The Blog — Bicycle Biz Economics

Fans of the Forums

125214666 Behind the Curtain Bicycle Biz Economics

I don't much like advertising. That's not necessarily my personal opinion - it may be, but that's irrelevant. Most advertisers don't give a crap what consumers think about advertising in general, only what they think of their ads in particular (which is often very different than caring about what consumers think of the products featured in the ads). Rather, I am offering my professional opinion here. As a guy who spent the last decade and a half making a living in the online advertising industry, I fully support growing this business without spending a single dollar on measured media.  When...

Read more →


Subsidies, Sponsorship and Sexy Paint

125214666 Bicycle Biz Economics Glass Houses

Part of the cost of the modern racing bicycle is a subsidy, or some economic assistance that one buyer provides so that another doesn't have to. The most obvious place we see this is in amateur and pro sponsorship. The expense of giving racers pro deals and free equipment is built into the margins of products sold at retail. You're paying more so that others may ride for free or half-price.  You won't be surprised to learn that subsidies don't sit well with our model. We think you should pay for what's important, and asking you to shoulder the burden...

Read more →


Cost-Based Pricing, Value-Based Pricing and Awesome-Based Pricing

125214666 Bicycle Biz Economics Glass Houses

I've written previously about how we set our prices. We use what is called cost-based pricing: we start with what it costs us to procure and deliver a frame or wheelset to you, and then add to that amount an amount of margin (or profit) that makes the effort required on our part worthwhile. If we chose higher margins, we'd make more on each sale but have fewer sales overall. If we charged less, we wouldn't make as much on each transaction and we'd grow to resent all you cheap bastards taking advantage of us every time we shipped a...

Read more →


Economies of Small

125214666 Bicycle Biz Economics News & Narcissism

I've worked for and with a lot of different companies. All have either been big, or doing everything they can to get big. It's like an unwritten goal of every business - to be number 1 or 2 in your industry and somehow harvest that leadership position.  Dave and I talk a lot about growth, but never about getting Big. Part of the reason is that Big is a really far away point on the map, but the other part is that we're not sure we want to go in that direction anyway. We like being small. For one, it...

Read more →


Investments in Psychological Differentiation

125214666 Bicycle Biz Economics Glass Houses Warnings & Examples

Even though the UCI hasn't communicated anything to national federations about how its UCI Approved Frame Sticker program is going to be implemented, monitored or enforced anywhere outside of professional events (and even the details there are pretty thin), several brands sprinted for the holeshot and right to claim that they were the first to obtain the magical little decal for their frames. Among them is Felt, who have gone so far as to gain the UCI's approval post haste, and then launch an ad campaign on VeloNews bragging about it. The picture you see here is one of the...

Read more →