How to price a used bike
You might recall I have placed an ad for selling my bike here and elsewhere. Post placing the ad, I have been getting a few requests on the sale and some offers too. I had to reject some of the offers since they were too low.
It made think how I should be pricing my bike and maybe I should have a model with simplistic parameters to price the bike. Of course, the sale will depend on the demand, vintage and condition of the bike. But I suppose these should generally sway the price around some mean and I should have a model to compute the mean.
The model I use is fairly straightforward with simple assumptions:
- The cost of a bike drops by a factor the moment you ride it out of the shop. I think a 20% drop is a sensible start. It may look steep but then If one can get a brand new bike with warranty from a shop with installment payments, there is very little reason to get a used bike at more than 80% of cost price. Well, it is debatable and I am comfortable with the figure.
- A Bike, being a mechanical beast, does not completely lose all its value regardless of age. We can still see ‘vintage’ bikes from 60’s and 70’s on sale. Unless totaled, bikes are usually usable with minor repairs. Even if totaled, some bikes can still fetch scrap value or one may salvage components and make some money.
- I figured a simple depreciation model with an annualized depreciation rate would work fine by not allowing the price to get to 0. The question would then be what rate should be applied. I plotted a few curves at different rates and I think I would settle between 8% to 10%. I suppose the seller would want as low a rate as possible and the buyer would prefer as high as possible. Well, there is no satisfying everyone and I suppose trade can happen only when both parties agree on a reasonable figure to work with.
Given a new bike costs about 2500 and It is about 3years old, I figure a sale price of 1400-1600 to be fair price. I am not even considering some of the upgrades. Well I have to be a reasonable seller too.
Related posts:
March 15th, 2009 19:43
Hi Nat
Just want to share my experience in selling off a normal size bike. I had a Marin Sausalito, top of the range hybrid 2002 model. Bot for $1250, sold for $250 last year. It seems that the selling price is often what folks want to pay for it, and what new bike prices are. It had a broken shifter but apart fm that, it was fine.
But for foldies, I find the resale so much better. I sold off my Dahon Speed 8 2 yo at $850, retailed new $1100. Folks are selling off their 1 yo tikits in Spore close to $2k, just a mite from new.
My conclusion is foldies seem to have better resale, perhaps its one size fits all advantage?
Al
March 15th, 2009 20:47
At the end of the day, the price will be moderated by the supply vs demand. As you mention, foldies could have a good resale value due to the fact it is one size fits most and the fact that the utility value of foldie is pretty clear.
I suppose when it comes to regular bikes, the issue of mountain vs road, component geekery, size, handle bar type, tire width etc… make the niche for a particular bike pretty narrow indeed.
The reason i thought about this issue is that I had no idea where to start in terms of figuring out what the inherent value of a bike is. If the market is poor and the price is very very low, I will not bother selling. the XO is a pretty nice bike and I am enjoying alternating between the LHT and the XO for my commutes (about 16km one way). After a couple of weeks on the LHT, you feel like superman on the XO (not faster but just a feeling of speed).
I think I will just wait and hope for a buyer. Am planning for another trip to PDX, OR this year when I plan to pick up my NWT or Tikit anyway.
March 16th, 2009 18:36
Agree, if the price is too low, just keep it. Vik’s NWT looks v tempting, esp w the Nexus hub set up. With a LHT already in your stable, I suppose a tikit is a better buy?
His white NWT is absolutely gorgeous.
March 16th, 2009 22:54
I lurk on Vik’s site too
The NWT in white looks gorgeous. But I may very well go with the Tikit when push comes to shove. I was thinking along the NWT due to its 20″ wheels. But if I am honest with myself, I suppose I would see more use commuting with the foldie and for that Tikit might be the way to go.
Do appreciate your comments, as always…
March 17th, 2009 08:02
I have a tikit at my home in Spore if you want to have a test ride. Back for a short vacation in July…
According to my BF friend Pat who rides a Pocket Rocket, he tested the tikit and said the feel is EXACTLY the same despite 16″ wheels. I’ve not ridden NWT so I cannot comment. That is quite amazing as he takes part in tri and all and is quite a serious rider.
Email me to make arrangements if you like.
March 17th, 2009 09:42
I appreciate the offer, I would gladly take it on
I tried both the tikit and the NWT when I was in Eugene last year. The time I had was very short, but I prsonally felt that the NWT handled potholes and bumps better.
I think I can understand where Pat comes from, For about 90% of my use, the diffrences in “ride quality” of any bike is almost negligible. I am pretty sure I cannot tell one fom the other in a blind test. But I am enjoying the process of thinking through why I might go for one or the other.