It should be very clear that we are strong believers in the value of bike fit. There are a number of benefits from a variety of perspectives:
- Making riders comfortable increases their enjoyment of the sport
- Performance oriented fits make riders faster
- Delivering those outcomes to a rider makes them a more loyal customer of your store
- Investing in bike fit can increase the profitability of your store
It is the fourth point we’re addressing with this article. It’s easy to view bike fit tools as just another business expense, but it has been proven many times over that they are an investment in your business can offer returns better than other product or activity.
We’ve constructed a ‘Return on Investment’ Calculator, that we’ll use in this article. If you get in touch with us we’re happy to customise the figures for your specific scenario. For the below examples we’ll use figures for the USA market, derived from published data and experience. You can view the full model here, we’ll just use snippets for illustration.
To explain the scenario above:
- Based on our premium product, 3D Fit Pro, on up front payment
- A computer, Kinect Camera and attendance at a training course have been included
- Choosing the region and start month dictates the assumed pattern of demand
- Store of ~2000 square feet, paying $75,000 annual lease with 80 square feet for the fit area
- We’ve allowed for the fitter to be on above average bike shop wage, taking 2hrs 30mins for a fit
- $200 or higher is normal for a 3D motion capture based dynamic fit
- Accessory sales are a critical part of delivering a comfortable outcome for the rider. With the added benefit that they make the business of bike fit more profitable. $250 per fit is on the low end of industry data. Accessories are:
- Wedges (for pedals)
- We didn’t factor increased bike sales as it’s hard to prove exact numbers. There is no doubt that doing good bike fits leads to selling bikes
- Peak fits per month is the demand in your best month at the height of the season. For this example we’ve used 12 - 3 per week which is a low level for a dedicated area, but we’re not trying to inflate the prospects so it is a conservative figure. The model cycles the demand through the year to reflect the typical trend
- The startup factor allows for the first four months as a warmup period. In this instance the first month is at 70% of what it will be once established. The subsequent months grow until they hit 100%
As you can see, this scenario gives $339 per square foot of revenue for the fit area. Compared to a US bike store average of around $170-$180. The investment in bike fit takes 7 months to pay off and offers a gross margin of 40.8%. It’s important to note that the gross margin quoted here is actually ‘gross - wages’ as the time per fit is counted in the costs. If we remove the labour cost to better compare to other store activities the Gross margin is 62.9%.
As a second scenario, lets consider a bare bones approach:
In this case we’ve gone with:
- Just our 3D Motion product, paid monthly (so no startup fee)
- Lower fit fee ($150) and accessory sales ($200) with only 10 fits in the best month of the year
- Labour cost has been left out for simplicity
Even in this somewhat pessimistic scenario the revenue contribution is $219 per square foot - still a valuable contributor to shop profitability.
If you are in a location with low demand it may also follow that the shop lease would be lower, but we haven’t made that assumption in the model. Obviously this would increase the viability of the above scenario.
If you’re somewhere with a strong cycling community and want to maximise the revenue from bike fit. This scenario allows for spending extra on fit tools and accessories, along with marketing as an ongoing monthly cost. This extra investment and promotion leads to being able to charge a higher fee, for more fits and sell more accessories.
Clearly a high input scenario, but the numbers show that it’s worthwhile.
In an era where store margins are being continuously eroded by competition from the internet, focusing on service is the most logical path to remaining viable. We’ve shown here that bike fit stacks up extremely well just in terms of the dollars pulled in by the activity on its own. The impact on more difficult to quantify factors like customer engagement, loyalty and repeat business is beyond the scope of this discussion, but anecdotally it is definitely a significant impact.
As mentioned at the beginning of the article, we’re happy to customise the model to help you evaluate the potential value of investing in our tools for your business.