Why are bicycles priced the way they are?

Question

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I spent six hundred dollars Canadian funds on a Norco Yorkville Hybrid. The rationale being that for that price I would get better than an entry level bike. It's a retirement gift to myself. I deserve better than an ordinary bike after forty plus years work.

Now it has become evident that while it is a good bike it is rather ordinary. I look around and see riders spending one,two and almost three grand for what they want. Is this just a case of buyers remorse? I like the Yorkville. It is nice looking but I wanted something special.A bike that performs better than average. Why are bikes priced the way they are?

Answer 1

Simply put, you are paying for the research and development that it takes to produce the top end framesets and groupsets. It takes a lot of time, trial, drafting, creating, testing, and reiteration of all the above steps to create a marketable product that also performs. (To some extent, you are also paying for the free product that goes to sponsored teams, but that is much smaller slice of the pie).

The good news, especially if you are working from a limited budget, is that you don't necessarily need the top end, current year models, unless you are intending on riding it for quite some time, or you really do need the small edge that the latest and greatest will give you.

The reason for this is that technology trickles down year after year, and/or you can purchase top of the line a couple years later for a much cheaper price. I don't know the exact rate at which technology does move down, but the current SRAM Force group (Their mid range groupset), is probably just as good or better than the Red groupset of a few years ago, because as the Red group evolves to be better, they don't get rid of the older tech, it just bumps down a level and becomes Force, and the old Force bumps down to Apex, etc etc. (That is very simplified, but basically true). Or, because you don't need that slight edge, you can buy a used group a couple years down the line for much less than new.

The same holds true for bike frames. While the newest framesets have all the aerodynamic and construction/design tweaks that hours in the wind tunnel produce, you can easily get a top of the line frame from a few years ago and reap most of the advantages that you would need. For a long time, the gold standard in triathlon frames was the Cervelo P3, which outperformed just about every frame around, even 4-5 years after initial release.

Yes, it's always fun to get the new shiny, but unless you are at the pointy end of the spectrum, you will get much more bang for your buck buying a few years old.

Answer 2

How is any product priced? There are three factors:

1. The cost to develop and manufacture the item, and cost of marketing and sales networks.
2. The demand for the item and what people are willing to pay
3. Volume, the more units made and sold the lower the item cost

If you look into what goes into making a carbon-fiber frame you'll see where some of the cost comes from - it requires human labor and is difficult to automate.

Bikes are not a huge volume product - compared to say smartphones or laptop PCs.

Answer 3

Part of the price is materials employed, part is assembling know-how, the remaining (good) part is brand. (Which is why you pay a Mercedes way more than a Dacia)

At the very end it's not the bike that performs better than ordinary, it's your legs.

My approach with any sport apparel has always been pragmatic: "start with low gear, once you get real better improve the gear". With bikes this meant riding my first 15k km on a low end bike, which I still use to commute. That same bike was also my "horse" for the first two cycling holidays, riding up and downhill on the Italian Appennini. With that bike I became able to overtake cyclists riding a 1k Euro full suspended MTB on paved roads (sic!)'

Then I decided that switching to a better bike was worth it, an moved to a slightly more expensive bike (900 Euros back then).

In the town were I lived before there was a skilled craftsman who was really good in hand making bikes. For one of his works you could easily spend 12k Euros or even more. Personally I would never put that much money on something that still requires my leg to move.