Terms and Conditions

[dogrange]

Is there a law firm example we can use here as an analogy? I'm serious atmo.

I work with a lot of law firms, and you don't see a price reductions as such. Caveat: my experience is in the context of firms doing corporate work (transactions and litigation) for big companies.

What I see is a fracturing market where some firms position themselves in the "value" sphere and try to undercut the "premium" firms while offering similar quality. Meanwhile, the "premium" firms try to buttress their billing rates with lots of marketing, and some capabilities that are truly beyond the smaller "value" firms (e.g., ability to handle very large multi-jurisdictional transactions, you want to buy a premium name to represent you for high-profile litigation, etc.). On the side, many of the "premium" firms are pressured by clients to offer discounts or flat rates for projects, but they will only do this kicking and screaming. Personally, I also suspect that many bills end up padded, so even if big firm X offers you a 10% discount on transaction Y, you (the client) end up paying whatever you would have paid without the discount.

Not sure where this is going, other than to point out that the perceived better (not sure they are actually better in the case of law firms) firms can generally charge more than less experienced or less prestigious firms (just like in framebuilding, to some extent), but clients push back on the bills at the top of the food chain. There is much less rate and billing pushback (in my experience) when using the value firms, probably because they are a good deal compared to the standard of the prestige firms they compete with.

[dogrange]

Forgot to add that big firm billing rates have generally shot upward over the last 10-15 years. Not a hockey stick, but a very steady and significant rise.

[marley]

Reducing what you charge a customer based on process improvements or decreased raw material cost is generally reserved for long term supplier-customer relationships where it is in the best interest of both parties.

[e-RICHIE]

Reducing what you charge a customer based on process improvements or decreased raw material cost is generally reserved for long term supplier-customer relationships where it is in the best interest of both parties.

We need a first and last name accompanying all posts on Frame Forum atmo.
Thanks.
http://www.velocipedesalon.com/forum...rum-36866.html

[marley]

Reducing what you charge a customer based on process improvements or decreased raw material cost is generally reserved for long term supplier-customer relationships where it is in the best interest of both parties.

Dan Warner

[jaredjerome]

I'm somewhat surprised that simply an hourly rate isn't the standard for custom/made-to-measure bikes. I've worked for an instrument repair shop and chassis fabrication before and never worked on a set price basis. Like others have said, their prices reflect more of a baseline or ballpark, but even that seems somewhat unique. One would think that it would be more like custom car fabrication, or even tattooing, where it's more, "This is my rate, and it takes however long it takes, and if material costs change, they change." Just thinking aloud...

[e-RICHIE]

I'm somewhat surprised that simply an hourly rate isn't the standard for custom/made-to-measure bikes. I've worked for an instrument repair shop and chassis fabrication before and never worked on a set price basis. Like others have said, their prices reflect more of a baseline or ballpark, but even that seems somewhat unique. One would think that it would be more like custom car fabrication, or even tattooing, where it's more, "This is my rate, and it takes however long it takes, and if material costs change, they change." Just thinking aloud...

We sell a commodity not a repair service. When I rebuild a broken frame, I think hourly rate. When I sell a bicycle, I think Bijan atmo.

[Jonathan]

I'm late to read and post. As a datapoint. I go to the paint store pretty frequently. I'm not sure I've ever paid the same price twice for the basics like primer, reducer, activator etc. chemical prices seem to march up steadily. Every year or so I'll break down my paint materials cost for a frame and fork and it's always more expensive.

[jaredjerome]

We sell a commodity not a repair service. When I rebuild a broken frame, I think hourly rate. When I sell a bicycle, I think Bijan atmo.

Yes, a typical repair service is not a product, but a custom car, or a painting, or a custom instrument (which was a big part of our service), or tattoo is not a repair service. It's a custom product/service (depending on example). When I welded for a BMX company, we obviously had set pricing, but it wasn't custom frames and not comparable to the guys who have a different paint scheme, different joining methods, different tubing brands (and so on) every single bike. I could see if someone only TIG welds, or only brazes, or offers a standard paint option - where determining how long it will take is pretty simple. To me it seems like the difference between a custom service versus a product. For other industries, it seems like custom = hourly, and production = set price. I guess it also could also simply be the difference between completely custom and simply made-to-measure.

I'm more making an observation than trying to recommend or suggest any sort of pricing scheme, so anyone reading should take what I type with a grain of salt. I'm merely a lowly satellite builder that likes to burn tubes on the weekends. For what that's worth, satellites are made to order, however we don't use either pricing scheme =P

[e-RICHIE]

Yes, a typical repair service is not a product, but a custom car, or a painting, or a custom instrument (which was a big part of our service), or tattoo is not a repair service. It's a custom product/service (depending on example). When I welded for a BMX company, we obviously had set pricing, but it wasn't custom frames and not comparable to the guys who have a different paint scheme, different joining methods, different tubing brands (and so on) every single bike. I could see if someone only TIG welds, or only brazes, or offers a standard paint option - where determining how long it will take is pretty simple. To me it seems like the difference between a custom service versus a product. For other industries, it seems like custom = hourly, and production = set price. I guess it also could also simply be the difference between completely custom and simply made-to-measure.

I'm more making an observation than trying to recommend or suggest any sort of pricing scheme, so anyone reading should take what I type with a grain of salt. I'm merely a lowly satellite builder that likes to burn tubes on the weekends. For what that's worth, satellites are made to order, however we don't use either pricing scheme =P

Can we have an email surcharge atmo?

[jaredjerome]

Can we have an email surcharge atmo?

I'm sure we do!

