What things "should" cost

What things "should" cost

The year was 2010. The restaurant build out that I'd been project managing was finally finishing up. The original schedule we'd given the client showed them a Memorial Day opening, yet here we were just days before Columbus Day. Client delays can be a hell of a drug, but the bright side was that it left me a lot of time to work on November. 

If you ever find yourself project managing a restaurant build out, I have a few pieces of advice. First, get the kitchen open ASAP. That makes everyone happy and, more importantly, they start testing menus and stuff which means you get to eat. A lot. Second, take advantage of the soft open. Good lord you can take all of your friends out to lunch or dinner for the cost of a good tip. It's fantastic. Third, get invited to the staff menu tasting, and when you do take small bites! When the first item arrived I was ready to go all "nomnomnomnom" and the very experienced server next to me said "slow down, cowboy, they're going to be bringing food out for the next hour - have a nibble and move on." Sage words. 

Anyhow, our story unfolds at a lunch during the soft open. I'd invited a bunch of people from the very high end shop across the street from the restaurant, who I'd become friendly with during the project. The owner, with whom I was less familiar, came too. What I hadn't let these guys in on was November - they had no idea that we'd been testing frames and wheels and doing all sorts of "let's get ready to start a bike company" stuff. 

During this time, Ritte had just become a thing. Ritte is sort of a complex story. Their first bike was a DengFu model that they just had painted. And it's one of these stories where the whole thing was just kind of an accident, but they doubled down on the facade that the frame that they were selling for like $2000 was "theirs" and not a bike that anyone could buy on the internet for $400. The paint was great, the manufactured backstory was absolutely hilarious, but there was that sticky insistence that "nope, this is our bike." And then when the second version came out after the story became too big to hide, there was a "well, on this one, you see, we had significant design input." Look, the guy didn't start out to make a bike company, people loved his team's kit and their made up story, and the world beat a path to his door to buy bikes. I believe that it wasn't deception at inception, but you gotta come clean early and often. 

Anyhoo, back to lunch. I was sheepish because Mike and I are getting ready to launch a business that's in large part in response to retail shell shock when you go into stores like theirs, and the owner starts in with this oratorio about how they're going to start selling Ritte - the first generation, very much a straight off of Alibaba and into the paint shed product. And the frame's going to retail for $3000, because that's what a 1000g carbon frame should cost. (emphasis his) Now, on the one had, I get it. You're a high end shop selling expensive Cervelos and Specializeds and other exclusive and pricey brands, and you don't want to undermine that business, but you want to capture and profit from the energy that's around this new thing. 

And the whole time, the guy's just bashing all the open mold stuff they're seeing, and all the service work they're getting from people bringing them parts and frames sourced elsewhere to build up. Bear in mind, these guys were charging $300 for a frame build 10 years ago. That wasn't robbery - it takes time and skill and tools to do right - but their work wasn't always that great, and $300 for that work was definitely top fo the market at the time. But mostly it was the bashing of all this stuff that I recall. And I'm the whole time sitting there like this guy seems to know about 1/3 of what we've found out, and I just can't see this working for him in the long run.

There is no price that something "should" cost. Disruptive pricing will always be a thing. I trade in my retirement account for the great and grand fee of $0 per trade. That doesn't seem like a very good business to me, but Fidelity seems to make do. If a bike can suit its purpose well for $500, so be it. We provide an expert and relatively expensive-to-provide service, and we feel price pressure from below all the time. There has been too much of this "what things should cost" sentiment within the bike industry since forever. 

This is not to say that legitimate products and services don't have fair costs. I've been offered a whole lot of beer to do bike work. Why do people think that $15 of beer is worth $60? That's one of the craziest things I come across. But if your buddy who you ride with is happy to build up your wheels for a 6 pack of (really really good, trust me) beer, so be it. You might well wind up with a set of Larry wheels but you might not. I might be speaking out of both sides of my mouth there, but I don't think so. We're only afforded the privilege and protection that our own work history provides, there's no "should." Someone comes along with a better mousetrap, and we've got two options...

Just like with most of the cases in my just-completed "Supply Chain and Operations Management" (in which I got nearly a perfect grade, natch), there's no one size fits all right answer to this. A World Tour brand selling wheels for $3000 can't stand the thought of a Pro Conti brand selling wheels for $1800, and the Pro Conti brand can't stand our price points. We know we can't do what do for less and have it be worthwhile, but if the market doesn't value what we do and isn't amenable to our product/service/price equation, we don't get to stamp our feet and screech about what things "should" cost. 

The shop in question has been out of business for a couple of years, and I don't think they ever actually stocked or sold and Rittes. Restaurant is still open. Ritte's still around but the thrill is gone. 

The Mad Fiber part comes later this week. 


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The funny thing about capitalism and free trade: over time, the cost of goods generally settle to where they should.


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