Profit margins of various frame materials
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  1. #1

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    Profit margins of various frame materials

    Just curious what your thought are

    My thoughts?

    1. Carbon Fiber, from the cheapest to the most expensive. In the lead by a good amount.
    2. Steel
    3. Aluminum (pretty close to steel)
    4. Titanium

    additions? care to break down further? ie cheap steel, expensive steel, etc. I realize these are huge generalizations.

    the reason I'm curious is bc of a Trek replacement of a carbon fiber Madone 5.9SL frame for $1300 where I said I thought Trek was making at least $900 on this replacement(another thread).

    I also feel the reason CF is so prevalent these days is bc of its high profit margins.

  2. #2
    RoadBikeReview Member
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    If we exclude uber cheap product, I reckon it's like this
    1. Carbon
    2. Alloy
    3. Steel
    4. Titanium

    With carbon & alloy very close.

  3. #3
    merckxman
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    Aluminum/Cannondale

    I recall reading in an article about Cannondale that the tubeset to make a full Cannondale (this would have been the CAAD 3, 4, 5, types) costs less than $20.00.

  4. #4
    Juanmoretime
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    Material costs.

    There are many cost associated with bringing a product to the market and the material costs is only a very small and sometimes insignificant part of that. The cost of a factory, employees, employee benefits, insurance, advertising and maybe sponsoring a pro team, research and development, shipping and there are many other costs that have to be calculated in. The bicycle companies are making money but no where to the degree that you are figuring. Most typical industrial manufacturers, when all the costs are laid out on their profit and loss statement, are more in the 5 to 30% range.
    Last edited by Juanmoretime; 03-05-2006 at 04:45 AM.
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  5. #5
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    Quote Originally Posted by Juanmoretime
    There are many cost associated with bring a product to the market and the material costs is only a very small and sometimes insignificant part of that. The cost of a factory, employees, employee benefits, insurance, advertising and maybe sponsoring a pro team, research and development, shipping and there are many other costs that have to be calculated in. The bicycle companies are making money but no where to the degree that you are figuring. Most typical industrial manufactures, when all the costs are laid out on their profit and loss statement, are more in the 5 to 30% range.

    Juan is spot on.

  6. #6

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    yup I overlooked the cost of doing business (whoops ). I would still think that its above 5-30%. Though I am quite possible wrong on this. The higher end stuff isn't mass produced and the lower end stuff has lower margins (more competition) so you are probably pretty close if not reight on. They definately aren't microsoft selling software....

  7. #7
    toomanybikes
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    I think the question deals with the gross margin on frames.

    That is revenue less cost of goods ( Material, labour and some component of manufacturing overhead allocation).

    The costs of selling, admin, and other "make the suckers buy it" costs are a different category and do not really address the OP's question.

  8. #8

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    The least expensive material to work with these days is aluminum. That's why you see it on most of the WalMart bikes. It's also the material you will find when looking for the cheapest bike with given components. The joke in the industry is that many bike manufacturers are really just selling parts: buy a component group from them and get a free frame.
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  9. #9
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    Quote Originally Posted by HeronTodd
    The least expensive material to work with these days is aluminum. That's why you see it on most of the WalMart bikes. It's also the material you will find when looking for the cheapest bike with given components. The joke in the industry is that many bike manufacturers are really just selling parts: buy a component group from them and get a free frame.
    Yep, in Germany you can get a new, fully Dura-Ace equiped bike with Ritchey WCS parts, a Selle Italia Flite saddle and a Ksyrium Equipe wheelset shod with Conti GP3000's for 1500 euros ($1800). Of course you get a lousy and heavy frame with it.
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