What Your Money Buys

What Your Money Buys

It often is surprising that high-end components cost not just a little more, but several times as much as budget components. For example, the high-end Sugino cranks (above right) cost more than three times as much as the budget model from the same maker (above left). (This already takes into account that the bottom bracket is included with the expensive crank.)
Both are good cranks. Neither is likely to fail prematurely. Both will transmit your pedaling power to the chain. The high-end crank has some advantages: It is lighter, it has a narrower tread (Q factor), it probably is a bit stronger, and the finish is prettier.
In this post, I am not concerned about whether the high-end crank is worth the extra money. Instead, I will examine why it is so expensive. Many cyclists gladly would pay an extra 20% or maybe even 50% more for a nicer product, but isn’t the upcharge for high-end products excessive? Are the makers of high-end products getting rich? If not, where does all the extra money go? Here are some answers:

Better materials: High-strength steel and aluminum alloys are more expensive than more basic versions of the same metal. The same applies to carbon fiber.
Even for the same alloy, reputable suppliers charge more, but they also guarantee the composition and temper of their metals. Discount material suppliers have been known to “substitute” a less expensive aluminum without telling the company who places the order. (That is how they can undercut the prices of the competition.) There is a reason why quality materials are marked with complete product information (above).

Better manufacturing techniques: Forging parts (above) costs more than casting, which in turn costs more than stamping. Even for the same technique, employing skilled labor and the best machinery results in more precision and strength. For example, inexpensive castings can contain air bubbles that reduce the strength. A skilled craftsperson will get better results, but at a higher price.
Closer tolerances: A lightweight, high-performance part has less margin for error, so it must be made to closer tolerances. For example, the casing layers in a high-performance tire must be placed much more accurately into the mold than those of a utility tire, which has much more overlap between layers.

More manufacturing steps: Extra steps in manufacturing can improve performance and appearance, but add cost. For example, drilling out the center of a bottom bracket spindle reduces the weight, but takes an extra step of precision machining. A dedicated crank machining fixture can improve the runout of your chainrings. And polishing components requires extensive manual labor. All these things cost money.
More research and development: The more you optimize a component, the longer it takes to develop it. You need more prototypes, you need better engineers, and they need to spend more time.
More oversight: Getting suppliers do exactly what you want is extremely time-consuming. Our engineer in Taiwan has been working almost full-time on the René Herse crank project for months now. He visits the various factories weekly (or more often) to make sure everything is according to spec.
It is much easier (and cheaper) to send a set of drawings (or even just a photo and sketch) to a supplier and just accept what they come up with.
More testing: High-end parts usually are tested both by the company, as well as independent testing labs, to make sure they are safe. For lower-end parts from small companies, the customer often does the testing. If there is a failure, the company usually recalls the parts, but sometimes people may get hurt.
Smaller production runs: A high-end product tends to sell in smaller numbers because it costs more. This in turn means that the costs of R&D, molds, dies and setup must be amortized over smaller numbers, which increases the price.
For example, a tire mold costs about $18,000. If that cost is amortized over 100,000 tires, it adds 18 cents to the price of each tire. If it is amortized over 1000 tires, then it adds 18 dollars to each tire.
Knowledge costs money: We often think of geometries and other knowledge as “free.” After all, you can buy a copy of Bicycle Quarterly and learn all about optimized geometries for front-loading city bikes. And it doesn’t cost more to rake fork blades to 55 mm offset than it does to rake them to 43 mm. So why do many makers simply strap a rack or basket to their standard hybrid frames?
I have come to realize that knowledge isn’t free. Researching a topic and evaluating the results takes time. Making prototypes and testing them takes even more money and time. Making decisions within a company takes meetings, presentations and more time. Qualified people spending time on a project adds up very quickly to a lot of money. It is much cheaper to say “We’ll just copy the specs from our competitor’s catalogue.”

Prestige: In some cases, companies charge more for a product simply because they can. The Campagnolo Super Record cranks (above left) are virtually identical to the Record model (above right), yet the “top-of-the-line” Super Record model costs $120 more. While this practice is common in the mainstream (just think about cars!), it is rare among the small makers who make products for enthusiasts.
When you add it all up, I hope you are no longer surprised that better parts cost significantly more than the cheaper offerings. The sad truth for small manufacturers of high-end parts is that the profit margins usually are lower on the more expensive parts and bikes than they are on the cheaper ones. In the end, it is up to you to decide whether the improved performance warrants the higher price.

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