Why Are Bikes So Expensive: How many people actually buy £10,000 bikes?

It seems that over the years, bikes are getting more and more expensive. When I got into cycling I ogled bikes that cost £1000, however, now the top-of-the-range bikes cost upwards of £10,000. Surely this isn’t all down to inflation? As a cyclist with a keen interest in statistics, I wanted to take a look into what causes bikes to cost so much, and why they are so expensive?

Bikes are expensive to purchase as the manufacturers need to accrue their costs from producing the bike. The main costs when producing a bike include the labor costs (20%), investments into research and development (20%) as well as the extra associated costs of the frame materials (15%) and components (15%).

So we’ve established what the main costs of producing a bike are, but why does this mean bikes are as expensive as they are? I take a look at each of the areas that affect bike pricing, as well as a look into how much cyclists actually spend on their bikes in the rest of the article.

Why do bikes cost so much?

When it comes to the total price of a bike, there are many different factors that come together to add to the total overall price. The largest factors in bike cost are the labor costs and the cost of research & development. However, many other smaller factors, such as shipping costs, really do add up.

I’ll take a look into each of these sections in a lot more detail below, looking at each of the factors that result in them costing as much as they do.

Assembly and labor

One of the largest costs when producing a bike are the labor costs. Labor is required at all stages of the process, all the way from frame creation up to final bike assembly.

Carbon fiber bikes in particular require more “human” work than other frame materials, this is because carbon fiber requires many intricate and specific steps to form it into the correct shape for a bike frame, and machines alone are not able to do this.

Once the bike parts have been completed, workers need to be employed to assemble the bikes. For cheaper bikes, this process can be automated, but for more luxury bikes, this step requires professional mechanics. Consider the difference between a mass-produced watch and a hand-made one by a watchmaker.

In this section, I’ve barely covered the surface of the different areas where a bike company has to invest in labor costs, think of everyone involved in the organization, from researchers and designers to salespeople and admin staff. All of these people need to be paid and add to the overall cost of each bike.

Research and development

The other largest cost associated with bike manufacturing is that of research and development. Time and therefore money has to be spent on designing frame materials, perfecting bikes’ shape, and reducing the weight of a bike.

Research and development cost the manufacturer in factory time, material development, and also increased labor costs. Bike manufacturers have to pay the wages of engineers, designers, and chemists who are involved in the design of these parts.

This process can take years, and as such bike manufacturers often have to increase bike prices a considerable way to accommodate for this.

Even once they have designed these new bike shapes and materials, they also need to allocate funds to test these out, produce prototypes, and ensure they are safe and fit for purpose.

Materials

As you can see from the chart, the most expensive materials for bike frames are titanium alloys as well as carbon fiber, coming in at $45 and $28 dollars per kilogram each.

If we take a look at the different weights of bikes made from different materials, we can estimate how much of the cost of each bike is made from the materials themselves.

However, this is not the whole story. These numbers are likely to be much lower than the actual costs for bike manufacturers.

First of all, this does not take into account any waste material that is produced as a byproduct of making a bike. 100% of the material that manufacturers buy is not going to end up on the final bike frame.

Secondly, while the material that is used to make the frame will make up the largest proportion of material on the bike, it is not the only one. Bike manufacturers have to buy paint, brake pads, nuts & bolts, etc. All of these add to the final cost.

On top of this, the high-end bike market is a relatively small market in comparison to other industries such as car manufacturing. This means bike manufacturers cant take advantage of economies of scale as well as other manufacturers can, and so their cost per kilogram of material will likely be higher than that in other industries.

Components

On top of the materials required to make the frame, you also have the cost of the different bike components. This cost is made up of parts such as the shifters, drive chains, and brakes.

In reality, only two or three manufacturers produce some of these parts (especially shifters), and almost all bike manufacturers have to work with them, allowing them to set higher prices.

If you take the most common groupset on all road bikes (the Shimano 105) as an example, it comes in at £450, this alone would make up a large percentage of a bike’s cost. However, this is minimal in comparison to other Shimano groupsets which cost upwards of £1000. Other brands can cost even more, for example, some of the Campagnolo groupsets will cost you more than twice as much as this.  

Shipping

Most companies have one primary area where they produce their bikes (often China, India, Taiwan, or Europe), but bikes need to be sent all over the world. This costs money.

First of all, they need to hire or rent out freight ships to help carry the bikes across the world. These need to be staffed, have fuel paid and manufacturers have to compete with other companies for space on these ships, all of which costs money.

On top of this, they also need to pay for packing materials for each of those bikes, ensuring they do not get damaged during transport.

Finally, the bike manufacturers also need to set aside some money for insurance or to cover the cost of any lost or damaged shipments.

Advertising

Bike manufacturers also invest a lot of money into advertisements that they need to earn back once the bikes start to sell.

While most bike companies do not pay directly for TV advertisements, they will invest a lot into magazine advertisements, internet advertisements, and hire staff to attend conventions and trade shows.

On top of this, many cycling brands are now paying for sponsored advertising through platforms such as Youtube.

Retail

Once so much money has been spent on the overall production of the bikes, the bike shop that sells the bike to you personally still needs to be able to make some money.

Often each bike shop has a deal directly with a manufacturer, giving them a certain percentage markup that they can add to the price of the bike.