[Michael Gordon]

We sell a commodity not a repair service. When I rebuild a broken frame, I think hourly rate. When I sell a bicycle, I think Bijan atmo.

The builders on this forum who are selling their frames sell anything but a commodity. They sell a specialty. If they were a commodity, buyers would simply go to the builder that offers the lowest price and fastest turn around time. In the world of commodities, everyone's product is the same, interchangeable, and price and lead time are king. Instead, many builders have a lengthy lead time and sell their work at premium prices. Often frames alone can cost as much as a nicely equipped carbon ride from China, but this is not what the buyer of a specialty product is looking for. Yes, I guess from a purely functional aspect I can ride my cannondale just as well as I can ride my Ron Cooper (RIP), but I much prefer my Cooper because it is so unique to me... the story of how I got it, the Cooper that my grade school friend's dad has, the sculpted lugs, the fact that I am always riding the only cooper in the group wherever I go. Yes, technically speaking it is a bike, but to me it is much more special than that. I am sure the same goes for anyone who buys (and waits for) a Richard Sachs, Zanconatto, Zukas, 44, Spectrum, Winter... just to name a few.

I come from the candy business where things like sugar, nuts, & cocoa are commodities. They are all graded by industry standards. In our business, companies typically buy from the vendor who offers the best service and price. The specialty companies turn these commodities into unique finished goods and sell them as specialty products at premium prices. How well the market their brand ends up being the single biggest factor in the price that they are able to command for their product. For the companies that buy chocolate and peanuts and sell chocolate covered peanuts... well, these guys are buying commodities and sell a commodity, because anyone can chocolate coat a peanut.

I mentioned earlier that I have a Cannondale. I got a great deal on it from the owner of the shop I ride with, and got it quickly in time for cross season (COMMODITY). As nice of a bike as it is, I would still rather be riding something from one of the builders on this forum (SPECIALTY).

[e-RICHIE]

The builders on this forum <cut>

Okay - it's a specialty rather than a commodity. Kinda' sorta' like Mast Brothers not selling candy, but rather chocolate. Anyway. The point is, the charge-by-the-hour tangent doesn't work for me. There's a price, and it's my task to complete the assembly in the time estimated to fabricate it. If I go over, I don't surcharge. If my materials and costs escalate, I adjust the invoice accordingly. That's one (among many) reasons the fiscal handshake is as low as it is. The client isn't financing the project, he's reserving a table in the dining room.

[Lionel]

Buyers perspective: for a frame I get within 12 months I would want the price to be fixed. It is the builder's problem to deal with fluctuating material cost in that time frame. For something 5 years out I understand. All of my bikes I got in 12 months or less and the cost was always known upfront. I like it that way and it's a pretty reasonable request.

Lionel Bonnot is my name

[e-RICHIE]

Buyers perspective: for a frame I get within 12 months I would want the price to be fixed. It is the builder's problem to deal with fluctuating material cost in that time frame. For something 5 years out I understand. All of my bikes I got in 12 months or less and the cost was always known upfront. I like it that way and it's a pretty reasonable request.

Lionel Bonnot is my name

I could agree with that AS LONG AS the down payment was large enough to support the fluctuations. At
some point, you are financing the build, not just reserving a spot. Later. Off to The Rapha Club thingy atmo.

[Lionel]

I dealt with a few versions:

Strong: 50% upfront, 50% when the whole thing is done
Spectrum: $500 upfront and something like $1500 when the build starts, rest when it is done
Rock Lobster: $400 upfront and nothing else until the whole thing is done
Crumpton: $500 upfront and nothing else until the whole thing is done (IIRC, maybe there was an intermediate payment)
Zank: $500 upfront and nothing else until the whole thing is done (IIRC)
Pinarello: $10K upfront but everything was already done ;-)

Lionel Bonnot

[fortyfour]

To answer the above hourly vs set price from my own perspective, I actually use a combination of both. But strictly speaking, any pricing you see in any of my literature is "For Example Only and Subject to Change".

I know how long it typically takes a bike to be built give or take and I know what I'd like to make per hour. I know what my materials cost me with a typical build right down to the last braze on. This is the result of my base price. I know material, time and effort it takes to layer on specific options. These are reflected in my A la carte menu style options pricing. I also know what the price of entry is that it takes for someone to consider even walking through the doors, aka: the price of entry. That took some research and experimenting. That is the most important one that many big companies spend a lot to figure out. (The $1.99 vs $2.00 psychology thing.) I think with more time, reputation, etc. that price of entry will go up to where it really should be. But that's going to take some time, experimenting and more experience so I can command a higher ticket price honestly. But to be true to the market, I'm not under selling anyone else or at least not trying to. Anyone who is just starting should never, ever undersell themselves. Ever.

I know if I told someone that I work hourly and the end price is what it is, no one, absolutely NO ONE would agree to buy a custom bicycle from me. Custom cars and custom motorcycles are a completely different market and mentality.

As an example, I had someone visit with what was easily a 25k BMW motorcycle, full leathers, etc., describe his collection of motorcycles and then tell me my price was too high...

But for reference sake: the goldsmith who I apprenticed under for a time said that he typically added up his materials and hours it took to make with an hourly rate he wanted to make. Then doubled it. If that still didn't look right he'd often triple or quadruple it. And this is someone who specialized in engagement rings and he truly believed that diamonds were absolutely worthless rocks that only had worth because we applied that worth to them. That's something I agree with though - diamonds are just rocks just like bicycles are just made from metal. You're actually paying for the care, expertise and experience of the craftsman putting it all together in a meaningful manner. That is worthy of the price they ask.