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If you are close to buying an MTB, you will find them with prices ranging from 500 up to 15,000 Euro, almost as expensive as a car.
Mountain bike prices vary depending on the brand and the quality and robustness of the components.
00:00 Intro
00:59 Rapid Evolution
01:30 Limited component competition
02:20 If demand increases so does the price
03:02 If people pay
03:49 The cost of labour
04:38 Branding catches on
05:19 Safety has a cost
06:07 The Cost of Marketing
06:48 Closing
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Let's try to analyse what are the 8 variables and economic dynamics that come into play and cause prices to rise.
1-Rapid evolution of the mountain bike industry If we compare the cycling industry to the car industry, we can see that the suspension of a car stays the same for years, the engine changes every 10 years and the bodywork about every 3.
This is not the case with mountain bikes.
Every year, mountain bikes evolve with more complex, stronger and better technological solutions. Innovation presents faster and lighter products every year. Although this is a positive aspect, each new development raises costs.
2-Limited competition for components
When competition is limited, there is no need to lower the price of the product. Transmissions and brakes are 95% monopolised by two multinationals: the American SRAM and the Japanese Shimano. They dictate the rules, and as with Apple, their products form a unique ecosystem. These are expensive products, the cost of which ends up falling on the consumer.
3- If the demand for a product is high, the market increases its price. Although the number of people interested in the sport is still niche, it has grown enormously over the past five years. The reasons for this growth are manifold. For some, the pandemic has served as a wake-up call to find new means of locution; for others, the introduction of eMTBs and eBikes in general has opened up a new market.
4-If the buyer is willing to pay a high price, why should the seller sell at a lower price? Lowering the price would make sense if 1) the volume of sales is increased and 2) the manufacturer is able to handle the increase in demand. Since the sport is still niche, lowering the price would not massively increase demand.
5-The cost of labour, research and development has a big impact on the cost. It has been calculated that around 1,500 people are employed to produce 15,000 frames per year. Materials such as carbon and aluminium have to be processed in their raw form. The frame must be designed, prototyped, tested, corrected, retested and only at the end does the moulding and production process begin. These tasks are assigned to highly skilled labour, whose salaries account for a large portion of the final production cost.
6. The brand gets traction and manufacturers know they can make money from it. Many of those who approach the world of MTBs and do not yet have the necessary knowledge to understand the real value of a bike, compensate for their lack of knowledge by placing their trust in well-known brands. The choice to buy a well-known brand gives consumers a certain peace of mind, and this trust is often reason enough to charge a few euros more.
7- Safety has a cost Mountain biking is a sport with a fair share of risk. Descending at high speed over technical terrain and unexpected obstacles is part of the thrill that most mountain bikers love and seek. Therefore, the vehicle on which we ride must be safe, durable, reliable and precise.
8- The cycle of marketing impact
The promotional campaign of a new MTB plays a huge role in the final price. Advertising and promotional efforts create in consumers the idea of the excellence of the product, they will buy it, and if the product is really good, they will become loyal followers of the brand. When the same brand releases a new line, customers are likely to invest again in the product they trust.
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