E-bikes 101: Getting the price right

E-bikes pose an enormous opportunity for bike shops willing to embrace urban transport, but getting started can be intimidating for retailers. Myles Warwood explores the fluctuating costs of electric bikes

This piece first appeared in the August edition of BikeBiz magazine – get your free subscription here

During the pandemic, bike sales boomed – they continued to stay on a steady trajectory for a short while afterwards, but will we see the bubble burst soon? Not because the want for bikes goes away – there are ever more reasons to travel by bike than before – but amid mounting fuel prices and the cost of living punching a hole in the ceiling, manufacturers are struggling to keep the costs of bike sales down.

This struggle also has a trickle-down effect on the end consumer, with the middle man being the local bike shop feeling the pinch. Not everyone can afford to keep up with escalating prices, so while there might be a bicycle boom, this could very quickly lead to a bicycle bust with the price of second-hand and eBay-listed bikes becoming more appealing and able to hold their value.

E-bike inflation
Manufacturers can point to many reasons why the cost of their bikes is rising, but let’s look at the example of e-bikes – you might be hard pushed to find one with a good motor, groupset and components for under £1,500.

Brexit, shipping costs and supply chain are just a few reasons that will increase the cost of a bike build for a manufacturer, and there is only so much that they can absorb. At some point, the scales will tip too far, and they have to increase the prices they sell to the retailer, which passes on to the consumer.

But what is the right price? How much is too much to purchase an e-bike? This is an interesting question, because of the understanding that e-bikes are a more significant purchase when compared to a road bike or mountain bike purchase.

It sounds like such an easy question ‘what is the right price for an e-bike?’ in its simplest form – you add up the price of the components, add a little bit on top for yourself and sell the bike, however with the cost of everything going up and up, where does it end?

Strain on retailers
Speaking to Chris Leakey from Manchester Bikes, an e-bike and e-cargo specialist based in the city, the balance of just doing the maths and making the sale isn’t that easy.

“Supply chains are still erratic, making it difficult to plan. Delivery might be made on time, but it could be delayed or cancelled altogether. We’re constantly checking in with suppliers every couple of weeks to see what is coming.”

This inability to consistently plan is one felt across the bike shops, which means that prices still need to be held high to help each sale sustain the business as long as possible.

Then, there is the balance – each sale gives you just a little bit of money which you need to stretch, but you also need to advertise, get more bikes in, and keep the lights on; if you’ve got bikes in stock and people want to buy, you have to make sure they know about you, and marketing isn’t cheap.

Adverts on Facebook, Instagram and campaigns in printed magazines cost money, and as sales aren’t where they’re expected to be, it makes it harder to find the funds to advertise. This vicious catch-22 is as finely balanced as a tightrope walker on cheese wire.

But what are manufacturers doing? Well, it’s not just a simple case of them keeping their prices low and absorbing as much of the cost as possible. This will help the bike shops and the consumer, but it would be detrimental to the manufacturer, they have to up cost price as prices through the supply chain fluctuate – this means bike shops are seeing one or more mid-season price changes, which would not have been the case a few years ago.

Thinking outside the box
But to combat this, bike shops must think laterally instead of how to drive up sales. Manchester Bikes has turned to bike rental service Blike to help keep the cash flow moving with an upcoming partnership.

Blike is a new cycle-to-work scheme that offers a range of bikes and e-bikes, along with everything a rider would need, at an affordable monthly rate. Rental services may work out better for both the consumer and the bike shop owner.

With this scheme, consumers can rent a cargo bike through Manchester Bikes from £200 a month – this includes insurance and an annual service. Compare that to someone leasing their second car to help with school runs and kids club, but without the volatile cost of petrol. It’s a three-year rental with the option to cancel at any time.

Leakey hopes that “offering this service will make the higher end e-bike and cargo bikes more accessible to the consumer”, with cargo bikes holding value very well, certainly if serviced and maintained, then it’s a win-win for the local bike shop.

Leakey said: “The ideal cost of an e-bike is so relative, with some thinking £2,000 is a bargain and others finding it extortionate. Generally speaking, you get a better bike for more money. A year or so ago and £1,500 would have been a good price for an e-bike but prices are easily £2,000 now. That’s how much it’s shifted in just one year.”