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RE: New ST Options



Eric,
	What's your take on tire costs?  $100 for the tire and $30 for the
install labor and $7 and change for tax.
	I paid just under 12,000 for my bike in early February.  That is
sticker plus two bags and a race can.  How much is the dealer paying for the
ST itself?  Anybody know?
	If the bike retails for 10,250 then I estimate that dealers pay
somewhere between 5-7k for a plain ST.  There is freight and setup costs
which the manufacturer pays.  I do understand that they may not be getting a
huge amount for setup but after the first 5 STs it doesn't take as long to
set one up either.
	There net profit on the bike if they sell it at sticker would range
from 25-50%.  30-40% is standard for a company making money on any product
unless they do volume work.  So the bikes pay for themselves in my scenario.
Now the merchandising kicks in.  200-400% profit on low dollar items.
Moderate level items get between 50-100% mark ups depending on volume and
High level items 10-50% mark ups.
	The reason behind this methodology is people buy cheaper stuff more
often than expensive stuff.
	The only costs for service that a dealer I can see will pay is for
his service personnel of course a manager which should also be a service
person, insurance, the cost of service screw ups, tools, and training.
Tools and training are one time occurrences essentially so that leaves
insurance and screw ups.  Utilities and location overhead would be covered
on the sale of bikes.  So that identifies the three departments that make up
at least my dealer, sales, parts and service.  In my scenario all three
areas are profit centers.
	That is the standard model for retail I have been exposed to.  I
don't see them varying this very much unless it is the owners hobby or hard
times exist.  Without this type of business model the average business owner
is wasting his money on a business like this.  So there is some reason why
your average shop is still open.
	It should also be made clear that only the owner(s) of any business
gets rich.  Anybody who works for someone else will only be comfortable at
best short of being a EO (executive officer) of a fortune 500 company.

	End.

Martin

- -----Original Message-----
From: Eric Sheley [mailto:eric@xxxxxxxxxx]
Sent: Tuesday, September 21, 1999 4:06 PM
To: ST@xxxxxxxxxxxxxx
Subject: RE: New ST Options


At 01:53 PM 09/21/1999 -0700, Retherford, Martin wrote:

 >	They make there money in parts and service.  I was looking to buy a

I would agree with you on parts only (see below for service) - that's why 
parts managers in Harley dealerships are typically the highest paid in the 
industry (ever see what the average Harley owner spends on accessories?) . 
The point that I was trying to make (and didn't) was that if the dealer 
cuts their bike price and sell at little or no margin and the customer then 
goes mail order (or internet) for parts and accessories, there is no way 
for the dealer to recoup his profits. Bottom line is that it is a business 
and if you want them to stay in business, you should support them within 
reason.

 >	The 60 dollars an hour for repairs and service.  Service industry
 >world wide makes a killing.  Why shouldn't the dealers?

Sounds good if you say it fast..... but in the real world of motorcycle 
repair this is not always the case. First, pay the employees a reasonable 
rate. Then pay the service manager on top of that. Add in the cost of rent 
and utilities and the differential on warranty work (what it costs the 
dealer to do warranty work vs what he actually gets back from the company). 
Then factor in the seasonal nature that most dealers face (or how much work 
is that tech doing in the middle of December ?) and I think you'll find 
that the highly profitable service industry averages don't apply anymore.

I don't want to give the impression that they are going to the poor house, 
because most are not. But they are not getting rich either....

- - Eric


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