Huge Profit Margins

[Cyclezee]

We read and hear of large profit margins being made on e-bikes, anything between 50 and 100%
These figures may be accurate, but you can be sure the mark up is not all profit as there are considerable overheads to be taken into consideration.

If someone can buy a product and sell it for twice what they paid for it, good luck to them, that is capitalism.
If that is the case you would expect to see a rash of imitators come along and do the same thing, but that does not seem to be happening as far as e-bikes are concerned.

That could be because it is a limited market with a relatively small turn over and a couple of companies have already cornered the market for good quality products. These companies can therefore sell products for as much as they like with very little competition, but they can never sell for more than the customer is prepared to pay if they want to stay in business.

Thought for the day,

John

 

[Ian]

It's not just e-bikes, 100% mark up is commonplace on virtually everything except groceries and cars. Of course retailers argue that 100% mark up is not 100% profit which is certainly true, especially for smaller businesses who's relative costs are considerable.

 

[Jeremy]

Good thought. My guess is that few ebike dealers are selling more than a handful of bikes a week. So, if it's their only business, even at a 100% markup they still aren't going to get very rich from it, once the costs of premises, insurance, taxes, warranty issues etc are taken into account.

This is probably why the country isn't flooded with dealers selling ebikes, the hassle is probably more than it's worth. At least with conventional bikes the dealer can be reasonably sure that he can fix anything that fails under warranty without costing him and arm and a leg. With an ebike he can't even be sure of getting the parts for some models.

Jeremy

 

[flecc]

Yes it's normal practice to double the price paid, and as said above,the size of the market is a major factor, it being impossible to survive with much less. None of the importers I know drive Bentleys or Maybachs.

However after VAT, the proportion of the bike's retail price is under 43%.

Newer battery types are often marked up less to make them more acceptable, and I'm sure that's true of David Miall's new Wisper battery type with it's retail price fixed at £290 for it's introduction. He won't thank me for this but I'd guess he's added 30% at most to the cost.

Powacycle batteries have also obviously been sold with much reduced margins for a very long time.
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[fishingpaul]

It would be good to see more competition,at present if you want an ezee you can only buy one from 50 cycles,wisper also from one supplier,there are loads of £400 to £500 bikes available,but to buy a bike with a bit better performance,the price more than doubles to £1200+,and still at this price many are proving unreliable and expensive to maintain.

 

[flecc]

It would be good to see more competition,at present if you want an ezee you can only buy one from 50 cycles,wisper also from one supplier,there are loads of £400 to £500 bikes available,but to buy a bike with a bit better performance,the price more than doubles to £1200+,and still at this price many are proving unreliable and expensive to maintain.

While the general principle is right Paul, unfortunately more competition could increase the prices. None of the suppliers of more expensive bikes is making much money, and some really struggle in the off season. If the small sales were divided between more suppliers, they'd be hard pressed to survive without even bigger margins.

The market for e-bikes over about £500 is just too small.
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