Friday, July 30, 2010

Excess in the Bicycle Industry: Explanations and Implications

[Aurumania crystal and gold track bike, image via forbes.com]

A couple of weeks ago, Forbes published an article on "The World's Most Expensive Bikes".  Readers have been sending me links to this article asking what I think, until finally I gave in and read it. 

[Golden Brompton, image via forbes.com]

Glancing over the pictures, I noticed a strong trend for gold plating, crystals and diamonds - the usual when it comes to "luxury bikes". It made me wonder how much of these bicycles' price was due to ride quality (can they even be ridden?) and how much was due to the decorative elements. 

[KGS custom Parlee bicycle, image via forbes.com]

I was also surprised to see that I actually know someone whose bicycle is on the Forbes list (not my cup of tea, this bike, but I understand that some people like to race on such things).  Kevin Saunders of KGS Bikes is an acquaintance (now also a sponsor, but initially an acquaintance) and the proprietor of a custom bicycle shop in San Antonio, Texas specialising in roadbikes that promise the "perfect fit." While admittedly high end, I did not think that most KGS bikes fetched the kinds of prices featured in Forbes. So I asked Kevin about it. His answers were pretty straightforward, and I include them here in response to this discussion on Chic Cyclist (see the comments section):
Velouria: Kevin, how do you justify your $32,000 bicycle that was featured on the Forbes list?
Kevin Saunders: The bicycles in that price range that we have created were commissioned as one-offs. (They were also done prior to the Recession that started in 2008.) A price of around $18.000-20,000 is where we find the line between premium (where more expensive components actually perform better) and luxury (where more expensive components may have a special finish or paint job but do not actually perform better). 
V: So special paint can cost over $10,000?...
KS: Yes. Some fringe exotic components and one of a kind paint jobs (that includes not only the frame but all the components as well) can mean the difference between a $22,000 and a $32,000 bike. Our price for this is based on actual cost plus a reasonable markup.
V: And performance-wise, would a client even notice the ride quality difference between, say, a $10,000 bike, a $20,000 bike, and a $32,000 KGS bike?
KS: Performance wise, the difference between a $10,000 and a $20,000 bike is significant. There is almost no performance improvement to get to the next level (up to $32,000 or more). The only value above the $22,000 price point  is artistic.
So, if I understand this correctly, even if you try to build a top of the line bicycle for competitive road cycling with full custom geometry and the highest performance available, the price will top out at $22,000. Anything beyond that will be mainly decorative. Keeping this in mind, consider that some of the bicycles on the Forbes list are priced at over $100,000. 

[Montante gold-plated bike, image via forbes.com]

So what are the implications of such bicycles existing?  The "designer bicycle" not only goes beyond the typical prices of custom builders, but specifically presents itself as a luxury good - incorporating costly decorative materials and accessories from haute couture houses. The "Fendi Abici Bike" I wrote about last year is one such example. There have also been similar products from Hermes and Chanel. Based on the feedback I have read about such bikes so far, cyclists in the blogging universe tend to be critical of excess in the bicycle industry. And this applies to accessories as much as to the bicycles themselves: When ecovelo wrote about a Brompton leather briefcase that retails for $600, some readers questioned that such an expensive bicycle accessory was allowed to exist.

[Formigli track bike, image via KGS Bikes]

My view however, is that the trend for "luxury bicycles" is great. Bring on the gold-plated framesets, the diamond-encrusted derailleurs, and the haute couture panniers! Even though I would not buy any of it, I am glad it is there. The trend for cycling-related luxury goods is a positive one, because it successfully combats that stereotype we all know: The stereotype of cycling being something people do because they either cannot afford a car, or are part of some weird fringe subculture. Rather than making people feel guilty about materialism - which is after all, a basic trait of human nature - this trend takes advantage of materialism to make bicycles appealing for people who otherwise would not have been drawn to them. Think about that the next time you curse that luxury car cutting into the bicycle lane. Wouldn't you rather they were riding a luxury bicycle?

