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following the Evans discount thread, what typical mark up would a LBS get on a current model big brand bike, say a 2016 Giant, Spesh, Trek etc ?
Just curious really !
I assume you mean the difference between trade and rrp? The sales, the floor rental, the staffing costs, the warranty support and building it 😉
You'd need to start off at least 100% I reckon.
£1000 delivered into shop
£2000 selling price
VAT already takes £333 of the £1000.
Mark up or margin?
Also depends on how many units the shop commits to over the year, and whatever other terms have been negotiated. Then, of course, there's the margin taken by Halfords/Cyclescheme etc for the C2W sales.
b r is nowhere near.
Just curious really !
LOL 😆
What do you do for a living? Fancy telling us how much profit you do or don't make?
To be honest, on some bikes it's embarrassing, not because of how much it is, but how little... You don't work in the bike trade to get rich! Big shops that buy in bulk get bigger discount obviously, but even they will often have to sell last years models at, or below cost, just to get shot of them...
Can we leave it at "it's not as bad as electronic goods retail, but it's a lot less margin than most industries" please and move on?
You'd need to start off at least 100% I reckon.£1000 delivered into shop
£2000 selling price
Hahahahahahahahahahahahahahahahahahahahahahahaha!
You'd need to start off at least 100% I reckon.£1000 delivered into shop
£2000 selling priceVAT already takes £333 of the £1000.
With margins like that, I'd be able to retire next month! 😉
Let's just face it, when the new Aston Martin comes out we know it's all the bike industry lining up to buy them...
You'd need to start off at least 100% I reckon.£1000 delivered into shop
£2000 selling priceVAT already takes £333 of the £1000.
You don't know then.
[i]With margins like that, I'd be able to retire next month! [/i]
If you're making less, how do you stay in business?
When I worked in the trade (about 15 years ago), the best profit margins were around 35% on bikes and 40% on accessories and parts.
We closed half the bike shop down and turned it into a coffee shop as the mark up on food was about 90%.
Most big suppliers required you to take a number of units per year at various price levels, this meant taking a risk and holding a fair amount of stock. You have any of it left in September and the next years models arrive and it is viewed as old stock. Once you consider all the associated costs bike shops make very little profit.
@br 😆
Depends on the brands and the commitment you make.Some brands (Trek) tie in the the margin across all their products (clothes,shoes,accessories) and offer a further rebate at the end of the year if you meet their targets for both sales and growth.
If you are a large stockist it can be up to 40% for the bigger brands but for most its closer to 30-35%.If you are a smaller shop and can't meet the buy in requirements (a number of bikes from each category) it can be as low as 20%.
By the time you've knocked off the customary 10% for someone walking into the shop and then thrown in the obligatory 'freebies' that does'nt leave too much for rent/rates/wages/bills etc.
[quote=mboy ]Can we leave it at "it's not as bad as electronic goods retail, but it's a lot less margin than most industries" please and move on?
I'm not sure why the need to be so coy - I think most of us are aware the margins aren't huge on complete bikes, and those who aren't could probably do with being educated. It's hardly a trade secret which is going to kick the bottom out of the market.
I read once the price doubles at each stage. So a frame that costs £250 to make costs the distributer £500. They sell it to the shop for £1000 who then sell it for £2000.
Not sure how true it is though. Certainly doesn't sound right.
People are perhaps coy because a proportion of stw see margin as profit and will use figures like that at an example of how the lbs is ripping the world off.
It's bollocksThey sell it to the shop for £1000 who then sell it for £2000.
Not sure how true it is though.
Yep double it up..It's fact actually
Having seen my LBS' online ordering system when I bought a bike a few years ago, I know that a £2,800 Trek cost the shop £1500. So not quite 100%, but close. However, the shop has a lot of overheads to pay for out of that markup, which takes huge chunks out of profit margin. I would guess that Evans – with their huge buying power – might get better prices than an independent retailer. So they'd have more scope for discount.
Yep double it up..It's fact actually
No it's not you ignoramus.
I don't work in retail, so asking as really have no idea. Some interesting replies. I know that local bike clubs can get discounts of up to 20% off the RRP on current model bikes, so was wondering whether the shop still makes a bit of profit in these cases.
40 to 20% max really for bikes at RRP of current year stock, so f'all really once any discount is given and other running costs taken into account.
