Why Are Bikes So Expensive?

‍If this is your first time buying a bike, one of the first questions that you will probably ask is “Why are bikes so expensive?”

If you do a quick Google search, you will find out that most good bikes are well over $1000 and some even cost upward of $15000! Yikes!

There are several direct and indirect factors that influence the price of your bike, including cutting-edge R&D, specialized and customized components, higher material and labor cost, less competition, more demand, and limited supply, and branding and marketing reasons.

In fact, you will find that high-end bikes are not the only bicycles that are expensive. Even economy versions are now pricier than ever. In this guide, you will take a look at several elements that will help you understand the high cost of your bicycles.

I have owned many bikes over the years, from entry-level models to specialized and customized bikes and I have seen their prices climb over the years. As an expert, I see that the superior components and better material are some reasons for the price hike but not all. However, I do understand why buying a bike is getting so expensive these days.

‍Factors Influencing the High Price of Bikes

Here is a list of reasons why you need to think twice when you are out buying a bike:

Cutting-Edge R&D

High-quality bicycle brands spend an awful lot of money designing, innovating, and researching new bicycle models. They are looking at newer and more creative ways to level up their bikes with state-of-the-art technology. Paying for premium material, software, prototypes, and employee costs all add up.

If you consider the Specialized brand, they are always introducing one innovative feature after another when it comes to their bike’s performance and comfort level. They have created a special “Win Tunnel” in association with NASA engineers to test the aerodynamic capabilities of their bikes. In addition, SRAM is using Zipp engineers to design sawtooth-shaped wheels for its bikes. The cost of employing these extremely qualified and experienced engineers alone is very high, but if you also add the materials used and manufacturing for each tested item, it becomes easy to understand why research and development can cost millions of dollars each year — and this price is recouped from the end customers.

In fact, the development of a specialized bike can cost as much as a motorcycle or even a car, reported Chris Yu, the head of engineering and innovation for the company.

Premium Materials

Another very big reason for the high cost of bikes is the material used. These days, bikes are being made with a wide variety of materials. Although previously, bike frames were predominantly made of steel, manufacturers have now introduced bikes that are made of more costly raw materials like carbon fiber and titanium.

Carbon fiber comes in a variety of grades and forms. The higher the grade of the carbon, the higher will be the cost to acquire it for manufacturing bikes. This also means that it needs to be stored right in transit and requires good care in refrigerated and cold units. Carbon fiber is also quite tricky to mold and shape so a lot of attention and precision is needed when using this material to create bicycles.

Even if a bike manufacturer is making their own carbon fiber, they need to recover its cost by adding it to the sales price of the bicycle.

High Degree of Customization

If you are looking for a standard bike without any bells and whistles, you can find one that is reasonably priced, though as we mentioned before, bike prices have risen, regardless of version. However, if you want to personalize your bike, be prepared to pay significantly more. Every small deviation from the basic production model will cost you and can go up to thousands of dollars.

Getting a customized seat, choosing a different type of handlebars, and adding racks or fenders to your bike will all result in a higher price tag. These days, many companies that produce bike parts like SRAM, Shimano, and Campagnolo offer different components for different tiers of a bike model. If you want to buy the expensive Shimani Dura Ace, you will get smoother shifting, better pedaling ability, and more power uphill, but for a price. You can buy a Madone Trek SLR 9 for $12,549.99, which in itself is quite a hefty price, but when I added the Ruby Chroma Team Edition to it, the price increased by $2000 — just for a simple color scheme change.

There are many bike manufacturers that offer multiple customization options, not just a single one, and the more customizations you add, the more expensive the bike will be.

Increased Manufacturing and Labor Costs

If the manufacturers are using high-quality material to make a bike, it will need more care during the manufacturing process. If you want clean welds on your aluminum bike frame, they require more attention to detail — even though a robot is doing the actual welding, a human will be overseeing the process. If you want aerodynamic carbon frames, the manufacturers will need to make highly-controlled precision assemblies with a small tolerance.

In fact, it takes about 1,500 workers to make just 15,000 frames for high-end bikes using the highest-standard processes. These expensive components are made by hand and have a high engineering cost.

The price of the bicycle will also be affected depending on where the company’s manufacturing facilities are located. Companies that make their bicycles in China or other countries that have cheaper labor will be able to sell their cycles for a lower cost. However, brands that produce their bikes in the US are going to place a larger price tag on the bike, since labor cost in the country is high. In some cases, prices can increase even further if a brand makes specialized bikes in other countries, like Bianchi that produces some bikes in Italy.

Improved Quality Control

One of the main differentiators between a generic bike and a bike from a big brand name is quality control. Bikes from such brands are made in highly supervised manufacturing facilities where engineers check every aspect of the bicycle during the manufacturing process to make sure no flaw slips through the cracks.

With a simple Google search, you may find thousands of generic and counterfeit carbon fiber bicycles that are being sold for just a few hundred dollars. However, these bikes lack quality control and do not offer you any guarantee on the life of their bikes or their components.

The Scarcity Principle

Although this may not be true for every single expensive bike out there, there are some bikes that cost more because there are fewer of them in the market. This is because their manufacturers craft various components by hand, including carbon fiber frames, which means the production process takes a long time and the bikes are produced in limited quantities. As we mentioned before, high-brands require 1,500 employees to create 15,000 frames for each other using the latest technology and engineering.