28 comments:

  1. I am wondering where or when you would ride a golden bike--seems it would be more useful as trophy than in traffic.

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  2. One difference is that these bikes are mostly one-offs, custom bikes created for show or wealthy clients. There are expensive production bikes, but no production luxury bikes (a bike that is expensive mainly for reasons of showing off wealth), whereas many luxury goods exist in some sort of regular production. Conspicuous consumption needs to be, you know, conspicuous. People want to buy stuff that signals wealth and class to their peers. It's hard to do that with a bike unless your peers understand that a Cinelli is not a Schwinn. And even the Cinelli, while somewhat expensive for a bike, doesn't turn heads the way an expensive sports car or a Rolls-Royce does. But maybe there will be trickle-down--rich people buying ostentatious custom bikes will lead to the regular production of luxury bikes for status-seekers.

    If that makes any sense.

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  3. Anne - I would think that the gold would have some reflective properties?

    Moopheus - That's a good point. I know that there are several Italian manufacturers (the names escape me now) that do make luxury production bicycles. They are transport bikes with mens and lady's frames and cost around $10,000. But in the US, and most other countries actually, there are no recognisable "luxury bike brands" - especially for transportation. It will be interesting to see whether this type of thing emerges.

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  4. There is a slippery line between fashion and utility. When an additional cost is purely aesthetic and adds nothing to the function of the bicycle, that could be defined as mere fashion. For example, goldplate cannot possibly make a bike lighter or stiffer. (Yellow paint would be more visible). There are also costs that only hypothetically improve the ride, such as an expensive carbon road bike used only for short, flat weekend rides. However, what is too much for the money is in the eye of the beholder.

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  5. Jefe - Think of it this way: If we take a loop-frame transport bike that is priced at $100,000, we can safely assume that no more than $5,000 of that amount comes from the frame and components in of themselves (Okay, maybe $10,000 if the frame is titanium and there is a Rolhoff hub on the bike). So essentially, the woman who owns such a bike is riding a $10,000 bike with $90,000 of jewelry plastered over it. Now, my point, is that if she weren't riding the bike, she would still find a way to spend that $90,000 on jewelry. So why not attach it to a bike? Win-win : )

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  6. It is also important to remember that the more expensive bikes on that list are the prices paid at collector's auction. At that point it is no longer about "raw materials + a reasonable markup" but more a reflection of one upsmanship within a select group of wealthy individuals or foundations. That is a very different sense of value than, say, your "average" exchange between a custom builder and their everyday clientele.

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  7. Ahh! Beauty is in the eye of the beholder! In the late fiftys, the neighbor had a Isetta, and all the other neighbors laughed, it's small, dangerous, would it tip over, can't go fast. What people would give to have a new one now!

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  8. Sure, it may seem silly to us to pay for luxury rather than quality when it comes to bikes. Would I pay $30,000 for a bike knowing that it doesn't ride any better than a $20,000 bike? No. But that doesn't mean that luxury bikes shouldn't have a place in this society. If it takes the Hermes brand and leather accessories to get a wealthy woman on a Batavus (who may not otherwise consider riding a plain Batavus Old Dutch), at least she's now going to be riding a bike. Shouldn't that count for something?

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  9. I'm often surprised at how much and how often my Trek District can turn heads. It's kind of a "special" bike, even though it's actually mass-produced and not ridiculously expensive, and even "normal" people (non-cyclists) notice it.

    I wouldn't be caught dead riding a gold-plated, diamond-encrusted bike, but I'm happy they exist.

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  10. Pierre - FYI, I think like half the bikes on the Forbes list were made by Trek : ))

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  11. Velouria, isn't it cynical to assume that one wasteful act will merely be replaced with another (e.g.,needlessly expensive bike vs. jewelry). I think each action should be valued on it's own merits. Some items are traditionally ornamental (jewelry) and others useful (bikes). I am more offended when the utility of the bike is marred by useless ornament. At some point (maybe goldplating and diamond encrusting), the decorations simply spoof the function.

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  12. Jefe said...
    "isn't it cynical to assume that one wasteful act will merely be replaced with another"


    Yes. Cynical, but I think realistic.