Having seen my LBS' online ordering system when I bought a bike a few years ago, I know that a £2,800 Trek cost the shop £1500.
Plus the VAT.
Yep double it up..It's fact actually
No, it really isn't
Having seen my LBS' online ordering system when I bought a bike a few years ago, I know that a £2,800 Trek cost the shop £1500. So not quite 100%, but close. However, the shop has a lot of overheads to pay for out of that markup, which takes huge chunks out of profit margin. I would guess that Evans – with their huge buying power – might get better prices than an independent retailer. So they'd have more scope for discount.
Nope. Wrong again. Unless it was an extra special deal, where Trek had bought too many bikes and were selling them to their dealers at a deal. I would't expect that your dealer would have paid any less than 1700 quid for that bike.
.mikewsmith - Member
People are perhaps coy because a proportion of stw see margin as profit and will use figures like that at an example of how the lbs is ripping the world off
No one thinks LBS's are really stitching people up, do they?
They are squeezed between customers who use them as a sizing service and competition from the big boys.
It cannot be easy at all.
Overall, I know one shop doing excellent business, a couple ticking along nicely but most seem to be struggling, even the really good ones.
If it was such a goldmine, we'd all be at it.
What with all our expert knowledge.
We'll miss them when they're gone.
Evans/Wiggle/Halfords/Crc have a slightly different model with their in-house/self distributed brands (Norco,Bmc,Pinnacle,Dhb,Nukeproof,Ragley etc) as they remove a layer of cost.Sometimes 2 in the case of brands they own and sell directly (why crc can sell their own brands at 40%+ discount and still make money)
Rusty Spanner - Member
No one thinks LBS's are really stitching people up, do they?
It's your first day here isn't it....
[quote=Rusty Spanner ]No one thinks LBS's are really stitching people up, do they?
Have you not seen the owners' Ferraris?
Evans/Wiggle/Halfords/Crc have a slightly different model with their in-house/self distributed brands (Norco,Bmc,Pinnacle,Dhb,Nukeproof,Ragley etc) as they remove a layer of cost.Sometimes 2 in the case of brands they own and sell directly (why crc can sell their own brands at 40%+ discount and still make money)
My limited awareness suggests they'd mark up by more than 100% on brands where they own the importer, possibly significantly more if they own the bike brand too.
As to bargains, it's amazing what you can find if you visit your lbs and ask them to poke around a bit in the back, as my friend Samantha told me.
Recent finds include the previously considered extinct 2015 dropped bar Tour de Fer, resplendent red.
They'd forgotten about them, apparently.
🙂
I know some of the landed costs the importers pay for products.Whilst not tiny it's significantly less than the retailers make and they rely on volume of sales.2015 has been such a hard year for the trade partly because the importers have been left with a glut of overstock from 2014 (forward orders are placed months beforehand and 2013 was a bumper year).
It is a fact (happy to be proven wrong.. things might have changed a lot.)
Half of you have the receipts in hand so simple to prove across a varied spectrum of bikes.
I'm not suggesting bike shops are gold mines at all. Doesn't mean people should lie about the numbers in case some think it is easy money.
Joe pipe down with the name calling. Thanks.
Double the price and add VAT is standard for retail. But it is obvious from clearance that the margin on new bikes from small shops is less than this. Our previous sponsor would give us 40% discount and above this was struggling to not lose money. That on some expensive bikes.
Personally, I have no problem with reasonable prices. Evans don't sell Giant btw. If you get 10% discount on a popular model (that will sell out in the standard sizes) be happy.
To be fair ,you're an idiot.
The half dozen people on here who have refuted your 'fact' are either long time bike trade employees or lbs owners.
I know some of the landed costs the importers pay for products.
Indeed... Owning my own shop has opened my eyes to things from the importer's side of things too... On some premium products, say high end FS frames, carbon wheels etc. the importers are lucky to make even 6-8% margin selling them onto the retailers sometimes! I know when I wanted a nice set of wheels for my own bike, asked a favour of the brand manager at the importer and he said "as you're selling a few of these to customers already, I'll do you a set at our cost price for yourself, so another 6% off your normal dealer rate"... 😯
Yep double it up..It's fact actually
In the rarified world of high st. clothing retail, maybe!
Seriously, if you can't post without name calling then you need to go elsewhere.
I haven't posted anything offensive.
