his 20 year old ride. He has been to the LBS every weekend since picking up "things". In one of his recent trips he learned about this material called carbon fiber. I don't think his new hobby is going to be any cheaper than golf. He may be able to keep his LBS in the black all by himself.
 

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Discussion Starter · #9 ·
My point is

My point is that a washer/dryer is two hundred pounds of metal, gears, and electronics. It must be engineered and tested also. It must be placed on a container ship and shipped from wherever. A wheelset can be 2000 grams and cost $200 or it can be 1400 grams and cost $1500.It seems like with the amount of materials used that 1400 gram wheelset could cost a bit less. If demand for high end and high cost bike parts is lessening then we might see lower prices. According to the replys so far people seem to say that demand is still high so prices will remain the same.
 

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Some info on economics.

dougrocky123 said:
My point is that a washer/dryer is two hundred pounds of metal, gears, and electronics.
The comparison between a washer/dryer and a high-end bicycle doesn't hold water. The washer/dryer is an item people think they need. The high-end bicycle is a luxury item that people treat themselves to. No one needs a high-end bicycle unless they make their living with it.

With $650 dollar pedals now available, some high-end bike stuff and bikes may have reached the status of so-called "Veblen goods," which are a group of commodities for which peoples' preference for buying them increases as a direct function of their price, instead of decreasing according to the law of demand.

http://en.wikipedia.org/wiki/Veblen_good
 

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I was curious,in this time of recession, if much of the high end bike gear is being sold.

"The likes of Zipp are seeking more of Europe’s high-end bike market. In Europe, sales of bikes costing more than 1,600 euros ($2,123) doubled in the two years through 2008 to 1.47 billion euros and may remain steady this year even amid the worst recession since World War II, according to Jack Oortwijn, an industry analyst for Euro Bike magazine.

“Cycling is good for your wallet and good for your health,” Oortwijn said.

In the U.S., growth is flatter because cycling isn’t as popular, according to Elliot Gluskin, who compiles an annual report on the market for the U.S.’s National Bicycle Dealers Association." http://www.bloomberg.com/apps/news?pid=20601085&sid=akYjnYVUPYVc&refer=europe

The article is current but a little vague. It's so difficult to be bullish about any industry right now. The Wall Street Journal has been reporting for at least a few months that conspicuous consumption has decreased significantly during the recession which reflects on Veblen goods. And, of course, people usually do not spend so much when unemployed (projected to approach 10% :cryin: ). We all know there are plenty of unemployed professionals.

I see bikes going for $5000, groups for $2500, and wheels for $1500 and its way beyond my means! My last washer and dryer only cost $700 so a wheelset for $1500 seems way out of wack.

This statement is ingenious. Seriously. People seem to think your talking economics but I interpret this as smart personal finance inconsistent with the impulsive behavior of many other American consumers. Your talking about your elasticity of demand for a $1500 wheelset.

Do you think prices will come down if unsold supplies start to sit in the warehouse?

Inventory management! See excerpt above (so, no). Please remember that companies estimate future sales and plan inventory accordingly (so, no). Some bike manufacturers might prefer to under supply the market for very high end products anyway (so, no). Many bike products are branded for one year and margins are never superior on last years product line (so, no again). One bike shop told me early last year that manufacturers had low balled sales projections for 08, but that's hearsay. But, hey, just ask someone who works at QBP. Addendum: sometimes the bike industry is not smart at all, so who knows how well it has been managing inventory. I have to assume that Shimano is an exception and keeps a very low inventory, always.

As for less expensive bike products, the future is bright! Check this out:

"In economics, the cross price elasticity of demand measures the responsiveness of the quantity demanded of one good (X), to a change in the price of another good (Y).

As gas prices have soared, consumers have cut back on the amount of gas purchased (measured by the price elasticity of demand, which would be negative), but high gas prices have also resulted in increased purchases of other products and services (positive cross-price elasticity), and Greg Mankiw and Division of Labour have been keeping track:

4. Increased purchases of bicycles and bike repairs." http://mjperry.blogspot.com/2008/06/cross-price-elasticity-i-to-vii.html
 

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Sales are up, prices are too and once you are hooked on cycling nothing else will do.

If you are "waiting for a we can't sell our bikes special", you will have a long wait.

If you are waiting for a "we can't sell our automobiles special", your time has come!!!