    Plus, I don't agree that lavish decorative elements do not belong on functional objects. If anything, why not decorate the objects we use the most everyday? That way, what is always with us and gets used the most also brings us aesthetic pleasure. People have a history of making daily objects such as watches, fountain pens, horse carriages, and houses in a way that is not only functional but ornamental.

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  13. If gold were a penny a pound you would see a lot of it on bikes. People like the color, it takes a high polish, but most of all it does not tarnish (the reason it is used in electronics, even though silver is actually more conductive, BEFORE it oxidizes). Its downside is that it's soft and scratches easily.

    Gold has real objective value as a bicycle finish. Not on THESE bikes, because of course it does not cost a penny a pound and IS being used for the purposes of conspicuous consumption (or at least the promotion of it).

    Although I tend to find this sort of conspicuous consumption a bit repulsive I can't say I find it any more so than what I call Anti-Materialist Hyper-Consumption; people who do not care for their things as a demonstration of their lack of materialism, and thus end up disposing of and having to consume more things as a result. At least these goofy expensive bikes aren't likely to be sitting in a landfill in a few years "for the planet."

    Kevin's $22k bikes have real objective value, but not, I'm afraid, to all of the people who actually buy them. They buy them to have "the best" but are not really capable of getting the best out of them, nor do they even know just how "the best" is defined. There are, however, people who actually have more money than they know what to do with, and if some of that money goes to making Kevin's business viable his bikes are thus made available to those very few who can use them as intended at a more "reasonable" price.

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  14. Thank you Velouria for posting this and I would like to add a few comments. When Forbes called us I cringed a little because proving value at any price point is our goal and we never want to scare people off. The gold track bike is ridiculously wasteful, as I am sure people considered manicured lawns were back in the day! Our premium bicycles are cherished by their owners and the most important thing is, they are ridden hard and perform like the thoroughbreds they are.

    Bicycles can have so many useful functions, and a utility bike may haul 400 lbs much more effectively than Velouria's lovely Pashley, but it won't go as fast as the Rivendell or one of our custom KGS machines.

    We exist because relatively few people have found value in a bicycle that holds their bodies perfectly so they can either ride faster, more comfortably or both. The bike could hang on the wall but doesn't. It is part of the owners life.

    I will share with you all Velouria's delight at the breadth of readership at Lovely Bicycle. I too am thrilled that folks from around the world can appreciate this beautiful machine in so many different forms.

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  15. I did not mean decoration is wrong. I like a pleasing appearance as much as anyone. However, there comes a point where the decoration makes the useful object beside the point, and that is where I draw the line. No goldplated, diamond encrusted bicycles, please. A Pinarello Dogma with Super Record gruppo, now that is the kind of overspending that I can appreciate.

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  16. Gold plating, crystals, diamonds on a bicycle are not luxury, they are excessive and ostentatious. Luxury is when the best materials are used in a tasteful way, ostentation is vulgar bling-bling. And I realise that the line between them is very thin and above all culture related. Over on Anna-from-Vienna's blog where the same topic occurs, I mentioned the Bugatti Veyron Hermès special, a car made by Volkswagen - the people who bring you Bentley, Lamborghini and Audi - costing 2.3 million dollars. To me, horrible; to others, the pinnacle of taste. But then I also wouldn't buy most of the seriously limited editions of Montblanc pens. Namiki, now that would be an entirely different matter.

    I wonder, if someone buys an 100,000 dollars bicycle, what would be the cost of continuous guards and insurance? Probably negligible for someone who has the cash to buy the bike in the first place.

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  17. Frits - I like the classic Montblanc pens for historical reasons, but for me the firm has crossed a line a few years ago, where their pens have lost everything except the ostentatious aspects. The same can probably be said of most modern fountain companies, which is why I have generally lost interest in getting to know the new models.

    But anyway, bikes... As some have already mentioned, it is difficult to draw a distinction between "tastefully ornamental" and "vulgarly ostentatious" without imposing our own narcissistic world view on the objects we judge. Who am I to say that a gold and diamond bike is "wasteful" without knowing the full context? If the buyer was choosing between building a home for orphans and a buying a gold bike - then yes, the bike is wasteful. If the buyer was choosing between a luxury sportscar and a gold bike, then is it still wasteful? Some would say that lugwork is wasteful, because with modern TIG-welding techniques it no longer serves a necessary function. Some would say buying a new bike is wasteful, period, because there are so many vintage ones around. I could go on, but you get my point.

