Bike and Part Sales
For bike and part sales you need to make sure you have proper Insurance, and that you are paying the necessary taxes -- the rest is up to your organization.
- 1 Selling Parts
- 2 Selling Bikes
- 3 Pricing
- 4 Taxes
- 5 Examples
Keep them separate from the used stuff and make sure you price them correctly and add the appropriate tax.
This is a sticky thing to get into, since it may put you in direct competition with your local bike shop and go against mission statements that talk about re-use. The community bike shops are sometimes not non-profits and pick up unique brands that no one else sells, like track specific bikes.
All bikes that you sell should be checked over by a senior mechanic. Not only does this make sure that bikes are in working order but it provides constructive feedback for volunteers and/or staff that are still learning.
This varies from one community bike shop to another, as a result you may want to try experimenting with a few different models before settling on one in particular.
What do you think is a fair price?
Try giving the person the option of setting the price by asking, what do you think is a fair price? This puts most people off guard, in a good way, and more than not you will probably get more than you might have asked for in the first place. There will always be a few people that will make a low-ball offer, when that happens (and it will) just counter offer with something reasonable and remember that on the whole people will pay more when you empower them with setting their own prices.
An interesting example of this in the food industry is One World Cafe in Salt Lake City, Utah, USA. Eat all you want, pay want you want, and if you don't have any money at all, you can volunteer. (Really great food by the way.)
What can your volunteers/staff handle? If things are always really busy and making change is a hard thing to do, you may want to consider flat rates for all your used parts, like $5 or $10.
Keep the nicer parts in a glass case and price them accordingly.
New Parts & Bikes
New parts have an Manufacturer Suggested Retail Price (MSRP) that you should stick close to so that you don't under cut your local bike shop. A typical MSRP is double the wholesale cost; as an example a $15 wholesale part will MSRP for $30.
Selling parts at distributor (aka wholesale) cost is a bad thing. It undercuts local bike shops, violates your distributor agreement, and if you get caught doing it, it only makes it harder for other community bike shops to get distributor accounts in the future. The reason it is so hard now is due to previous abuse by community bike shops and individuals looking for cheap parts.
This is something you should experiment with, because it depends on several things.
- If you don't have a lot of shop space, and bikes start to stack up. Lower the price. This will get bikes out the door faster.
- How much does your local thrift store sell as-is bikes for? $25? How much does Walmart sell low quality working bikes for? $125? Community bike shops have a unique nitch in between those to prices.
- Make things easier for volunteers, sell at flat rates.
- Did you use new cables, cable housing, bearings or grease? What did that cost you?
- Is it "as-is?" Did you have to pay an employee to fix it? How much volunteer time went into it?
Generally speaking if your local Salvation Army adds sales tax when they sell used bikes -- your shop needs to as well. If you have a Distributor and are buying new things at wholesale you need to add sales tax because it has never been taxed before. So to recap, everything that is new needs to be taxed, and everything that is used needs to be modeled after your local thrift store.
There are two ways of dealing with taxes:
Taxes during sale
This is when something costs $5 and you add 7% (or whatever it is) to a total of $5.35 which the customer pays. When you file your sales taxes uncle sam gets the 35 cents for that sale and you get $5. If you are going to do it this way, make sure the volunteers/staff that use the register (you will probably need a register system) are trained in how to use it. Not everyone has had a retail job.
Taxes after sale
This is when something costs $5 which the customer pays. When you file your sales taxes you subtract 7% (or whatever it is) from the $5 sale. So uncle sam gets 35 cents and you are left with $4.65. While this means you usually don't need to make change which translates to less training for volunteers and staff it also means you have to take into account when budgeting that 7% (or whatever it is) will go to uncle sam.
At the Bike Church in Santa Cruz, bikes are sold either 'as is' (no wrenching done, although it is important to remember that we all spend a lot of time and intellectual labor GETTING the bike onto a hook in the shop) or as a mechanic's pet project. 'As is' bikes are typically priced between $15-$75 depending on all of the concerns that everyone else is posting to the list, and how much work needs to be done to make it safe and efficient. Desireability also plays a role in pricing. Bikes that mechanics (core/staff members) work over are priced by deducting the WHOLESALE price of new parts put on the bike, and then splitting the remainder between the mechanic and the shop. Thus, if a bike sells for $150, and there are $50 of new parts on it, the mechanic would take $50 and the shop would take $50. The mechanic sets the asking price based on the amount of labor put in and the desirability factors mentioned above. True, such systems do result in some cherrypicking, so a bike has to be kicking around 'as is' for a month before a mechanic can take it on, and, honestly, NOONE is ever gonna get rich fixing up busted bikes in the middle of the night, no matter how sweet the frame is.
At BICAS, the 'as-is' bikes are called 'pergatory; bikes in waiting' and though the factors for pricing are pretty similar the prices tend to be a bit lower here than in Santa Cruz (the bikes, overall, are a bit more toward the huffy side though; in Santa Cruz we turn those back at the gate, no room, no desire to haul other peoples metal recycling, whereas BICAS has a lot more room and need for all types of, uh, 'bikes'). At BICAS the 'floor bikes' (those that a mechanic has gone over) include in the price the RETAIL value of new parts, the 'as-is' value of the bike, and a designation for labor. The labor part is a little unclear policy-wise, as the mechanic approximates the amount of labor that went into the bike, but is paid as an an employee (each staff member is allocated 4hrs of paid work/week to wrench on floor bikes, and if it is slow in the shop staff can work on them then too). This is the main difference from the Bike Church, where all of the core mechanics are independent contractors (convenient for income taxes as well as being the actual truth of how tasks are accomplished).
We do something at Velocipede that I like. Even though we do try to set the price of the bike using all the factors people have mentioned, I also like to ask people interested in the bike how much they want to pay. If they say something ridiculously low, I'll give them a counter offer that is more reasonable, but still with in their means. This works for us for now because our overhead is still so low.
I came to this method just cause I never know what to charge for bikes, and never have the time to do the research on each bike to find out. I also like how it throws people for a loop and emphasizes that we are here to make bikes available to the public and while the money helps us to keep doing that, it is not our primary focus.
In Salt Lake City mountain bikes are $50 and Road bikes and cruisers are $75. This was done because mountain bikes were less popular, not all volunteers know what "campy" means, and donations stack up quickly. If something is nicer, we set it aside.
At Broke Spoke, any bike priced $75 or lower is available to earn on sweat equity (volunteering @ $8/hour). Sweat equity bike purchases are limited to 2 per calendar year. All other bike purchases must be at least half cash. Here is our bike pricing guide: File:Broke Spoke Pricing Guide.pdf.
At the Bike Exchange we donate most of our bikes, but sell the nicer or collectible bikes to cover our operating expenses. We price these bikes at what we think we can get by selling the bike at a swap meet, on craigslist, or on eBay. Two or more designated pricers get together to set the price for each bike. If I'm doing the pricing, I'll search for an identical or similar bike in the Completed Listings section on eBay. A typical bike sells for $150 to $250, but some go for much more than that.