It is a fact, happy (very happy) to be PROVEN wrong (Not bullied into submission)
Who are you arguing with?! 😯
So basically you reckon with no fact it's double someone calls you an idiot for making shit up and you get upset?
Only the VOICES under the tin foil HAT....... 😐
You can claim shops have 100% mark up if you want but its simply not true, I've worked in bike shops for years and I've never bought a current model for half the retail. If someone has some information that all the people who work in shops arent privy to then by all means share but otherwise it's all misinformed speculation.
There is no need to insult other forum members.
Are insults worse than just making stuff up Drac?
Drac...have you met Hora? 😕
I assumed Drac was telling off theocb for calling people liars
Having seen some grey import pricing a few years back there's definitely good money to be made. Unfortunately it's generally spread across 3-5 tiers by the time it gets to the customer.
The current model is slightly broken and it's why the direct sales brands have flourished..
It is a fact, happy (very happy) to be PROVEN wrong (Not bullied into submission)
Aside from a bunch of people from the industry (including myself) telling you this is incorrect how are you hoping to have it proven?
You'd need to start off at least 100% I reckon.
Dream on sunshine!
Actual figures:
£2000 rrp bike. Cost £1067. VAT £333. Therefore 'margin' is £600
I have worked in a chain shop previously. Margin on bikes would average at 30% (a touch more for spesh and trek etc a touch less for boutique).
Closer to 50% if you are also the importer (Evans and Norco for example) but the extra overhead (storing massive orders) and min order levels etc pretty much swallows up the "extra" margin.
I would guess halfords are making a load more on Boardman etc.
Seeing a cheap invoice from Trek does not mean much - they certainly did good staff deals so perhaps that was it?
Nope. Wrong again. Unless it was an extra special deal, where Trek had bought too many bikes and were selling them to their dealers at a deal.
Maybe so, Joe. I saw it with my own eyes. Don't know if that included VAT or not but happy to believe it does. That gets close to…
Margin on bikes would average at 30% (a touch more for spesh and trek etc a touch less for boutique).
I really don't have a problem with that amount of mark-up. A good shop deserves it. People need to make a living, right?
Margin on bikes would average at 30% (a touch more for spesh and trek etc a touch less for boutique).
many thanks, I think my question has now been answered !
Maybe so, Joe. I saw it with my own eyes. Don't know if that included VAT or not but happy to believe it does.
It would have said on the invoice... that you saw with your own eyes 😉
iainc - Member
Margin on bikes would average at 30% (a touch more for spesh and trek etc a touch less for boutique).
many thanks, I think my question has now been answered !
That's gross remember - the VAT will take 20% of that - knocking your 30% down to 24%, then if there's any discount or C2W/finance that comes off your hgeadline figure, so in the 30% case above its 20%, reduced to 16% after the vat in the blink of an eye. And that's without any other overheads!
We closed half the bike shop down and turned it into a coffee shop as the mark up on food was about 90%
Overall ratio in a coffee shop / cafe is about 1:3 to 1:4 minus VAT at selling price. Wages, overheads, rent, power etc take Net profit to between 10% to 20% if you have enough covers.
It's all relative really to people making a living having worked in the meat industry as employee and shop owner where the average mark up was 30% then deduct costs of running shop,wages etc there's not much left.
If people think there's so much profit there ,go do it themselves.
Working as an employee is far less stress than being a business owner ,speaking from both sides.
Actual figures:
£2000 rrp bike. Cost £1067. VAT £333. Therefore 'margin' is £600
Interesting PeterPoddy, is that now a norm across a wide selection of bikes in the shop you work, a £2000 bike would still be a high ticket sale so how do the figures look on the bread and butter of a normal bike shop; say £300-£800 bikes? Is your shop still buying those lower end bikes in and then doubling up?)
@Richwithsilver. Come on chap, you know what proof means.. show some pics of paperwork on those posh Yetis you have 8) What does a stockist pay YOU for a SB5C?
@Richwithsilver. Come on chap, you know what proof means.. show some pics of paperwork on those posh Yetis you have What does a stockist pay YOU for a SB5C?
Come on. You don't seriously expect that this is going to happen do you?
(Apologies if my humour detector needs recalibrating today.)
EDIT This isn't meant to imply that the industry types on here have something to hide. Just that it won't be surprising if they don't feel like posting their paperwork on the internetz, because really who would do that?
Doubling up doesn't happen at the lower end either.
