Is it price fixing? if so why is it allowed ?

[SpokeyDokey]

How do the manufacturers set the RRP in the first place? They obviously know their costs base & required margin which gives them a price to the retailer. But how do they determine how to load that price to hit the RRP?

 

[Norm]

I can recommend a couple of Uni courses if you want the full answer to that, Spokey, but you'll need three years to spare and the right A levels to get onto the course.

The brief answer, though, is supply & demand curves, competitive landscapes, economic environment and some tosser in marketing to over-ride the whole lot.

 

[gaz]

Put it this way, Dave........I can undercut a professional photographer any day of the week. With a borrowed camera and less than no idea how to use it. I somehow doubt that my efforts would equal theirs. What would your advice to a person commissioning a photograph be?

Which reminds me of this great read.

 

[Tomba]

I haven't said there is anything wrong with it.
I haven't said I am trying to save a fiver.
And I am trying to buy from a LBS .
I was merely reflecting on the results of my search and asking the question.
I ran a succesful business for 15 years and was never interested in competing with the cut price boys-so I am more than happy to deal local, pay a bit more and keep the LBS in business......as I say-I am merely asking the question......but not sure I should have now.

Dave, I have a serious problem with this thinking. After all cycling to me (and most) is only a hobby. Why should you or anyone feel the need to keep anyone in business?
If the business cant compete then they go under.

I've had this debate with mates I go fishing with. Sure its nice to go in to the LBS/Fishing shop to get personal service but not to the extent they charge extortionate prices.

Bottom line, if I can afford a little of my income to take part in a hobby then i'll do it. My family come first, food on the table and a roof over their heads is my priority, not keeping anyone in business.

Sorry for going off topic

 

[Albert]

Bicycle shops seem to be a special case. They always seem to charge list price on the major brands. The importers clearly have the ability to apply pressure and make individual shops toe the line. In my opinion, this is because bicycle shops are generally small hand to mouth operations and can be bullied into charging exactly what manufacturers/importers tell them to charge.
Whenever I buy cars (except Honda), cameras, motorcycles (except Honda), electronic goods etc., I always seem to be able to haggle a good deal easily.

IMO Specialized, in my experience, are poor value compared to other "premium" brands.

 

[dellzeqq]

the chances are that if you become a regular customer (without becoming a PITA) you'll get discounts - at one LBS (not my brother's) I'll get about 25% off sundries - they'll just round it down to the nearest big number, and Susie got £500 of her Ruby Pro.

You'll get your 10% if you have a CTC card - although not generally of complete bikes under, say, £500, where the mark-up is slim.

As for Specialized being poor value - I think it's more complex than that, and goes to the heart of the matter. Specialized bikes are poor value if they don't suit you, but they're brilliant value if they do, and that goes for every bike. Every time I've ridden a Trek I've thought it uncomfortable, but there's enough of them around to suggest that very many people are happy with them.

 

[Andrew_P]

It is retail price maintence in all but name.

Part of the problem is that they are imported bikes, that either go around the Globe to get here, or come direct to the distributor from Taiwan. Either way it makes for some very expensive overheads which have to be shared with the Brand Owner, Country Distributor, Retailer and then the consumer and each step everyone is adding their % so the costs are getting compounded.

I really cannot imagine why an LBS would want to distribute for major brands, the pressures of wide product range, wide sizing choices and then worst of all a VERY limited shelf life, well limited for £2k investment. I beleive that the end of season price is the actual retail price and that the first six months they are riding on the people who must have the newest release.

I was shocked to learn that the whole Eurozone has really high duty rates on Bikes running at 14% plus extra charges if the bike is coming from Asia.

I am also surprised that LBS's have not got together or become a buying group and come up with their own version of CB Bikes.

Sorry rant over I have looked in to this a fair bit lately, and was gobsmacked at the RRP of a Roubaix on another thread, with pretty much lower end groupset.

 

[Norm]

...so I am more than happy to deal local, pay a bit more and keep the LBS in business......

I've had this debate with mates I go fishing with. Sure its nice to go in to the LBS/Fishing shop to get personal service but not to the extent they charge extortionate prices.

Ah, but Dave didn't mention "extortionate", just "pay a bit more".

The thinking is that the LBS will be there when I pop in mid-ride, as I did last Sunday, because I'd lost a bolt from my rear mudguard. I know it probably only cost them a few pence but there was no thought of charging me and the only question was "Sure, have you got the tools to fit it?"

When I bought race-blades (at £2 over the web price) which I couldn't get to fit, I went round, the chap spent some time trying to fit them then said "Nope, they don't work with those tyres, do you want to try some others or do you want your money back?" No need to mention Sale of Goods Act or who was going to cover the return postage, just instant satisfaction.

