How much discount does a bike shop normally receive from it's manufacturers i.e. Trek, Specialized, etc.?

Question

I want to determine what the bike's value is at cost vs. MSRP amount

Answer 1

Yes that previous answer about a 250% mark up was way off, holy crap he has no clue. the answer just above was spot on.

Generally the cheaper the bike the closer to key stone pricing. for example a bike selling for $200 probably cost the dealer $110 to purchase, now after assembly, etc it would be closer to $120 or $130 cost. Now a high end bike selling for $6000 may have cost the retailer $4400. yes they make more money but the percentage mark up is less and a greater percentage of operating capital is tied up in one bike rather than many.

It's very hard for shops to decide what to stock, especially if they are small or there are a lot of shops to choose from. An expensive bike will make a lot from one sale if it's the right size and it sells. However you have to sell 20 cheap bikes to make the profit from one expensive one, that's a lot more work.

So as the other guy said it's parts, accessories, and service they make their money on. After expenses the actual bike sales part is break even at best. This is why most bike shops really won't go down on the price of a bike because they really aren't making enough on it to begin with, let alone discount it.

Answer 2

LOL! An earlier answer saying the markup is 250% or so is totally wrong. As far as I know, the only industry that gets that kind of markup is jewelry... and they usually make much more.

Anyway, from personal experience... our store sold upwards of 2000 bikes a year... the "average" markup on a bicycle is 50%. If a bicycle is sold to the dealer for $100 the MSRP is about $150. There are exceptions, however... most bikes in discount stores have a markup of 10% or less. High zoot bikes often have a smaller markup than less expensive ones, and quantity increases or decreases cost as well.

Bike shops typically make their money on parts and labor. The margin on bikes usually only covers operating costs (electric, insurance, etc). Discount stores make up for bikes in vacuum cleaners and paper towels.

All this being said, the vast majority of shops will sell at MSRP because, although they are allowed to sell the bike for any price they want the factory may choose to close the dealership if they do.

Answer 3

Sliding scale based on overall cost and brand. A bike shop will make the most percentage wise on an expensive bike as opposed to a cheaper one. The vast majority of the bikes use the same brand of components (shimano), so find a more obscure brand and compare that to the more popular brand with the same components and specs. That will give you an idea of how much MORE you are paying just for the name. If you are looking at a $1000 bike no-name, I'd say they are probably making about $200, at most.

Answer 4

The average is about 40% but it goes up with the quantity bought by the shop per year. most shops make their $$$$$ on parts & accessories and repairs the national average is around $35 or $40 per hr. shop time. these figures are ball park but there's a saying in the industry, if you want to get rich DON'T own a bike shop.

Answer 5

The general mark up a shop will put on a fairly expensive item from the wholesale price will exceed 200% of the wholesale price. For something costing $1000 (e.g. a bike), you're probably looking at a 250% mark-up; or, look at it this way round, 50% - 75% (or higher) of the RRP will be the shops profit.

Welcome to retail!

(In reading the person belows comment; I will add that my retail knowledge does not come from cycling, but is fairly similar)