Bicycle Pricing

[Admin]

1) It seems to me that now that the sales books are put into spread sheets those could be collated and then sorted for Brand/Model names, which would then give us some base numbers for at least the more common brands

Since data was not entered as Brand/Model it will take some reformatting to make it useful, but it would give us something to work with in terms of baselines

2) A related, but somewhat different issue is how we base our pricing. In talking to different people I get the impression that some lean towards pricing based on the value of the bike, whereas others emphasize how much work we did (or didn't) do to get it ready for sale. For example they would price identical make/model/condition bikes very differently if one had been merely tuned up whereas the other had been overhauled.

i) I think we need to be really clear which we are doing;

ii) I think our price needs to  be based on the value of the bike, not on the work done eg a high end bike should be priced high even if it required little more than cleaning when it came in. Equally a low end beat up kids bike needs to be priced low even if it took many hours of work to get it functional. The high "profit" from the former helps finance the latter and keeps that many more bikes out of the landfill.

[Admin]

In checking the internet on prices I am starting to see a pattern in pricing that at least gives a base to work from. It looks to me that for slightly older bikes prices typically range over a spectrum from about 35% of original price for a bike in "Like new" condition, to about 10% for a bike in "Fair" condition.

There are other considerations. For eg 20 - 30 yrs old is not really enough to count as vintage for most people, but prior to various technology improvements that lowers the value. Older than that may be regarded as vintage by at least some potential clients.

[Admin]

I have found a few really good links for pricing bikes, but they underscore our need to figure out what we are doing and why.

Given that:

1. bike resale value is comparatively poor (ie fair market price for "like new" is about 35%)
   
2. our policy is to charge a minimum of $125 for an overhaul
   

Does this means that:

1. we only Overhaul bikes with a minimum MSRP of approx $400?
   
2. we charge more than fair market value if a bike took more work to make road worthy?
   
3. we only tune up bikes that have an MSRP of <$400 regardless?
   

Let's take an example of a bike that has an MSRP of $275 and could be put in good to excellent condition with some work (Fair Market about $80). A Tune Up would only bring it to fair (Fair Market about $$25-$30), but it doesn't need a full overhaul, just a couple of hours more than a Tune Up.

What do we do with it?

1. Just the Tune Up? That is still below our minimum for a Tune Up ($40)
   
2. Restore it to Excellent condition without doing a full overhaul?
   
3. Scrap it even though it could be made roadworthy?
   

Bear in mind that according to policy we will tune up (2 hrs work) a Kid's bike and sell it for $10-$30, but not do an adult bike (same 2 hrs) unless it will sell for a minimum of $40. So apparently we are willing to work 2 hrs for $10, but not 2 hours $30, or 4 hours for $80, which just strikes me as weird.

This is why I think we need to rethink the guidelines in the light of our mandate, ie to:

1. keep bikes out of the landfill
   
2. offer affordable bikes to people who may not otherwise be able to afford them easily
   
3. promote cycling and bike maintenance skills generally
   
4. we are a nonprofit and hence not bound to the same cost effective restrictions that a commerciial enterprise is
   

Relevant to this discussion is the post How much work do we do on a bike?


I take it as given that:

• we need to remain financially viable (no one benefits if we go under)
  
• many bikes are not possible to make saleable without a total rebuild, which is simply not
  reasonable except for the most high end ones
  
• many bikes could be made quite functional, but it would take more work than we can reasonably justify
  

Even so, that still leaves a huge grey area for the bikes that could be brought to a point of giving at least a year of use without further maintenance, longer if cared for, but which do not fit within our current policy guidelines. I believe that the fact is that this is the very area where we should be focusing.

Businesses like Dave's Bike Dump exist to get the high end profit making bikes back on the road. There is no reason at this time why we should be competing with them for that market. Sure, lets fix up every high end bike that comes our way, but lets not make profit margin the basis of our purpose.

For that reason I believe we need a more flexible, sliding scale of work options where the mechanic does the work necessary to bring a bike up to standard, but depending on condition falls somewhere between Tune Up and Overhaul (inclusive), but that the condition of the bike is comparable regardless of the work done, and that the price is based on market value regardless of the work done.

Example, 2 identical brand/model/year bikes are donated. One is in good condition and requires no more than a basic Tune Up. The other is sound, but requires a partial Overhaul (4-5 hrs) to bring it up to "Good" condition. The Fair Market price for these in "Good" condition is $100.

Currently we would Tune Up both, selling one as "Good" (probably for less than $100), and the other as "Fair" for $40 (or possible even just scrap the 2nd). As a result we do 4 hrs work for $100 to $140 ($25 - $30/hr), or if we scrap one, 2 hrs work for $60 to $100 ($30 - $50).

If we do the work necessary for both and price appropriately it will be 6 - 7 hrs work for $200 ($27 - $35/hr). Obviously the 'scrap one' option is the most cost effective, but this last option gets 2 bikes back on the road for longer and is more cost effective than simply Tuning Up both.

Which is why I am advocating for a single worksheet covering all of the bases with the current "Tune Up" options as a required minimum, but beyond that the mechanic has the discretion to decide which work is necessary based on the condition of the bike.

For bikes that require more work than a Tune Up, but too much to justify for the price we would reasonable get, we could offer them "As Is" (ie no work done at all) for a very low price to anyone who wants to do the work themselves.

[Sponsored content]