Therefore, if a company is only producing 150 units of a specific bike model each year, its demand will be very high, which the company can leverage to raise the price of its product.

There are many companies that mass produce their bikes and benefit from economies of scale to keep their price lower. Others, however, focus more on quality and less on quantity when it comes to bike production.

Low Competition

If there are only a few companies that manufacture essential bike components, their demand will be high, and as such, they will have an oligopoly which can drive up prices. For example, SRAM and Shimano are the two major companies that produce drive trains. Their shifters are specifically designed so that they work with the brand’s own derailleurs. This means that if they want the bike to work seamlessly, bike manufacturers need to buy the entire system of either of the two brands — they cannot contend with a low-cost aftermarket component.

In the same way, Rear-Shox and Fox control the suspension parts in the bike industry while most of the quality frames are created by Giant for other brands. This type of control is expected to increase even more in the coming years and their prices will not decrease until another manufacturer enter the market with a similar product and is willing to sell them at a lower price.

Market Economics

The prices of bicycles are also influenced by market economics. If a bicycle is priced unreasonably high, it will remain in the inventory for a long time. If it is priced too low, the manufacturers won’t be able to recoup its production and overhead costs. Hence, bike brands need to find a balance between the two to make sure their products sell.

Determining the right price point for your bike takes some market research and trial and error. Most bike brands have already determined their price ranges and though they may produce new bikes every year, the price points do not change all that much.

Profitability for Retail Stores

In this digital age, brick-and-mortar stores have lost a lot of their previous foot traffic and face a challenge when it comes to staying open. This is just as true for bike stores. If you haven’t bought a bicycle in a while, go to a local retail store, and see the inflated prices on some of these bikes, you may be thinking that the stores are trying to rip you off.

Personally, I don’t believe most bike stores are trying to rip off their customers. The hard fact is that they also cannot keep a non-profitable item on their shelf and need to make money off the bicycles they are selling so that it can cover their overhead, employee salary, and any other cost that comes with keeping a store.

Hence, there is a reason why bikes in retail stores may be marked higher than the ones in online stores. However, keep in mind that the cost should only be reasonably higher. If you want your local bike store to stay open, buying a bike from there can support them.

High Cost of Marketing

The way manufacturers brand their bikes also plays a part in determining their price. There are several companies that brand themselves as an elite brand, even though they produce the same quality products as their competitors. These manufacturers will sell fewer bikes, but they also know that the profit from each sale will be higher.

The reality is that even if the company is producing an extremely expensive bike, but it is still being sold, the manufacturers will keep making it and selling it at that price. If they see that their bikes are sitting too long in the inventory, they may decide to lower their cost; however, most manufacturers will not cut their products' prices drastically. They will create a strategic plan to lower the price in small installments to get the maximum amount of profit.

Another thing that bicycle companies do is create a lot of hype when launching a new model because they know bike buyers will go head over heels for more offerings. Although cycling is not a habit that is exclusive to the rich, bike manufacturers do target people with more discretionary income. These brands equip the models with cutting-edge technology and release them for top dollar. If the bikes are sold at that price range, they may increase their cost some more to get even more out of their customers.

After all, if a bike is being sold for more, why would the company want to sell it for less?

The Global Pandemic

During the lockdown brought on by the COVID-19 pandemic, the world saw increased demand in bikes. There are many reasons why people started biking again: they did not want to remain stuck at home with nothing to do; with the closer of gyms, they wanted an alternative way to exercise; they did not want to travel on public transport where they may come in contact with potentially infected people.

Therefore, a lot of people who hadn’t used a bike for a long time started using bikes. As the demand for bikes increased, the supply chain witnessed a constraint and hence manufacturers increased the prices of their products.

How Much Does a Quality Bike Cost?

For a good medium-priced bike, you can expect to pay anywhere between $800 and $1,500, depending on where you are buying them from. If you want to invest in gravel and adventure bicycles, they may cost slightly more. You can also get a good used bike for around $300 that you can use for commuting around the city. However, I would not recommend getting a new bike that costs anything less than $300 as it may not be made of good quality material and may not work well. In fact, low-quality bikes end up ultimately costing you more since you will need to replace them with a better quality product, sooner rather than later.

Should You Buy an Expensive Bike?

The word “expensive” is relative. A $2000 bike may be expensive for a college student but may be chump change for a hotshot doctor or lawyer. Having said that, expensive bikes are usually the ones that are of higher quality and made by well-known brands. These brands can justify the high price of these bikes by placing their reputation on the fact that the bikes perform better and last longer.

However, if you Google cheap bikes, you will find thousands of reviews about how poor the baking experience was, how easily it broke, and how it was a waste of money. The saying “you pay for quality” holds particularly true when it comes to bicycles.

Does this mean you should throw away $10,000 without batting an eyelash for a bike? No way.

You need to first consider your biking needs and your budget. You can buy excellent bikes of every variety if you do some research and are willing to forego the newest or the most innovative model. Remember that there is no cap on the price of new bikes and their prices will continue to climb in the future. So you need to make an investment that is worth it.

Your personal cycling styles will factor into your decision when buying a bike. There is no reason to buy the new mountain bike when all you intend to do is to commute to and from your workplace on the road.

The second most important factor is your budget which can limit your ability to buy the most expensive bike. However, if you have high standards and are looking for a bike that will give you a  lot of value for your money, it is worthwhile to buy an expensive bike.