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I used to work in engineering at Caterpillar and often wondered what a bulldozer actually cost as I was part of such a large pool of professional people with salaries, health benefits and pension plans. The production people are paid well too. So maybe a $300,000-$400,000 bulldozer might actually only have a few tens of thousands of dollars worth of materials in it. The majority of the cost to produce it is the expense of the employees wages and compensation package. Of course this is true for all products we buy I just really hadn't thought about it too much before then.
Of course the "modern" pricing strategy can be to get good investors to fund you while you produce and sell at a loss, thinking you'll capture gobs of market share thereby crippling your competition all the while hoping that you'll eventually be able to improve you pricing and become profitable in the future. I think this was basically Amazon (and many other failed dot coms) strategy.
What I hate is when someone (who really has no idea) says "I know you guys only paid $370 for that bike! You're ripping me off!" The dealers do not make thousands upon thousands of dollars on a motocross bike. Nor does the distributor, nor does the manufacturer.
The Shop
frame, suspension, radiators, exhaust- WP
rims-excel
Tires-Dunlop
Engine internals-pankel
Carb/injectors-Suppliers
bars grips triple clamps-nekken
Brakes/ clutch- brembo/Magura
Oils-motorex
Fill in the blanks for me
Plastics
Seat
Engine cases
Clutch and transmission
Bolts hardware
Cables
Battery
Starter
Wiring/ecu
Most OEM's practice hold-back. Meaning they hold roughly 2%-3% of the retail price and pay it out quarterly back to the dealer after the unit has sold. This ensures the dealer can still whore the bike out at cost and still make a measly amount of money on what they sell. Which allows the dealer to hopefully stay in business so they can continue to order bikes from the manufacturer during the next order period. So, if you paid dealer invoice minus any rebates the dealer makes a measly $150'ish on the MX bike and has to wait until the end of the quarter to even see that money. Your salesman works off of commission and sometimes a very small base. So, after the dealer hopefully spiffs the salesman out of that $150 how much do you think the dealer actually made?
Also some smaller shops are paying interest on their inventory on the floor. Longer they have em less they make.
It is the same for the "different entity" that I work for.
Pit Row
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