Do you get more bike for less now?

[Jcgill]

I was recently browsing for a new road bike that I probably don’t need, but that got me thinking....
I was looking at a production go fast road bike that i could ride daily and not stress over if i was in a group ride or crit etc.

Two front runners were the Specialized Tarmac Elite for $2400 and the Cannondale Supersix Evo Ultegra for $2599. (Both come with Ultegra 8000 and are carbon frames.)

My last production road bikes were a 2010 Madone with 6700 that i got on sale as a leftover model at the end of 2010 for $2800, i think msrp was mid 3k if i recall....and a 2011 CAAD 10 with 6700 that i special ordered for $2100msrp.

With all of advancements in technology in the past 7-8 years and inflation how is it that Specialized and Cannondale offer a bike with a carbon frame and great Ultegra 8000 components for only a few hundred dollars more than i paid for an aluminum 10 speed bike in 2011?

[charliedid]

Yes

[MattTuck]

Originally Posted by Jcgill

With all of advancements in technology in the past 7-8 years and inflation how is it that Specialized and Cannondale offer a bike with a carbon frame and great Ultegra 8000 components for only a few hundred dollars more than i paid for an aluminum 10 speed bike in 2011?

Either profit margins have gone down, or costs have gone down and that has allowed them to lower prices.

You may have just gotten hosed and paid a premium in 2011


Maybe Canyon is having an impact on competitive pricing.

[veggieburger]

Originally Posted by MattTuck

..or costs have gone down and that has allowed them to lower prices.

Retail 'inflation' isn't as high as the service industry (for egs) due to the magnitude of overseas outsourcing. You can increase profit margins yet keep your retail prices from skyrocketing by producing at one of the bloated carbon factories in China.

[FlashUNC]

Yes, bikes change in nearly a decade of time.

[josephr]

Originally Posted by MattTuck

Either profit margins have gone down, or costs have gone down and that has allowed them to lower prices.

You may have just gotten hosed and paid a premium in 2011


Maybe Canyon is having an impact on competitive pricing.

I think Canyon will be limited to a specialty brand simply because there's more riders out there who aren't necessarily savvy or interested enough to assemble their own bike. Internet sales are great, but you'll only reach a handful of recreational riders... those that ride MS150s and RAGBRAI every year.

I don't really think you can have this conversation without mentioning the Trek Emonda SL...light carbon fiber, great all-around geometry, a nice in-house wheelset, and a full 105 drivetrain, all for $1999.

[Burnette]

Originally Posted by Jcgill

I was recently browsing for a new road bike that I probably don’t need, but that got me thinking....
I was looking at a production go fast road bike that i could ride daily and not stress over if i was in a group ride or crit etc.

Two front runners were the Specialized Tarmac Elite for $2400 and the Cannondale Supersix Evo Ultegra for $2599. (Both come with Ultegra 8000 and are carbon frames.)

My last production road bikes were a 2010 Madone with 6700 that i got on sale as a leftover model at the end of 2010 for $2800, i think msrp was mid 3k if i recall....and a 2011 CAAD 10 with 6700 that i special ordered for $2100msrp.

With all of advancements in technology in the past 7-8 years and inflation how is it that Specialized and Cannondale offer a bike with a carbon frame and great Ultegra 8000 components for only a few hundred dollars more than i paid for an aluminum 10 speed bike in 2011?

Put simply it's market saturation. There are so many brands and models of bikes at every price point. Go the web sites of wrench science and adrenaline bikes and look at the spread there. Look at Cannondale at REI. Add bike shops to the online sales, then add the used bike market that's booming and price erosion is what you see.

Today's consumer has an overabundance of choices which is super great for us, terrible for bike brands.

That's today's market, In the future online sales will push prices down even further. You'll buy online and price point versus component content will rule, to compete bike makers will have chase the lowest offer. The bike you order will go to a bike shop or to your door.

[Jcgill]

Good point on the trek! also the same tarmac and evo can be had with 105 components for 1900 tarmac or 2099 for the Evo.

I looked at the canyon models as well, they look like awesome rides, but my critique is that they have too big of jumps in their lineup. They go from a $1999 alloy bike to a $3600 carbon bike with carbon wheels. Also they seem to favor disc models over rim brake models as there are only a few rim brake options with huge price jumps between them.

I think the smaller jumps like a $1900 105 equipped tarmac then jump to the $2400 ultegra version would spark more sales versus $1400 jumps between each model.

[Ken Robb]

Matt Tuck and others with b-school training can explain how marginal cost per unit gets really cheap once a big company funds the tooling to stamp out carbon frames with little handwork required.. This leads to the ability and necessity of churning out lots of frames and selling them relatively cheap.

[tylercheung]

I think its a combination of Giant and Merida ramping up volume and thus less unit costs, plus also they have the margins and economies of scale to really push the tech in CFRP manufacturing and design.

OT, but the Taiwanese riders I know are VERY proud of their bikes. And what other bike company CEO routinely leads group rides around their country?

[Cicli]

Originally Posted by MattTuck

Maybe Canyon is having an impact on competitive pricing.

Nope, they are (IMHO) the “bikes direct” of the higher end market.
I think there are just better values out there in an effort to reach the masses.

[jumphigher]

Originally Posted by Burnette

Put simply it's market saturation.Today's consumer has an overabundance of choices which is super great for us, terrible for bike brands.

I sometimes wonder what the outcome of this will eventually be. Will we see a drastic drop in brands and models?

[oldpotatoe]

The market is saturated and flat at the same time. Race for the bottom, price wise.

[Burnette]

Originally Posted by jumphigher

I sometimes wonder what the outcome of this will eventually be. Will we see a drastic drop in brands and models?

Hard to say with any certainty and I don't think much will change near term. As Tator posted though, when you have too many players chasing the same few dollars, consumers win from the inevitable race to the bottom in price.

Online sales will bring this about quicker than anything IMO. These are nowhere near the levels to do damage now but Trek and Specialized have already been staffing for online sales, so it's coming.

What this does is to move price as the number one buying factor, more so than it is now. How so? At a bike shop or even R.E.I. you have person to person contact where the other metrics like frame quality and component mix can be explained. Online consumers will see specifications of these metrics and a price and make their decision based on price point first and as high a component level at that price they can get second. The difference is there isn't anyone there to qualify the other metrics to influence buying decisions or upsell consumers on higher profit models. Online price will reign supreme, just like it did with UK parts sites, it will be the same with complete bike sales inside the US online through Trek, Specialized, Giant, Cannondale and of course Canyon and many more.

This will cause the smaller brands in the margins that don't have scale to be pushed to the limit and some out of the market. What is left may then consolidate and through closures, bankruptcies and mergers the number of players left will be more inline with real demand.

We are in the saturation phase of the curve, enjoy the deals, we should have them for quite awhile before the market corrects it's self again.

[Jcgill]

Great discussion.

I may be going n the minority, but I typically do all of my online research before setting foot into a brick and mortar store to test the bike i found.

Case in point the specialized, i stalked it on specialized website, searched local dealers, found the lowest advertized price of $2253 vs. $2400 msrp. If i were going to buy i would show up to the shop, test ride, roll it out of the showroom. Zero chance of upselling me a Venge, or DA equipped tarmac.

I do see new riders being upsold at my local trek dealer based on what they have in stock...that is mostly the lower end sora and tiagra aluminum bikes however.