Angry Asian asks the question "Do those top-end prices actually reflect proportional increases in delivered performance? The answer, of course, is no. No one can make the argument that a very expensive bike is twice as good as one that costs half as much." Agreed. I would add that the $10,000 - $15,000 bike isn't twice as good as a bike that costs a quarter as much. In fact, I would argue that it's not noticeably better at all.
|Specialized S-Works McLaren Venge: $18,000|
It's obvious that the prices aren't set by development costs and material costs plus a reasonable profit margin. The bikes are expensive because they can be. Because there are wealthy fools out there willing to pay a super-premium for the illusion of having something exclusive. Look at some of the bikes and their prices: Specialized S-Works McLaren Venge, $18,000. Trek Madone 7.9 WSD, $15,500. Cervelo R5ca, $10,000 (frameset only). All of them are basically popped out of molds. They're only "exclusive" because they're priced out of reach for anybody but the top 1%. I can only guess that the point is to get people lusting over them so that when they see the "regular" versions -- popped out of essentially the same molds but selling for half as much -- they'll think it's a "bargain." I would argue it's still too much. Angry Asian's article points out that it leads to an upward push on high-end gear in general, and he's probably right.
Dave Moulton, a retired framebuilder, now a writer and blogger, has looked at bicycle pricing in a couple of his articles (Here, and Here). When Dave's business was at its height in the 1980s, he sold some very nice custom-built frames, made to order for his customers. He also made a very nice line of hand-built production bikes, his Fuso line, made in small batches to more standardized frame specs. These were very well-designed, beautifully built frames -- comparable to, or in some ways better than the top-level competition being imported from Italy at the time. They were sold as framesets, to be built into complete bicycles with components selected by the dealer or the customer.
|1986 Fuso with Dura Ace -- about $1000 in its day.|
In another article, Dave points out his price list from 1990, not too long before he would retire from framebuilding. He writes, "The most expensive is the Fuso Lux, which was custom built to order, with chrome plating, and retailed at $3,150 equipped with Campagnolo C Record components. This was probably the most you would pay for any top-of-the-line racing bicycle." Today, top-of-the-line racing bikes are, as we see already, selling for as much as $15,000. Dave goes on to show that average income has increased by roughly 50% since 1990, but obviously the price of top-level bicycles has grown considerably more. He says, "There is a culture within the cycling community now that almost wants to pay these high prices." Perhaps worth noting is the fact that incomes for people at the top of the food chain have grown considerably more than for those in the more humble masses -- and for that elite group, price equals prestige.
"Back when I built frames, as a small individual builder," Dave writes, "I could compete with the larger import companies and still make a fair profit. Today, top-of-the-line bikes are made by large corporations, and prices are not based on what it costs to produce, but rather by what the market will stand." I think that's true. I mentioned before that for the price of the Trek Madone listed above, one could buy a Honda CBR1000RR -- one of the hottest performance motorcycles available -- and still have enough left for an awfully nice bicycle.
Last year in my article about "halo bikes" I mentioned (as does Dave Moulton) that there are all kinds of builders out there today making truly hand-made bikes in all kinds of materials -- bikes that are made to order, one-of-a-kind, and in many ways more "exclusive" than some of these hyper-expensive prestige machines -- and many of them can be had for a fraction of the price.
Considering the "flat" state of today's bicycle market, inflating prices for prestige and adding to the perception of bicycles as toys for the rich is no solution. How about some sanity. . . please?