When I worked in the trade (about 15 years ago), the best profit margins were around 35% on bikes and 40% on accessories and parts.
+ another. And this was before the days of CRC and Wiggle. At the time the worst competitor was Ribble who grey imported Campag and sold it at what we (shop I worked in) would pay for it at trade. They also sold frames that claimed to be a certain tube-spec, but would only have one tube of that particular line in the frame (and not always a main frame tube either). Actually I can think of someone else that does that, but that's another story.
The problem now is that there are online retailers with large, cheaper-rent non-high street properties and the finances to negotiate extra-special discounts with distributors for mass orders. Needless to say these discounts are passed onto the consumer as very discounted prices and there's no way a high street retailer can get near them. Add this to online shops over on the continent who can often cut out a distribution middle-man (for example, they can deal with Shimano or SRAM Europe direct) and LBSs really have to think about their business model to remain competitive.
Having seen some grey import pricing a few years back there's definitely good money to be made.
Not having a go - genuinely interested. I've worked on both sides of the bike part distribution coin. Please go on.
The current model is slightly broken and it's why the direct sales brands have flourished.
To a degree this is true but could also be applied to plenty of other retail models. A lot of shops have to supply something more than bits now, especially with the likes of Amazon offering same-day delivery.
Having worked in the IT distro side of things for a few years markup there can be literally pennies and single finger pounds on a lot of items.
I had one manufacturer who wanted me to be a dealer offer me 10% margin once. Plus I had to buy a demo bike and two bikes for stock.
They were surprised when I said no 😀
The problem isn't so much the tight margins - they're quite tight but they also are in other industries. The problem is that people quite often expect a discount which they don't expect when buying a similarly-priced iPhone (for example).
Another problem is that, for silly reasons, the value of old stock drops off a cliff. Making 20% on everything you sell is okay if you sell in sufficient numbers. Making 35% on some, 20% on others, 0% on some, and -25% on what's left over gets very messy, and it's very easy to miscalculate whether you're an importer or a retailer.
I also think people get hung up on % margin. That's fine when all items are roughly the same price, but that's rarely the case.
If you sell a £4K bike at 25% margin you make £1000 profit. That covers a chunk of fixed costs, labour, etc. in one sale.
Alternatively, you sell a £400 bike at 40% margin, you make £160. Probably won't cover the mechanic's wages for the day.
Yet one shows at 40% margin and the other at 25% - which bit of business would you rather do?
I suspect that's why parts and inner tubes have such high mark ups on them - because doing an inner tube for pennies of actual profit doesn't pay many bills.
£160. Probably won't cover the mechanic's wages for the day.
£160 for a day's fixing bikes?! Sign me up!
I suspect that's why parts and inner tubes have such high mark ups on them - because doing an inner tube for pennies of actual profit doesn't pay many bills.
It's bread and butter. The largest mark-ups we made (that I remember) were on consumables such as cheap tyres (bizarrely expensive high-end tyres had very little mark-up), inner tubes and cables. At the end of the day you couldn't guarantee you'd sell a £2k bike every week, but you could be pretty certain that you'd repair a few punctures.
I work for a large German tyre manufacturer, and we can get the tyres at "trade + VAT" and it's only 1-2 pounds less per tyre than the german sites like bike-discount, rose etc..
Sure, i see that, but when people say there's a 100% markup on inner tubes as if it's an outrage - at the end of the day it's only a quid or two. That's what i was after..... everyone quotes % margin but only £'s pay the bills.
Alternatively, you sell a £400 bike at 40% margin, you make £160. Probably won't cover the mechanic's wages for the day.
Hahahahahaha that would pretty much cover my wages for 3 days. (Bike mechanic) But I doubt our total sales today have been £160. Whatever else is going on in the bike industry, the bike shops are not ripping you off and the owners are not getting rich.
Sure, i see that, but when people say there's a 100% markup on inner tubes as if it's an outrage - at the end of the day it's only a quid or two. That's what i was after..... everyone quotes % margin but only £'s pay the bills.
when I worked in a bike shop 30+ years ago, some of the margins were astronomical 😯 We'd buy a box of cable ferrules, unit price 0.5p and sell them for 3p. The owner was a millionaire 😉
You LBS's deserve to go under, shamelessly ripping off the punter like that 😉
@Richwithsilver. Come on chap, you know what proof means.. show some pics of paperwork on those posh Yetis you have What does a stockist pay YOU for a SB5C?