Get it in perspective, my bike is worth more than my car.
My car is a 1998, my bike is a 2009 model.
Both are paid for.
 

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You're comparing something top of the line and very specific to a median washer/dryer combo. You can easily get much cheaper with wheelsets.

For a comparison, I went over to home depot's site and looked at their high end washers and dryers.

Washers:
I see several models for 1600-1700$.

Dryers:
I see several models for 1500-1600$.

So a high end (as high end as you'll get at Home Depot - I'm sure there are more expensive ones) washer dryer combo would be roughly 3300.

Edit: Glancing around a bit more I found a "luxury" stainless steel washer for 2400 - which is a bit insane.
 

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its funny how everyone wants prices to be lowered because we are in a recession...being in the construction field i see it all the time. unfortunately labor, materials, insurances, truck payments, and tool prices don't drop because we are in a recession. you may be able to lower prices for the fact that it will up the cash flow but profit that goes back into a company for R&D, sponsorships, and whatever else goes right out the window.

and hey Lance said "it isn't about the bike"
 

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Dude, there's some cheap things to be found.

I'm totally in line for a Calfee Bamboosero... I mean c'mon, it's cheaper than the Pedal Force RS2 group buy... it's $425

This bike is my dream, I can't wait to put my HSC5 SL Fork on it with brooks honey everything and CC maple headset.
 

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I will still give the article I posted the benefit of the doubt about sales of high end bikes this year. But, when GDP decreases, when everyone deleverages and when unemployment approaches 10%, then almost all industries and individuals hurt. If bike manufacturers and distributors have managed inventory levels well, then prices for current high end products should not really change. However, what might benefit you is if companies increase low end and mid range product lines. This has occurred recently in the US as road cycling has become more popular, evidenced by the launch of Tiagra. Tighter budgets should further shift product lines in that direction and may give only an appearance of decreasing prices, but we all know sora does not compare with dura ace.

There must be so many more people that have started thinking like you during the past 12 months: "Why don't manufacturers sell tiagra chromoly bikes? 24 or 25 lbs is worth the savings to me!" In my opinion, sometimes whole industries get too accustomed to high margins such as from larger than necessary cars or from very exotic bicycles. Then, when consumers inevitably prefer less expensive goods with smaller margins, companies delay accepting reality. Sometimes, it seems like they are incapable of even contemplating lower margin goods. Is it me, or did Specialized cannibalize its mid range for 09? The bike industry is not the smartest kid on the block.
 

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alll costs come down in a recession, but they still wont be cheap enough to really notice (30%+) but then your wages will come down same amount...status quo really..
 

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everythingeverywhere said:
There must be so many more people that have started thinking like you during the past 12 months: "Why don't manufacturers sell tiagra chromoly bikes? 24 or 25 lbs is worth the savings to me!" In my opinion, sometimes whole industries get too accustomed to high margins such as from larger than necessary cars or from very exotic bicycles. Then, when consumers inevitably prefer less expensive goods with smaller margins, companies delay accepting reality. Sometimes, it seems like they are incapable of even contemplating lower margin goods. Is it me, or did Specialized cannibalize its mid range for 09? The bike industry is not the smartest kid on the block.
I think all industries are like this to some degree. As soon as computers go below about $500, that model is discontinued and something with a bit more bling is offered for about $500. Last years model *could* be sold for less, but that would cannibalize sales of the new model.
 

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While low cost items will always fluctuate to meet the market demands, specialty items will remain the same cost. That is until a major lack of interest and sales are evident on the high end market.

Yes, you can buy a bicycle at walmart for 70 dollars.
I wouldn't hold my breath thinking that the same savings will come trickling down to us on the high end side of the bike industry.

Sora and Tiagra were made as entry level products. Most newbies buy this level, but soon move on. It is still evident that the veteran riders will always ride dura ace, campagnolo, ultegra, sram and other higher priced items. To think that veteran riders would suddenly switch to lower priced grouppos because of the unemployment rate would be rediculous.
 

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I think the OP is questioning the manufactures real cost to produce something.

I'm suspect on this as well as I think there's no way in h*** that a bike frame should cost $3000. There's no way that the ultra light wheelsets cost the manufacture anywhere near $1000 each to produce.

It would be intersting to know exactly what $6000 bike actually cost once it's delivered to the dealers door.
 
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