Bicycle Markup and Profit Margins
I’ll explain why you should spend $1,000-2,000 on a high-quality pre-owned bike made in the last 5-10 years. A bike shop might make as much from the sale of an entry-level mountain bike as from a high-end road bike. In markup terms, a $500 bike that costs $300 wholesale is 66% markup. This is not profit. Many bikes take over an hour of labor to assemble.
A high margin would be 40-45% (66-80% markup), and a low end would be around 20% margin (25% markup) in my experience (as an employee). For a $500 bike, a 40% margin is $200, $300 original cost to the shop.
Negotiating Bike Prices and Seasonal Buying
You can negotiate some bike prices. Tell the seller you are willing to buy the bike in stock configuration to prove a decent bargaining point. And after you start haggling, ask to throw in stock parts, accessories, or spares in the deal. If you can’t get the discount you’d like, try to make it up with higher margin products.
Winter is the best time to buy a bike. The markup on electric bikes is around 25%, above the 21% average. The markup on high-end bikes is around 40%.
Misconceptions and Strategies
Margins on bicycles aren’t as thin as some owners claim, but they’re under the retail average. If you can’t get the upfront discount you’d like, try to make it up with products that have a higher margin.