These bike shops need to be able to make enough profit that they can pay their workers, pay rent on the shop itself place and also cover the price of any taxes, etc.

Some bike manufacturers, for example, Ribble, are now overcoming this extra cost by supplying bikes directly to riders without the need of a local bike shop as a middleman.

Other factors

Inflation

When people look at the price of bikes, they often complain that they are more expensive than they used to be. It is important to account for inflation when looking at bike prices.

For example, £1000 twenty years ago is now equivalent to £1730. This means that even if the prices of bikes didn’t change at all, you would need to spend £1730 in order to buy a bike worth £1000 twenty years ago.

To put this into a more practical example, let’s take a look at the Specialised S-works Tarmac road bike

If we compare the prices of the models released in 2009 and the most recent 2021 model, you can see that its cost has dramatically increased. However, it is not fair to blame the entirety of the price increase on inflation alone. In reality, while inflation would suggest that the price should increase by 29%, in reality, it increased by 114% (over two times).

Demand

As with all economics, supply and demand play a huge role in the price that an item sells for. I already mentioned the brand Ribble earlier, they’ve had great success in reducing their prices by selling directly to customers, however, this has resulted in an 8-month waiting list for even their cheapest bikes.

This level of demand for a product naturally results in it being priced higher.

Branding

When you are buying an expensive bike, you are not only buying the bike itself, you are paying for the branding and prestige that the bike comes with. For example, a Ferrari costs a lot more than a ford (even though both are cars and get you from A to B).

The most expensive brands in the cycling world include Specialized, Trek, Pinarello, and Bianchi, all of which charge a premium for their top-of-the-range bikes.

Value for money

When buying a bike, other factors such as their value for money also need to come into the conversation. For example, bikes are not just a fun toy, they actually can provide a great means of transport. If you compare the price of a bike over a year to that of a car, you realize quite quickly how cost-effective it can be.

A yearly bus pass in London costs £1074, certainly, my first bike didn’t cost this much and I put more miles on it and around London than I ever have on a bus.

As such, people are often willing to spend a considerable amount of money on a bike, knowing it will save them money in the long run.

Expendable income

Another factor to consider with bike costs is the level of expendable income that bike riders have. Cycling is becoming more popular over time and many cyclists fit into the stereotypical group of middle-aged men. Cyclists tend to have more expendable income than other groups, for example, schoolchildren. Think of it a bit like the stereotype of golfers.

As result, bike manufacturers are able to charge more money as the people who are buying their bikes can typically afford it.

The impact of covid-19

Bike prices skyrocketed during the covid-pandemic. Biking was a “covid friendly” activity and so it attracted a lot more interest than normal.

Especially when many people had more expendable income, having been unable to spend money on family vacations or social activities. On top of this, many countries supplied stimulus checks or tax rebates during the pandemic. Overall this meant that more people could afford to buy a new bike and demand rose.

In contrast to this, while demand for bikes went up, the supply of bikes came down. Supply chain issues and a lack of employees during covid resulted in a shortage of new bikes. This meant that the price of both new and used bikes shot up.

Cycle to work scheme changes

While this will only affect the UK, a final reason why bike prices have risen is a change to the UK’s cycle to work scheme.

This is a government-run scheme that allows riders to purchase a bike through their place of work, and avoid paying taxes on the money used to purchase the bike itself.

This is a commonly used scheme in the UK, and in the last few years, the rules of the program changes to allow bikes that cost over £1000 to be purchased through the scheme. This meant that bikes had previously been competing to stick under the £1000 mark to increase demand for their products, but are now no longer limited to this.

How much is the most expensive bike?

So we’ve established why bikes are so expensive, but what is the most expensive bike available?

What is the most expensive road bike?

When it comes to road bikes, the most expensive bike ever sold was Damien Hirst’s Trek Madone. Damien Hirst is a British artist who created a road bike decorated with real butterfly wings on the bike’s frame and rim.

The bike was used in the Tour De France by Lance Armstrong who was returning to cycling in 2009 and then sold at a charity auction for a whopping $500,000.

When it comes to the most expensive commercially available road bike, the Pinarello Dogma F12 Red eTap comes in on top costing £12,000 ($15,000).

What is the most expensive mountain bike?

Mountain bikes typically cost less than road bikes, using heavier materials that require less research and development in areas such as aerodynamics. Mountain bikes also tend to have cheaper components when compared to road bikes.

While this does mean that the most expensive mountain bikes cost less than their road bike counterparts, the Giant Trance Advanced Pro 29 still comes in at £8000 ($10,000), making it the most expensive mountain bike commercially available.

How much does the average person spend on a bike?

Given bike prices seem to be so much higher than many beginner cyclists expect, I thought it would be helpful to get an idea of how much cyclists actually spend on their bikes.

As you can see the most popular category was between $1000 and $3000. I will note that while there was a good size for the sample of this survey, the people I was able to ask were all in a large cycling community already.

Therefore the people I spoke to are much more likely to spend a large amount of money on a bike than a “novice” or “regular” cyclist would.

From my own personal experience, the majority of the riders I know spend around the $1000 mark on their bikes.

Overall

As you can see, there are many different factors that impact the overall cost of a bike. However, even though bikes are continuing to grow in price, I want to make it clear that you do not need the most expensive bike to enjoy riding!

I myself, and many of the riders I know started out riding cheap, entry-level bikes, and this can still be easily done today!