How much does it cost to manufacture a bike

[fleebag]

I was in Kmart a few days ago and saw an 18speed 26" "MTB" for $59- regular price.

I know it will be a piece of crap but it has wheels, brakes etc and they still make ?100% profit.
So my question is- how much does it cost to make a bike (not counting design time) cause the manufacturing process must be similar from a kmart bike to something super bling (which of course has 1000s of hours R&D).

 

[Jeffgre_6163]

I was in Kmart a few days ago and saw an 18speed 26" "MTB" for $59- regular price.

I know it will be a piece of crap but it has wheels, brakes etc and they still make ?100% profit.
So my question is- how much does it cost to make a bike (not counting design time) cause the manufacturing process must be similar from a kmart bike to something super bling (which of course has 1000s of hours R&D).

I cant answer your question directly, but I do know exactly where you are coming from
I.E. All bikes have the same number of parts etc so why the difference in price but you need to consider several things:
1] They will sell many many many times the number of $59 bikes compared to up market [$3k plus bikes] hence economies of scale dictate much lower unit pricing
2] Products are priced to what the market will bare - the $59 bike is clearly aimed at lower socio economic customers, not middle/upper income earners with big discreshionary incomes - I.E. Us $150k + per year earners get scalped because they can.
3] The materials in the bike will differ widely in metalurgicle specification dispite many people thinking aluminium is aluminium, Oils aint Oils so to speak
4] Quality control through all levels of manufacturing will be non existant to minimal on a $59.00 bike
5] Expect to assemble it yourself
6] Expect back up and servicability with your $59 special? HAAAHAAA
Most LBS will not even service them - sad but true for the many unsuspecting Mums and Dads that buy them for little Johnny
7] Expect it not to rust in to a pile of dust inside 2 years if it survives that long

IMHO Point 2 makes up the biggest % of why premium bikes cost what they do.
They are luxury products aimed at a luxury market - someone in the bike world is making a killing [And I dont believe its the retailer for the record]

I used to ride Motos and get extremely pissed as to why my 2008 KTM 450EXC cost around $12,000 when a top shelf MTB with full XT group set cost around $6,000.00
WHY!
The KTM is/was considered a "Boutique" brand [Think Ibis, Pivot etc in the bike world not Giant or GT] Moto weighs 9 times more , hence more materials, it has many hundreds more parts, has to be made to greater tolerances motor wise, had to pass ADR compliance testing, has extensive electronics etc etc.
There is NO WAY I could/can be convienced that an MTB actually cost $6k [inc retailler margins etc]

Now I just suck it up and cough up the dough or I would still be riding my 1988 Shogun Trail Breaker as some things you just cant change

 

[Anarchist]

(not counting design time) cause the manufacturing process must be similar from a kmart bike to something super bling (which of course has 1000s of hours R&D).

To be realistic, you must include R&D costs, prototyping (if any), design (if any) and tooling costs, etc. They all cost the manufacturer something and that something gets passed on to you, the consumer. That is at least part of the equation and in many instances a pretty large part.

 

[CalamityMTB]

Often the retailer will make very little if not lose money on bargain products such as a $59 bike. They refer to this within the industry as a "loss leader". They hope that while your in buying the bike you will also purchase some high margin accessories (helmets pumps etc) on which they will make money.

 

[flamshmizer]

I think he's asking how much it costs to make the mold and pour aluminum in to make the bike. We all understand why a 6 grand bike is a 6 grand bike, but how much does it actually cost to get from the metal refinery to the lbs?

 

[0psi]

cause the manufacturing process must be similar from a kmart bike to something super bling

Yes and no. While a part may look the same as another there are subtle differences that can affect price. Something like a suspension fork is the obvious one, a crappy fork is basically a spring in a tube, a high end fork will have high and low speed compression and rebound and a whole heap of other internal stuff that adds to the manufacturing cost and time.
Not so obvious are things like derailleurs which will have bearings in the place of bushes, forged or CNC'd parts instead of cast parts and tighter tolerances in high end parts.
To manufacture something to a higher tolerance (which generally results in a better functioning part) usually takes longer to manufacture which also bumps up cost. Plus the quality control to monitor these very fine tolerances in higher end parts also adds to the cost.

 

[Shredden]

I think I read somewhere that a giant XTC29 frame costs 22 dollars to make?

 

[fleebag]

I think he's asking how much it costs to make the mold and pour aluminum in to make the bike. We all understand why a 6 grand bike is a 6 grand bike, but how much does it actually cost to get from the metal refinery to the lbs?

Well, local Kmart

All good points and BTW i ride a sub 10kg dually that cost loads....

I still do wonder when 1 decent tire or 1 FD can cost over $100, does it really cost more to make than 2 bikes?

I guess most MTB companies also factor in the big envelope of cash they give the magazines to say they have the best product ever.

 

[JT252]

i know the markup is pretty huge.

let me put it this way i brought my rocky mountain switch 3.0 for $1300 brandnew.

