Why is Shimano 105 5700 (10-speed) is more expensive than 105 5800 (11-speed)?
Does someone know?
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3Depends on your retailer, part availability, part scarcity, how much they paid to get it when new, etc. The only person who can answer that is the person who is offering it for sale. – Batman Jan 29 '16 at 5:50
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1As Batman says - and ultimately the person offering it for sale is Shimano. How much are they selling it to distributors for. – OraNob Jan 29 '16 at 8:49
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1It's worth noting that Shimano's groupsets have changed quite quickly in recent years. Anyone who bought pretty much any Shimano groupset five years ago, now has out-of-date kit. But who's to say whether Shimano have a motive in doing this, or what that motive is, other than to shift more units? I guess I'm saying that it wouldn't surprise me if Shimnano sold 5800 cheaper, in order to encourage people to upgrade. – PeteH Jan 29 '16 at 10:14
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@PeteH When I bought my bike, it had an 8-speed groupset, so I think it already qualified as "out-of-date" before I rode it off the lot. The advantage is that it's dirt cheap to maintain. 8 speed drivetrain parts aren't the lightest you'll find, but you can get some pretty high quality stuff for rather low prices. The fact that cassettes, chainrings, and chains are compatible between manufacturers keeps everybody honest about pricing relative to manufacturing costs. – Kibbee Jan 29 '16 at 14:13
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A manufacturer designs a product, forcasts how many will be sold, tools, and starts selling that product. Pricing for that product is based on all of those items. After 5 years the manufacturer develops a new product and repeats the process. It may well turn out that due to advances in manufacturing the new improved product costs less to make than the old one. That will be reflected in the new product's price, but the old one may remain the same or actually increase. – Gary E Jan 29 '16 at 16:41
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Shimano, the distributor, and the retailer can pretty much set the price they want. It is common for older components to be more.
Clearly the distributor and retailer are not going to take a loss.
The marginal cost to Shimano is pretty low. Most of the cost is R&D, tooling, and branding.
Shimano wants you in their higher end stuff to promote their brand.
Once Shimano has machining set up the cost for them to produce one versus the other is the same. And they may have some innovation that the new is actually cheaper to produce.
In addition to Frisbee's answer, consider the middlemen in the supply chain.
There's two main models - Depreciating Stock means the retailer has bought the item at a price, and has to sell it with markup on top to make it worthwhile. While sitting around that stock item's cost is not available, its locked away till the item is sold. Accountants love to play silly-games with depreciating stock over time, to the point its cheaper to sell the item at less of a profit than to keep holding onto it.
Aside - This gets even weirder when the bike shop has to sell a certain number of bikes to keep their dealership rates.... walk into a bike shop at the right time and you can buy a brand new bike for less than wholesale cost, because the shop needs to sell N/month and they're not at that target. Only applies to whole bikes and just certain brands.
The other arrangement is Just In Time ordering where the distributor holds the stocks and the retailer overnights it. For me that's normally in another city, or sometimes in Australia.
- Advantage - fewer expensive things in stock sitting around using up capital.
- Downside - you can't have your part till tomorrow at the earliest. Plus the freight cost.
So why might the older 5700 be more expensive than the newer 5800? Could be any of:
- 5700 bay be harder to find - increased rarity means higher value
- Shimano/Importer/Distributor might be pushing the whole 11 speed setup so the end user can choose to buy most of a groupset (chain/cassette/2x derailers x2/2 shifters) for "not a lot more than this old 10 speed stuff"
- 5700 may be a better item than 5800 - stronger/better/faster etc and have a higher value.
- Promotions - again retailers are customers of the distributor, and there are occasionally promotions from the distributor, like "sell $x thousand worth of product and get a free barbeque/fuel voucher/trip to an island" or to even get a rebate/cashback at the end of the financial year. Some retailers will take that into account when choosing specials or pricing.
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1There's also a selection effect: the shops with lower prices will generally sell out first, so for non-replaceable parts like this, the price will climb over time just due to cheap shops selling out. – Móż Jan 30 '16 at 0:41