Even if I did put this info up, which I'm not going to, your expectations are so high that wouldn't believe me anyway!
You have a heap of experienced people here telling you that your 'fact' is incorrect. What is it that makes you think they're all in conspiracy together?
Sure, i see that, but when people say there's a 100% markup on inner tubes as if it's an outrage - at the end of the day it's only a quid or two. That's what i was after..... everyone quotes % margin but only £'s pay the bills.
I'm agreeing with you. 🙂
when I worked in a bike shop 30+ years ago, some of the margins were astronomical We'd buy a box of cable ferrules, unit price 0.5p and sell them for 3p. The owner was a millionaire
Disgusting behaviour! 😆
Remember when looking at staff costs that the employer has to cover tax, pension contributions etc too.
I'm sure the owner of the shop I used to work in would love to get some of these markups being quoted, some comments here have certainly made me chuckle 😉
Between peoples ideas on pricing like that and the "customer" but I've found this 2k bike on the Internet for 50p match it! Jokers it's suprising anyone sticks with running an lbs
. I'm struggling to see how you're working out the VAT there .You'd need to start off at least 100% I reckon.£1000 delivered into shop
£2000 selling priceVAT already takes £333 of the £1000.
. I'm struggling to see how you're working out the VAT there .
The bike is £1666.67 plus 20% VAT but the VAT goes to the tax man
£2000 selling price includes £333 of VAT. That goes straight to the taxman. So the bike before VAT is £1666 - £1000 = £666 margin.
Take off building, power, business rates, staff wages, including the employers tax, NI, pension contributions, plus other sundry bits and bobs, = not a lot.
And an LBS doesn't sell many £2000 bikes.
Beaten to it. Damn slow fingers.
Remember when looking at staff costs that the employer has to cover tax, pension contributions etc too.
Remember mark-up has to cover all overheads, including the staff costs and wages, all the tax bobbins, rent, utilities (so that's water, heat, electricity, phone, broadband) and any other stuff the shop needs to pay (does it have a website? Does it run a van? Does it support a team? Does it help out with local events or trails?). It doesn't go into the pocket of the owner.
Take off building, power, business rates, staff wages, including the employers tax, NI, pension contributions, plus other sundry bits and bobs, = not a lot.
Beaten to it too. 🙂
having owned a bike shop for 15 years
i can tell the OP that it has never been 100% margin
its 20-40% depending on volume. (when we were the biggest yeti dealer in the Uk we got 40%)
but you are typically offering 10% discount to compete with everyone else
c2W take 15%
VAT works against you if you buy at £100 add the vat at £20, selling at £200 the vat is £33
so there you are, that's the facts.
If only the Bike trade had the kind of margins some of you wrongly think we make, If that were the case I would almost be able to take the constant IBD bashing but however its not, don't use the likes of Evans/CRC/Wiggle to base your prices on, thats whats killing the bike industry, Its been said before and I'll say it again, THEY DON'T PAY WHAT WE PAY, they deal on a massive scale, buying from abroad from bike companies overbuying on parts to sell onto mail order companies and buying from whatever country is weakest to the pound, it goes on...
I could rant on and on but I think I've ranted enough.
Forget VAT it's not shops property its passed from the customer, handled by the shop and handed over to the taxman. Its a tax on the customer. The customer pays it ONTOP of ALL prices regardless of who with.
A 1k cost bike makes a shop £600? Wow, we can only dream of such %.
'Overheads'- all businesses have overheads.
hora in "rip off Britain" dream land SHOCKER!
Wow, we can only dream of such %
It does seem like a decent amount, but you have to bear in mind that £2k sales don't come along every day. Shops certainly aren't selling them all day long.
When I ran a shop, the average value of the bikes we sold day to day were between £300 and £600. That same percentage doesn't equate to quite so much moola...
A 1k cost bike makes a shop £600? Wow, we can only dream of such %.
But the % margin is only part of it, as discussed above. How many £2k bikes do you think your LBS actually sells, and also sells without giving a discount on either the bike or other products sold with it?
You're a bargain hunter Hora - when was the last time you paid RRP?
It does seem like a decent amount, but you have to bear in mind that £2k sales don't come along every day. Shops certainly aren't selling them all day long.
Beaten to it. Again. 😆