It was a year old at the time and this is was a handmade frame so i would say anywhere from $500ish to $1000 for a handmade frame at cost. This is just a guess.

I would say it is around the $300-$500 mark for a high end machine made frame. This figure would obviously change dramatically based on quantity.

You have to remember how many cost there are with running a bike company when you factor in what you might pay. Things like advertising, sponsorship, R&D, admin etc.

All ad up very quick this is why most companies target the widest market possible (Scott & Giant for instance)

 

[Steve-0]

Also with high end MTB's each part comes with it's own cost and margin from it's respective company. All those parts are then put together and another margin on top of that, plus profit to distributor and retailer.

Actual cost of the frame would be pumped up from R&D and QA. I assume making the bike would be real cheap unless its made by hand or it's carbon. Which then it'd have a higher labour cost and an extra premium because there's a (bigger) waiting list.

Parts would all be stamped out, cheap as. But lots of money put into the development and cost of machinery to build it.

You have to remember the MTB world is relatively small. Companies pumping out a new product every year would be spending a motza on development and new machinery...

No top end bike would be built for $59. I also very much doubt any Aussie bike shops are making any boast worthy money. Maybe TBSM? There pretty huge..

 

[jimmijolly]

The more you make, the cheaper you can do it for, simple as that. The more parts means you can amortise the cost of design, tooling, machining, assembly, packaging etc. much more efficiently. Make it in china and that will drop your overheads by at least 30-40 percent, then sell it in Kmart where you can pay minimum wage for someone to sell it to you!

 

[placebo]

The only difference we have between an affordably priced cycle for the everyman, and they rediculously priced rubbish foisted upon by specialised and other corporate masters is the greed of proletariat traitors such as sam hill. A vanguard of the proletariat, riding Huffys must be organised, to strike at the bourgeoisie, and through their struggle, there will be a revolution of the underclass. A new day will dawn, such that everyman will now have a carbon V-10. Long live the revolution brother, don't forget to like this on facebook.

 

[thecat]

Light: Strong: Cheap:

Pick any two.

 

[thecat]

The only difference we have between an affordably priced cycle for the everyman, and they rediculously priced rubbish foisted upon by specialised and other corporate masters is the greed of proletariat traitors such as sam hill. A vanguard of the proletariat, riding Huffys must be organised, to strike at the bourgeoisie, and through their struggle, there will be a revolution of the underclass. A new day will dawn, such that everyman will now have a carbon V-10. Long live the revolution brother, don't forget to like this on facebook.

They rule us.
They fool us.
They shoot at us
They eat for us
We work for all
We make food for all!

Long live the revolution!!!

 

[BM Epic]

They rule us.
They fool us.
They shoot at us
They eat for us
We work for all
We make food for all!

Long live the revolution!!!

So where does Uncle Ho chi mihn , General Giap, Comrade Molotov fit in all of this?, there all dead, the revolution is dead, reds are NOT under every bed, i am now reffering to my fridge magnet and telling the Feds that there is this "parlour pink" who lives in lithgow, and is a member of the party, and it is time we got him in for an investigation into his loyalties!!!

 

[thecat]

So where does Uncle Ho chi mihn , General Giap, Comrade Molotov fit in all of this?, there all dead, the revolution is dead, reds are NOT under every bed, i am now reffering to my fridge magnet and telling the Feds that there is this "parlour pink" who lives in lithgow, and is a member of the party, and it is time we got him in for an investigation into his loyalties!!!

just remember, you capitalist dog.

Those who can be bought, can be sold

 

[BM Epic]

just remember, you capitalist dog.

Those who can be bought, can be sold

That would be me=the whore!!!!, there is a price on everything!

 

[MARKL]

A different perspective - Norco recalled about two years of production of their downhill frames without being put out of business so there must be a reasonable margin somewhere...

 

[oetkb]

I worked retail in a surf shop for a while many years ago and hence have a small example for you.
I was putting prices onto a certain brand of reasonabley respected sunglasses, That price was $34.99. We (the shop) bought the sunglasses for $12. Almost a 300% mark up ( maths was never my forte so forgive me if I am wrong). The real crunch was that the manager used to be a rep and knew the guy that owned the sunglass company and had it straight from him that it cost him $2 for every pair of sunnies made in china and landed on the docks here in Australia. This brand was advertised fairly well through the written media eg surf mags etc and there was about 5 different models so their was obviously some biggish costs involved.
Now I know very well that the L.B.S is not making a killing. I don't think there is 1 rich LBS operator out there and thankfully for people like me they enjoy the challenge of fixing my rig when I break it because I'm sure as hell none of the internet retailers are interested in fixing it for me.
Perhaps we need to ask the Manufacturers some hard Q's?
And for F$%k's sake support your LBS. You won't realise what youv'e mised till it's gone.

 

[Craftworks]

Most of the time the bike shop makes a bigger margin than the manufacturer..