Production Cost of Making a Dirtbike

Bret
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Bret 1/17/2018 11:26am
1/17/2018 11:26am
Cygrace74 wrote:
Well just look at it the way that Kawasaki employee's get half off bikes and you know they're still making money in there somewhere,
We don't get half-off.
OldYZRider1
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OldYZRider1 1/17/2018 11:34am
1/17/2018 11:34am
I think the actual cost to produce an item sets a "floor" price at which a producer could use to determine what a minimal acceptable selling price could be. But "what the market will bear" or what the consumer might be willing to pay is how things are actually priced these days. Its not just a fixed multiplier such that if it costs us this much to produce we'll mark it up 40% to set the sell price. Maybe things used to be done that way but not much anymore I don't think.

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.
Falcon
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Falcon 1/17/2018 11:45am
1/17/2018 11:45am
I do not have actual numbers (and even if I did, I wouldn't disclose them,) but some of you are pretty close. Consider this: You buy the motorcycle from the dealer. He bought it from the U.S. Distributor, which bought it from the manufacturer. The manufacturer had to price the unit so they made profit after all the manufacturing and materials costs. It's safe to say there's a healthy but not unrealistic markup between each of those steps.

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.
40acres
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40acres 1/17/2018 11:58am
1/17/2018 11:58am
Falcon wrote:
I do not have actual numbers (and even if I did, I wouldn't disclose them,) but some of you are pretty close. Consider this: You buy...
I do not have actual numbers (and even if I did, I wouldn't disclose them,) but some of you are pretty close. Consider this: You buy the motorcycle from the dealer. He bought it from the U.S. Distributor, which bought it from the manufacturer. The manufacturer had to price the unit so they made profit after all the manufacturing and materials costs. It's safe to say there's a healthy but not unrealistic markup between each of those steps.

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.
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from personal experience that the distributor is the manufacturer. We order Yamaha from Yamaha and they are distributed by Yamaha. The same goes for the other manufacturers.

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Zesiger 112
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Zesiger 112 1/17/2018 12:27pm
1/17/2018 12:27pm
KTM
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


StevieD113 1/17/2018 12:28pm
1/17/2018 12:28pm
40acres wrote:
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from...
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from personal experience that the distributor is the manufacturer. We order Yamaha from Yamaha and they are distributed by Yamaha. The same goes for the other manufacturers.
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's how the manufactures work all over the world.
40acres
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40acres 1/17/2018 12:30pm
1/17/2018 12:30pm
40acres wrote:
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from...
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from personal experience that the distributor is the manufacturer. We order Yamaha from Yamaha and they are distributed by Yamaha. The same goes for the other manufacturers.
StevieD113 wrote:
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's...
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's how the manufactures work all over the world.
Same company, different entity.
Kenny Lingus
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Kenny Lingus 1/17/2018 12:38pm
1/17/2018 12:38pm
My buddy and I were just discussing how much the dealer made off our bikes at such a low OTD. He says they still make thousands and I say just enough to cover salesman's commission and prep/ freight then get kickbacks at the end of the year. Still not making more than a grand or so.
40acres
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40acres 1/17/2018 1:03pm
1/17/2018 1:03pm
Kenny Lingus wrote:
My buddy and I were just discussing how much the dealer made off our bikes at such a low OTD. He says they still make thousands...
My buddy and I were just discussing how much the dealer made off our bikes at such a low OTD. He says they still make thousands and I say just enough to cover salesman's commission and prep/ freight then get kickbacks at the end of the year. Still not making more than a grand or so.
If you bought the bike at full price they made about $1000, assuming they charged you freight. I'm guessing it's a MX bike so I'm going to assume you got it pretty cheap
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?
GeorgiePorgie 1/17/2018 1:36pm
1/17/2018 1:36pm Edited Date/Time 1/17/2018 1:38pm
Import taxes hurt it as well.

Also some smaller shops are paying interest on their inventory on the floor. Longer they have em less they make.
Kenny Lingus
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Kenny Lingus 1/17/2018 2:07pm
1/17/2018 2:07pm
Kenny Lingus wrote:
My buddy and I were just discussing how much the dealer made off our bikes at such a low OTD. He says they still make thousands...
My buddy and I were just discussing how much the dealer made off our bikes at such a low OTD. He says they still make thousands and I say just enough to cover salesman's commission and prep/ freight then get kickbacks at the end of the year. Still not making more than a grand or so.
40acres wrote:
If you bought the bike at full price they made about $1000, assuming they charged you freight. I'm guessing it's a MX bike so I'm going...
If you bought the bike at full price they made about $1000, assuming they charged you freight. I'm guessing it's a MX bike so I'm going to assume you got it pretty cheap
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?
Sorry I forgot to say what we bought.....18 CRF450 for 8250 OTD. At that price I figure they only make enough to pay salesman and guy in shop that uncrates it.
Falcon
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Falcon 1/17/2018 2:21pm
1/17/2018 2:21pm
40acres wrote:
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from...
You make some good points that I wish the masses would understand when they purchase a bike from a dealer. However, I can tell you from personal experience that the distributor is the manufacturer. We order Yamaha from Yamaha and they are distributed by Yamaha. The same goes for the other manufacturers.
StevieD113 wrote:
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's...
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's how the manufactures work all over the world.
40acres wrote:
Same company, different entity.
I bet YMC considers YMUS a distributor and makes them "buy" bikes. It may be a shell game since YMUS is owned by the Japanese parent, but there is a markup all the same.

It is the same for the "different entity" that I work for. Wink

philG
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philG 1/17/2018 2:27pm
1/17/2018 2:27pm
When a road bike was £5200 , out the door, in the door in a crate was £4200, near as .. you never got full retail, out the door would be £4500-£4700 to get a deal , £4999 on the tag.
40acres
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40acres 1/17/2018 2:29pm
1/17/2018 2:29pm
StevieD113 wrote:
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's...
You actually are ordering parts from Yamaha USA. They are a separate company to Yamaha Japan. They will purchase parts/bikes etc from the parent company. That's how the manufactures work all over the world.
40acres wrote:
Same company, different entity.
Falcon wrote:
I bet YMC considers YMUS a distributor and makes them "buy" bikes. It may be a shell game since YMUS is owned by the Japanese parent...
I bet YMC considers YMUS a distributor and makes them "buy" bikes. It may be a shell game since YMUS is owned by the Japanese parent, but there is a markup all the same.

It is the same for the "different entity" that I work for. Wink

Exactly
40acres
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40acres 1/17/2018 2:31pm
1/17/2018 2:31pm
philG wrote:
When a road bike was £5200 , out the door, in the door in a crate was £4200, near as .. you never got full retail...
When a road bike was £5200 , out the door, in the door in a crate was £4200, near as .. you never got full retail, out the door would be £4500-£4700 to get a deal , £4999 on the tag.
Right, because there's is always another dealer that is going to whore out the bike to get the deal. Double edged sword.

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