Wheel prices explained

Our pricing model is so simple it's crazy, but it's so different than the way most things in the world are priced that it bears a little explanation.

Some time ago, we had a big long discussion about how we should structure our pricing, and what we came up with was that we simply needed to make "X" per wheel set in order to make the business work. If the cost of the materials going into the wheels was $0, the selling price of those wheels would be "X." Since nothing ever costs nothing, the default selling price of our wheels is the cost of the components plus "X." For clarity, "cost" is our wholesale cost, not the retail price.

I'm not going to tell you what "X" is, but I can tell you that it's more than you'd pay to have a set of wheels built by a traditional bike shop. For one, we do it better than the vast majority of traditional bike shops. The bike shop around the corner has a high school kid do a bunch of their wheel work, and they farm some of it out to a local guy. None of it is as good as our work. That's a bluntly stated perspective you're not necessarily used to reading here, but there it is. Beyond that, there are costs outside of just the build - sales and advice and support and boxing and shipping and all the other stuff that we do. 

The retail price of any given component is roughly irrelevant to how we price. If two hub products carry the same retail price but our wholesale cost is different between them, the wholesale cost drives our price, and vice versa. This is why, as I explained in a recent post comment, our selling price for a wheel set built with DT 350s would be roughly equal to our selling price for a wheel set built with White Industries T11s. We pay about the same for each, despite the difference in retail costs.

This is a big part of why we don't bother with builds using very low cost components. There are many wheel products we sell where our built price is just about equal to what you could go buy the unassembled parts for. The less expensive the components going into that wheel are, the further way you get from that being the case, so at some point we just have to say "we are not an economical supplier of assembly and support etc of those components and therefore we can't/won't play that game."

Conversely, there are some components where just selling the parts for what you'd be able to buy them for has a little room beyond "X." In a lot of those cases, we are well priced relative to market, but we're not trying to be Discount Dave's House of Wheels.

As I was explaining to a friend last night, apart from the simplicity of it for us, this also removes any incentive we might have to push the higher priced and therefore higher margin wheel sets. If we make more or less the same on each build, that frees us up to not consider our back end in helping you find the best solution for your situation. 

So we'll build with DT 350s, but they won't be priced in line with their relative retail price to T11s. You shouldn't think of that as us giving a "bad deal" on the DT build, we're just a good deal on Whites. Same deal with Shimano - the fact that you can buy their hubs on Wiggle or Ribble or wherever at bargain basement prices doesn't remove our need to make "X" in order to profitably deliver a set of wheels to you, so while we'll build with their hubs, they aren't a mainstay thing for us. 

While it has some peculiarities and asymmetries, we think that our pricing is the best solution for both us and you. Keeping our best interests aligned with yours gives us great freedom to focus purely on helping you find the best product for your situation. 

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Fixed amount, absolutely.


Nice explanation. I like the idea of a fixed margin so there’s no incentive to push one product or another. Is X an amount or a percent?


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