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  18. I can has gold cast lugs and SA hub with diamond bearings?

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  19. Gilded butterflies. Hahahaha.

    - Shakespeare

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  20. I agree that some people may not be able to get "all" out of a $22,000 bike, and in fact, we at KGS bikes only control what we control. We have sold bicycles from $5,000 to $32,000 and our goal is to match expectations with reality. KFG, you have a great point that is in fact one of the reasons we thought we would start KGS Bikes as a full-time evolution from a 21 year part time business and passion. In fact, the opposite occurred.

    We have had a couple of people who bought a nice bike just for the joy of a precision piece of machinery and who didn't ride them. We have had folks that wanted the best of the best, and those who bought our most expensive bicycles ride them all the time. What we discovered, to my surprise, was that outsider's views of the affluent with "money to burn" when they came to our studio were exactly the opposite of what we found.

    A wealthy Scot could come in and by our most expensive bike, place it next to his Ferrari 599 and announce that he liked the bike better than the car. This really happened. This same gent was also so tight that he has a nickel of the first dime he ever earned, though he had expensive things too. The point is, our successful clients were able to keep their money by not wasting it, so they could afford to get more expensive stuff as well. They seem to be the best at discerning true value from a ripoff and I found that they were very good at this trait.

    It was a real compliment, in hind sight, to be able to deliver at this level, bicycles that were scrutinized to the most incredible detail and then with such a high level of expectation, we delivered and thrilled the clients.

    So in closing, you are correct in theory, KFG, but thankfully we are able to serve anyone who wants a bike that we build to our best ability whether it is a steel Classic Formigli fixed gear bike, a Co-Motion touring bike or tandem, or a Parlee or Formigli carbon fiber performance bike. Our goal is to make the individual the most important part of the equation and to match the bike exactly to that rider so a wonderful synergy is born.

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  21. I totally agree with you on this. Bring on the Bling Bikes! Get some celebrities photographed on them and get the young and impressionable yearning to imitate. If that's what it takes to get more butts on saddles then bring it on.

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  22. A Bling Bike is not a new concept. Back in the mid-70's, when I first started to cycle for fun, an English bike-maker by the name of Lambert offered a gold-plated bicycles. They were road bicycles made of chrome-moly tubing and alloy components and went for, if I remember correctly, $600. That reflects, among other things, the relatively lower cost of bikes at the time, the relative strength of the US dollar and the fact that gold was still going for about $60 an ounce.

    I remember the ads in the bike magazines, which looked like stills from a James Bond movie.

    A few years later, Austro Daimler, an Austrian bike maker (who made some really nice bikes: I know, I had one) also offered a gold-plated bike. It was sold (I wonder who bought it.) in a velvet-lined case. It was advertised in Playboy (Don't ask how I know that! ;-))with the sorts of human props one would expect to find in an ad in that magazine.

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  23. I've never owned a Ferrari. I prefer Maserati, pre Agnelli. I don't have a nickel of the first dime I ever earned, I have 100% of what I spent it on which is worth more in real dollars now than what I paid for it 40 years ago.

    And I never said "money to burn," I said "more money than they know what to do with," which anybody with an insider's view will know is a very, very different statement indeed.

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  24. I don't have much of a problem with hyper expensive "jewelry" bikes but I kinda do with the reality that those of use that can afford a bunch of stuff seem to just automatically fill our lives with all the stuff we can grab.Blinged out or not.

    I don't have this all figured out( I don't think I have ANYTHING all figured out) but if there aren't enough resources to go around, those of use that have way more than we need might be depriving somebody of what they ought to have. If we are willing to do without some of the excess that we really can do without, I don't think it matters so much if what we do have is covered with gold and jewels or whatever. If you have bad taste and a huge budget but somehow manage to keep your inventory down to what you can really use and enjoy I think you are allowed to say "screw em'" to anybody who gets in your face. If I have a mountain of stuff that I don't get any real use or joy out of maybe I'm the problem.

