[CR]KOF prices

(Example: Production Builders:Peugeot:PX-10LE)

In-Reply-To: <MONKEYFOODlIWKvKQUU00003d55@monkeyfood.nt.phred.org>
From: "Dennis Young" <mail@woodworkingboy.com>
Date: Thu, 16 Mar 2006 09:20:50 +0900
To: classicrendezvous@bikelist.org
cc: bretthorton@thehortoncollection.com
Subject: [CR]KOF prices

One small addendum to Brett's elucidating post if I may: I vote to keep the KOF prices at their current levels, not because I enjoy keeping these guys in the same eventual social security bracket as myself, but when considering an individual craftsman, there is nothing like big economic success to cause the level of work to decline. Brett mentions the resulting time away from the bench to keep the chips flowing, and it can be detrimental in more ways than one. I wonder if Brian, and the hard working e-richie, will have the same steady hand after consuming all those nice suds under the cabana in Rio? Well, maybe Brian is beyond all evil temptation, since he seems to keep his strokes even when always banging on a drum in who knows what kind of places? Still, we need to help save these guys from themselves.

"Art is a kind of innate drive that seizes a human being and makes him it's instrument. To perform this difficult office it is sometimes necessary for him to sacrifice happiness and everything that makes life worth living for the ordinary human being" ~ Carl Jung

Dennis Young Hotaka, Japan

> 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