When I bought some gloves, they had a selection of a dozen pairs which were all allegedly in my size to try on and I was able to discount about half of them as Specialized, Sealskins, Altura and Pearl Izumi all have a different idea of what XL means, what length a thumb should be and how to place a seam in exactly the wrong place.

When I wanted some upgrades for the MTB, I got some Elixir 5 brakes at around £10 more than the web price but, at the same time, they gave me some shifters they had taken off another new bike as my previous set up had integrated levers & shifters. I also had Rock Shox Tora 302 forks which they got direct from the distributor at very low price as they had been used for demo purposes, and a pair of rims which the boss-man was building up for his own use. They also didn't charge for the labour to fit any of it as I was in no hurry and they could do it over a couple of weeks when they had some time to kill. The whole lot came in at around £250, the forks would have been most of that on their own. I know some of that is "second hand" but that was all fitted to an MTB that gets ridden around the farm and local trails by a 20 stone incompetent, so the lack of a new sticker was hardly going to be important.

As Dell said, there's always a bit knocked off at the till.

None of that personal service would be available from Wiggle or CRC.

 

[dellzeqq]

it's also about the future. Where do kids go to get bits for the BSOs that their parents have bought them? Where do kids go to look at the bikes they hope to ride in the future? I know I live in a kind of cycle shop heaven, with five decent bike shops within three miles of my front door, but, while Brixton Cycles will lend a spanner to a kid to fix his or her BMX on the footpath outside the front of the shop I'm not sure that CRC and Wiggle will do the same.....

 

[RecordAceFromNew]

it's also about the future. Where do kids go to get bits for the BSOs that their parents have bought them? Where do kids go to look at the bikes they hope to ride in the future? I know I live in a kind of cycle shop heaven, with five decent bike shops within three miles of my front door, but, while Brixton Cycles will lend a spanner to a kid to fix his or her BMX on the footpath outside the front of the shop I'm not sure that CRC and Wiggle will do the same.....

This is an excellent justification for good LBS to be supported, but is price fixing by a few brands such as Specialized essential for that to be achieved?

To avoid the wholesale elimination of LBSs by mail order firms, why don't Specialized and others simply insist (breaking no law I am aware) that their stockists aren't allowed to sell their wares by mail order, rather than engaging in the seemingly illegal practice of price fixing?

To borrow Norm's example to illustrate my difficulty in connecting supporting LBSs with price fixing and justifying price fixing, if I wanted to buy a Specialized bike, why must that purchase of mine subsidise his gloves purchase because he has outsized/undersized thumbs? Why shouldn't shops be free to charge a price for gloves (or missing bolts, or used forks, or services, or bikes) commensurate with cost and profit expectation which they are legally free to do?

Actually I don't even have any problem if individual shops load whatever cost they choose on any goods (including those aren't available by mail order) to the extent RRP is exceeded, because consumers still get to choose based on how they load such costs, and the cost efficient shops should and will still have an advantage. Price fixing is a rather different thing though, and is generally unlawful for good reasons.

 

[vickster]

To avoid the wholesale elimination of LBSs by mail order firms, why don't Specialized and others simply insist (breaking no law I am aware) that their stockists aren't allowed to sell their wares by mail order, rather than engaging in the seemingly illegal practice of price fixing?

I think Trek do

 

[Arrowfoot]

Occasionally this sort of behaviour appear where branded and well received products are involved. No idea about the bike industry but have seen it in high end cameras.

Stores that don't hold the line don't receive enough units, delivered in stores a week later, not allowed into promotional events etc. Eventually the message is received. Stores can't fix price for obvious reasons so when you see the same price. This is where major stores force manufacturers and country importers to apply pressure on other stores.

You never see this sort of behaviour in low end or less popular high end products.

LBS special and homely service is another discussion altogether. I suspect that many continue to buy their bike at major stores for price but go to LBS for service and accessories.

 

[dellzeqq]

This is an excellent justification for good LBS to be supported, but is price fixing by a few brands such as Specialized essential for that to be achieved?

my point is that it isn't price fixing if the service offered is part of the price. That's where the competition thing comes in.

To avoid the wholesale elimination of LBSs by mail order firms, why don't Specialized and others simply insist (breaking no law I am aware) that their stockists aren't allowed to sell their wares by mail order, rather than engaging in the seemingly illegal practice of price fixing?

an interesting thought. I had thought that Madison imposed that kind of restriction on Ridgeback and Genesis dealers, but mail order ads have crept in over the last three years or so. Heavens to betsy you can even get Colnagos mail order these days!

 

[mickle]

It's not price fixing.

 

[snailracer]

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073792322&type=RESOURCES