    If you are really into bikes or shotguns or boats or whatever I think thats fine to have some crazy examples, but if you are'nt really into them it seems like a bad idea to have a bunch of it just because you can...Of course this is coming from a guy whos total inventory of toys isn't worth the price of any of this stuff so maybe I'm just jealous.

    Spindizzy

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  25. I think it is really all about the love of the bicycle. Some of these examples seem more like art, yet functional. Some seem to exist because "they can". None the less showing love and respect to the bicycle.

    There is this guy at my local LBS that is constantly switching out things on his bikes. It appears to me that he can't quit spending money on his bikes. I guess really he just loves his bikes.

    I have another friend whose mother said she wanted to buy a bike to do short trips to the local stores and restaurants. She wanted to get a bike from Wal-Mart. I told her she should get a better bike; one that would fit her better, work better, and last longer. She asked how much; I told her around $350. She said "Too much", "When the cheap bike wears out I'll just buy another one." I stopped debating with her. She has the mentality of many Americans that it is all about price and can't even consider the quality.

    I like quality. I also like the best. My dad has often chided me about this trait telling me I could have more if I was so insistent on having the best. Guess what? I still have my quality stuff that works and all his stuff simply didn't last.

    I recently had two bikes built up (one for me and one for my son). I selected high-end quality parts for the build and spent about twice of what the complete bike would have cost using less expensive components. The bikes ride like a dream. We love our new bikes.

    I am not able to get the most out of my bike; I'm getting older and just can't push the bike to the limits it is designed for. Does that mean I'm being wasteful? I don't think so. I need every advantage I can get to reach the levels of cycling I desire. I am more efficient and comfortable; I enjoy riding the bike as I built it up than I would have if I got the stock bike.

    As Kevin pointed out, some people recognize quality and engineering and don't mind paying for it regardless of whether the bike is going to be ridden to its limits.

    I started reading this blog because of Velouria's love of the bike and her ability to write so eloquently about this special relationship. It is all about the love of the bicycle.

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  26. When I was a little girl, my very snobby Grandmother (never called her Gramma!) counseled me to always spend extra on quality but guard against "vulgar displays of wealth". I think unless you happen to be a Tour de France competitor, a $10,000 bicycle qualifies as the latter. However, I do appreciate your thoughts about luxury bicycles aiding in overcoming stereotypes about why people why some people choose to bike over drive a car (although I fall into that category myself at the moment). Diamond encrusted bikes just seem to me another example of tasteless "bling", something coveted by reality show contestants.

    Sorry, about the rant. My snobbiness is really showing badly, I'm afraid. I really do spend more for quality and even if I'm shopping for a low price won't consider paying for poor quality. A $10,000 bike that reflects $10,000 worth of quality is one thing; a gold plated or jewel encrusted bike that simply reflects $10,000 of luxury seems to me to be self-indulgent and frankly, a desperate cry for help.

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  27. I feel it's like the Victoria's Secrets bejewelled bra. In reality wearing it would be quite impractical (for me anyway, the diamonds would snag on my cardi). But, as tacky and ostentatious as it is, there's no denying everyone's attention is grabbed when it heads down the runway. There's always going to be 'bling' so why shouldn't cycling have it's share and grab some attention.

    My poor beige Surly is trembling in the corner. After reading this post, I may have muttered something about glue guns and sequins!

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  28. "Rather than making people feel guilty about materialism - which is after all, a basic trait of human nature - "

    I'm sure it's true people have been consuming more than they need as a show of wealth since the earliest civilizations, but I'm not sure that makes it a basic human trait, or at the least one that should be encouraged...

    "It is true of dress in even a higher degree than of most other items of consumption, that people will undergo a very considerable degree of privation in the comforts or the necessaries of life in order to afford what is considered a decent amount of wasteful consumption; so that it is by no means an uncommon occurrence, in an inclement climate, for people to go ill clad in order to appear well dressed" Veblen

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