Re: [CR]KOF Pricing - Is a $20k Frameset Viable?

(Example: Component Manufacturers:Campagnolo)

Date: Wed, 15 Mar 2006 11:49:34 -0800
Subject: Re: [CR]KOF Pricing - Is a $20k Frameset Viable?
To: Vladislav Luskin <vladluskin@yahoo.com>
From: "Brandon Ives" <brandon@ivycycles.com>
In-Reply-To: <20060315192454.69081.qmail@web51414.mail.yahoo.com>
cc: classic rendezvous <classicrendezvous@bikelist.org>

U.S. and I believe it's a bit conservative of an estimate. best, Brandon"monkeyman"Ives Vancouver, B.C.

On Wednesday, Mar 15, 2006, at 11:24 US/Pacific, Vladislav Luskin wrote:
> Is that $7000 US or Australian for Dazza's frame? A big difference.
>
> Vlad Luskin
> SFCA
>
> Brandon Ives <brandon@ivycycles.com> wrote:
> As usual has taken everything I wanted to say and expressed it in a
> nice non-offensive way. For my own work based on my projections and
> historically based pricing formula in 10 years I hope to have the rep
> and resources to put my frames in the $4000 - $4500 range. I don't
> think I'll ever make a $20k frame, but I'm a simple guy who likes
> simple bikes. Now someone like Dazza (a.k.a. Darrell llewellyn) is
> getting there. This bike was built all out and Dazza won't say what he
> charged, but a few of us have extrapolated from hints and such that it
> was in the $7k ballpark as just a frame and fork.
>
> For you lug lickers there are few better. He spent 4x the amount of
> time I spent working on my slowest build. So he had better be getting
> paid. I love to see people like him, Dave Bohm, Brain Baylis, Sasha
> White, ETC build stuff like this so I don't have to.
> best,
> Brandon"monkeyman"Ives
> Vancouver, B.C
> PS: remember the #1 rule of business isn't how much your stuff sells
> for it's how high the margin is on the stuff you sell.
>
> On Wednesday, Mar 15, 2006, at 10:27 US/Pacific, Brett Horton wrote:
>
>> I have enjoyed reading this never ending thread. However, the
>> comparative rational (shotguns, cars, etc) used to somehow justify the
>> raping and pillaging of the rich is incredibly flawed. Based on a few
>> of the posts, the inference can easily be drawn that, with a
>> conspiracy of thought and action, the cloaked triad of supreme KOF'ers
>> can somehow manipulate pricing and demand with a flip of the switch.
>> Based on what? That H&H can sell a shotgun for $50,000?
>>
>> Time for a little reality check. First, one has to determine if a
>> bicycle can be a "Giffen good."(ie the higher the price, the higher
>> the demand) On the assumption you have convinced yourself there is a
>> line of people willing to pop $20k, how do you plan to speak to these
>> people? How will go about shaping their decision to purchase your
>> output at a price multiple several times that of a more common item?
>>
>> If you think you are going to fetch $20k for a bike and all the
>> other current costs of production will remain the same, you are wrong.
>> It speaks to why a modern carbon wonder bike that is factory line
>> produced will often sell for more than a full custom steel bike. The
>> makers of the carbon wonders have invested a significant amount of
>> capital into sponsorship of UCI Division One teams, they take out
>> repeated ads in magazines world wide, and they constantly exhibit at
>> trade shows, bringing fresh product variances to the market on a
>> consistent basis. Many have spent years and years creating brand
>> awareness. Alternatively, some newcomers have dumped incredible
>> amounts of resources in a short period of time to accelerate their
>> brand visibility. BTW, all of those things take money and business
>> risk. Many, if not most of the companies that fall into this "carbon"
>> category, have a diverse product base and the available cash flow to
>> somewhat minimize their risks.
>>
>> Not that it can't be done. Don't forget, there was a day way back
>> when, a guy named Ernesto Colnago was a team mechanic and budding solo
>> frame builder. What differentiates his monetary success with that of
>> other builders from the same era was, among other things, his vision,
>> drive, and even luck. (But even with all this, how many premium priced
>> Ferrari Colnago branded bikes were sold worldwide?)
>>
>> If I look at the pantheon of American KOF builders, I can only see
>> one guy that could remotely be in a position to pull the gig off. But
>> even in his case, he would likely need outside capital / investors to
>> front end the cost necessary to make it happen. Conservatively, unless
>> you could ramp production rates up significantly, you would be
>> expending $3,000-$4,000 as a minimum per frame in branding expense for
>> the first 5-6 years. Oh, and your investor / outside money-person
>> would probably like a return on their money as well. If you think
>> these numbers are too steep or otherwise unbelievable, try this:
>> Calculate the cost of advertising and trade show expenses alone for a
>> branding campaign that would truly speak to your perspective buyer
>> base. Then divide that by your maximum output. And don't forget,
>> you're going to have less time to produce your product because you
>> will be increasing the time you spend in trade show booths. You might
>> very well find $3,000-$4,000 per frame is low.
>>
>> From the outside looking in, it seems to me the price increases of
>> the last few years from KOF builders can be attributed more to the
>> rise of prices of production factory frames than anything else. I
>> would argue that at present, like it or not, custom made steel frames
>> are the lagging red haired step-child to factory frames when it comes
>> to product pricing.
>>
>> Save the flame email. This has nothing to do with appreciation of
>> custom built steel. This has to do with economic reality. You want big
>> prices? You want to create a Giffen good? Then draft a viable business
>> plan, round up the money, embrace your new life replete with partners,
>> and fire up the torch!
>>
>> Brett Horton
>> San Francisco, California
>>
>>
>>
>>
>> Don Wilson said:
>> but $10K to $20K for a bike, if custom bikes were marketed correctly
>> and effectively, wouldn't even make today's wealthy blink.
>>
>>
>>
>> _______________________________________________
>>
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