what kind of profit are they making
- Thread starter Stu9
- Start date
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cd365
Guru
- Location
- Coventry, uk
An extra £300 I reckon 
They are not doing it for charity. Out of this profit, they have to pay for the staff, buildings etc etc before you are left with a true operating profit. Compare it with a bottle of wine in your local restaurant. A £5 bottle of wine will be sold for around £15 - not rip off, just paying the bills.
oldroadman
Veteran
- Location
- Ubique
They may be shifting old stock, maybe 2012 delivery, and/or getting a subsidy from the manufacturer to shift volume for them, to clear out space for 2013 models. Not much profit but enough to make it worthwhile with a few incentives. Happens in a lot of capital item sales, you can get cars, white goods, all sorts at good rates if you accept it's not the latest model.
jazzkat
Fixed wheel fanatic.
- Location
- The Cumbrian Riviera
Maybe a little off topic but there was a programme on the radio last week that said that supermarket profits work on an economy of scale model whereby they may make only 5p pure profit on an item. But when you consider they may sell several million of the said item the profit becomes 'worthwhile' especially in these interesting times.
I always used to think that shops had a 50% mark up. As said above, when you take out working costs, it wouldn't leave a massive profit. Maybe at £300 they are just covering cost and hitting sales targets that may mean a good deal with their suppliers.
I always used to think that shops had a 50% mark up. As said above, when you take out working costs, it wouldn't leave a massive profit. Maybe at £300 they are just covering cost and hitting sales targets that may mean a good deal with their suppliers.
albion
Guru
- Location
- South Tyneside
The likes of Tesco and Asda will sell you a plastic sink plug for 99p
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Well, that's certainly 5 pennies worth.
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Well, that's certainly 5 pennies worth.
simon the viking
Guru
I assume they will work like most retailers they will buy in some stock specifically for a sale and price it artificially high for the required amount of time by law (28 days? and I believe it doesn't even have to be available in all of their shops) then they will slash the price in a sale to a more realistic price, if they sell any at the higher price then its a bonus, If they have the monopoly on the brand then who's to say what the correct R.R.P is? (obviously they don't do it on their premium bike ranges like Boardman's as people will be more savvy on those and compare the specs)
You're probably right on that....mind you, he tried to sell me one today, cant remember the model but it was £1400, lovely bike but out my range
biggs682
Touch it up and ride it
- Location
- Northamptonshire
tdf's vary in price from store to store yet tv advertising special offer of £300 , yet they still go for £250 + on flea bay ?
a mate bought one just after olympics rode it once then put it in shade till a few weeks ago and sold it at a loss for £275
a mate bought one just after olympics rode it once then put it in shade till a few weeks ago and sold it at a loss for £275
Risex4
Dropped by the autobus
- Location
- The Green/Gray Hills Of Debunshire
Not necessarily. For mass chain merchants - no matter what they sell - you'd be surprised at what maths the pull which makes "logical" sense. It simply doesn't follow that they'll definitely be making any profit on that £300 bike, let alone a "healthy skin".
Because of economies of scale, its quite normal for large retailers to sell selected lines at cost or even negative margin. As has been said, it could be old stock that they require to shift, an incentivised discount from the supplier or intended loss-leader.
Even though they may normally sell at £600, the "normal" cost may be (for example) £400. I haven't a clue as to specific prices, but just for arguments sake. The retailer may go to the supplier (or visa-versa) and say we want to stock your product as a sale item, give us 5000 at £200 so we can sell them at half price. In return, we'll give you prime product placement in our stores and advertise on TV. The benefits to both parties are beneficial here as it gets customers into the retailer and gets the supplier's bike advertised and brand awareness up. There is of course always the potential to get punters switched to a more profitable model once they are in the door. There's still profit in it, just not as much for the retailer or the supplier in the interests of stimulating business.
Similarly, the retailer may simply take it upon itself to reduce a bike to cost (or even slightly below) without supplier involvement. When there is a big market spike (as cycling will experience over the summer months/TdF) competition for this extra custom is a bit cutthroat. If you have one bike that you make no money on, but by advertising it heavily it gets people through your doors where you then have a chance to up-sale or push profit rich add-ons to, then that is perfect retail sense. And customers who shop in your store once are more likely to come back and shop there again in the future.
I spent a decade working for an electrical retailer (not the one which went belly up last Christmas), and you saw this kind of thing every week of the year. The big boys can afford to pull this kind of lose-on-one-ticket to gain overall tactic because of volume. You'd seldom see a LBS or independent pulling the same kind of tactic (outside of discounted clearance or end of line) because they don't have the same flexibility or market potential.
paul04
Über Member
Spot on, the original price might have been £349, they just double the price for 28 days, then have a "sale" and really just knock off
£50 to make it £299
If you want to buy anything these days, just wait for a sale
I've become much more savvy at shopping around in the last couple of years. Trying to make my £s go further and being quite successful. I've had some cracking deals on services for being in the right place at the right time.
I haven't cracked it with bikes though. I get some good bits cheap but not a bike. I think one reason is I'm too fussy. I've never cared about brands before for anything else. I've just got a cracking deal on a new car for 63 plate delivery because its a pretty boring runout model, a vauxhall zafira. Yet I look at bikes and discount most brands very quickly. I also disregard very old models like 2010/ 2011 ones. So I'm left with the more expensive ones where I would have to pay a premium.
I haven't cracked it with bikes though. I get some good bits cheap but not a bike. I think one reason is I'm too fussy. I've never cared about brands before for anything else. I've just got a cracking deal on a new car for 63 plate delivery because its a pretty boring runout model, a vauxhall zafira. Yet I look at bikes and discount most brands very quickly. I also disregard very old models like 2010/ 2011 ones. So I'm left with the more expensive ones where I would have to pay a premium.
Jenkins
Legendary Member
- Location
- Felixstowe
With something like the Carrera TDF road bike the normal price is £300. Every now and then they increase the price to £600 for a month so when they bring it back to £300 they can claim it's half price.Can't remember the legislation involved but it's totally legal - the likes of Currys/PC World do something similar with electronics.
Any sales made at £60 are a bonus as their profit margin is based on the £300 selling price.
Any sales made at £60 are a bonus as their profit margin is based on the £300 selling price.
... it is one reason I will walk out of a shop that claims something has 50% 60% or whatever off... it's bollocks. support you local independent retailers for a more realistic pricing structure. I hate big high street retailers and would love to banish then from my life. My other half works in marketing so I know all the scams to lure and fool people into thinking they have a bargain.
