June 16th, 2010 Posted in General Stuff

Been thinking about how annoyed we get when someone comes in with a boxes of chainreaction/ebay/wiggle and wants us to build their dream bike for them. Particularly when it’s stuff that we specialise in (take the time and money to research and stock product). There have been times when the customer wouldn’t have even know about the internet purchased products, but for our time in analysing their particular situation and offering a solution (generally by Nick, who is a solutions man). Yeah it’s cheaper blah blah but fuck, that’s just rude!

So our labour rates are worked out based on what could be done by Adam or Dave at $80 an hour which also includes workshop equipment, tools blah blah.. Which is way less than what I was charging as an essentially unskilled trainee accountant 20 years ago. How much do you earn? We are both very smart and handsome guys and given our shop specialisation you get great value because we know what we are doing. Unfortunately that doesn’t mean that we earn $80 for every hour the shop is open because we have to order stuff, talk to lovely people who share our bike lifestyle,  and do other things, like talk to people about which things they should buy on ebay/wiggle/chainreaction.

So we have to balance how to price our time and how to price our products that we stock. That mix has been the same for pretty much ten years. Our markup on parts has gone up a bit. Our standard service price has gone up from $50 or $60 in 1999 to $90 in 2010. ( I gotta stop feeling guilty when I hear people whinging about their mortgages. House prices have more than doubled in that period, and I don’t own a house yet.) The model works if we sell a bit of stuff and fix stuff. Right now, it works pretty well. We have a truly wonderful lot of customers (hate that word) who have been with us for a long time, and we feel a 2 way relationship. People pay a fair price for our advice and services, and everyone pays the same. We don’t discriminate against huffy riders or roadies. So, the thing is, the business model currently depends on service charges, profit on parts and accessories and profit on bikes. Becasue we spend so much time with new bike owners and building the bikes up properly, we don’t make money on new bikes, and I really don’t know why we stock bikes. Except for how cool it is seeing someone pick up their new bike. 2 year olds or 62 year olds, the look is generally the same.

Anyway, when someone gets their bike fixed, or a new set of wheels built, or a custom bike built, our labour rate factors in the profit from the parts/accessories that we sell with the service. So when someone brings in their ebay/chainreaction/wiggle , and we don’t get any of the profit from those parts, but we still spend the same amount of time on their project, smiling , we are ripping ourself off.

So what do we do? If we put our service prices up across the board, and all those lovely customers who haven’t been buying internet parts and bringing them in for us to fit will have to pay more. That doesn’t seem right. Or we could just say no internet buyers, like other shops say no to Huffys. I’m tempted, because then I wouldn’t need to be annoyed every time I am working on their internet products. We don’t really need any more customers. But people will keep buying more stuff off the internet unless there is a true carbon price put on all those airfreights, ha. Or maybe we should charge a corkage, 50% extra labour to work on internet provided bits. Or should we just bite it and keep  saying “oh awesome! We are so excited that you have bought all this stuff on the internet, even though we sell it too!”

Spose it doesn’t happen that much. Lucky we don’t depend on high end stuff .

Can’t wait for the day when we only do BoBo bikes and repairs.

End of rant