Comment by leak | Hacker News Reader

Comment by leak | Hacker News Reader

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I don't have experience in a lot of negotiations but I have used similar methods many times. I bought a bike a couple days ago and got them to throw in a few extra things for free. I didn't negotiate the price of the bike but I made a point of needing a light and a helment.

First, I asked for a light that would be go great with the bike and the sales person put one he had laying around on the bike. I said it looked great. Then I asked for a helment and found one for me that I liked. I put on the helment and did a test ride with the bike. I told him I'll take the bike. Then I asked, how much for the helment & light? He gave me the price. I said "That's not bad but honestly, I don't have the money for everything. What can you do?" He offered to give me 20% off the helment & light. I again said that was a great deal but couldn't do it. A few more back and forth and me throwing in that I would need another bike (for my gf) and wanted to come back and buy from him, he eventually threw in the light and helment.

What I knew was roughly how much profit they were making from the bike. I knew roughly the mark up of accessories and I knew how they wanted to sell the bike.

It worked out really well for me and the business. I love the bike and the business now has a new loyal customer.

I bought a bike too last year. I paid list price, had them install kiddie seats, I paid list for those too.

The last place I would drive a hard bargain would be in a bike store.

For one, I can afford the bike + extras, otherwise I wouldn't go out to buy it, we're talking relatively small money here. I simply set a budget and didn't exceed the budget, which may have influenced my choice of bike but that's fine.

When I went back a few weeks later with a small problem (crank play) the guy instantly dropped what he was doing, fixed the problem immediately (obviously no charge) and asked how my kids liked the bike. We talked for a bit more and he asked me to come in any time there is anything wrong with the bike right away.

I love the bike and that guy running his small business.

I wonder how he would have treated me if I had decided to haggle with him over the price of the seats or the bike using my negotiation skills. Relative to my income that guy is working a lot harder for a lot less.

Maybe my perspective about bike store owners changed when I worked for a bike store when I was 15 (newspaper route + working in the bike store paid for my first computer).

Car dealerships I approach in an entirely different way.

I'm not sure if you've ever been to a bike shop when they are having a sale. The bike shop I was at had some bikes listed for $999 on sale for $739. That's more than $200 off a bike and they're still making money. The guy selling me the bike doesn't lose that $200 difference. They are making higher profit ratio on a bike than a car dealership does on a car.

If you get treated differently if you have issues in the future because you bargained then that's an issue with the business not the price you paid.

Btw, I paid full price for the bike as it wasn't on sale. My guess is they made 30% profit from the $800 purchase.

> My guess is they made 30% profit from the $800 purchase.

No, they made a 30% gross margin. Their profits would likely be substantially less.

It's more likely that items on sale are sold at a net loss. The cost of simply having stock is more than you'd think. As an example, I ran an ecommerce site for a hardware company and after 30 days in stock laptops were no longer profitable, even if sold at full price.

My understand is that bikes have a pretty slim margin and stores make their money on accessories and servicing.

You got it just about right. Bikes now have annual updates, just like cars do. Any bikes not sold end-of-season will be worth roughly their second hand resale value the next year. Hence the stock clearance sales. This effect is stronger for racing bikes and mountain bikes than it is for evergreens (for obvious reasons). If a bike store is borrowing at 7% (good deal with the bank) to buy their stock then a $500 bike that retails for $649 (30% gross margin) will have cost the store ~20 bucks in interest after half a year. If they sell it during clearance they will probably drop the price to $549 or $499 depending on how much inventory they have to move. At $550 they're still making some money, at $499 they're losing.

And they still have to put the bike together, give it the '0' service (mostly checking if everything is tight, re-inflating tires and setting it up for the customer) and a warranty. And clean it up after every jerk that goes puddle hopping with a new bike during their test-drive, after which they won't buy it.

There is not a whole lot of money in selling discounted bikes.

Then after the first year you have hopefully a loyal customer that can't fix their own punctures and that keeps coming back over a long time for fixes and eventually an upgrade. It isn't rare for a sale to make more on accessories than on the bike itself, compared to the price of a bike a bag set, seats, lights (usually mandated by law to be on every new bike) and clothing are sold at much higher margins.

How do you know they were still making money on the $739? How do you know the bike manufacturer wasn't offering incentives, much like with a car dealership?

It's a business - you don't sell stuff if there is no money in it. It made you more money being out of the store for that price than sitting in the store... whether it was through rebates from the manufacturer, some contract deal, etc is irrelevant - the business made money.

Not necessarily true. Old stock is sold at a loss quite frequently because keeping it will cost even more than getting rid of it. Space is a real problem in bicycle stores (and capital an even worse one) if you can't show next years models in March then you're not going to be selling any bikes at all.

You have sentimental feelings towards bikes shops and feel good about paying full price. I can understand that. But, I don't see why you should criticize leak for not having the same feelings. Lots of people work hard and make less than you do (many car dealers included). It's not the consumers job to worry about whether the other side is making enough profit. Businesses can take care of themselves. Sometimes they won't sell at a low price because they don't want to set a precedent for negotiating. But, often times, it's profit-enhancing to price discriminate a bit and charging the rich guy full price while throwing in some free accessories for the frugal guy. There is not need to guilt trip the frugal guy about it.

> But, I don't see why you should criticize leak for not having the same feelings.

I'm fine with his haggling. My time and the way I'm perceived by the store owners of the places where I shop is worth more to me than I could ever gain by haggling over the price of a bike. Leak and I are in that sense not in the same position. I also think that if I want to keep that store in business by the time some warranty issue rolls around that I probably will have to let them earn some money. (the dutch word for that particular feeling is 'gunnen', this doesn't happen often but I haven't a clue what the proper English translation is).

He gets to do it his way and I do it in mine. Any guilt complexes are on account of their respective owners.

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