Money Exchange
by Jim Cunningham, CyclArtist

A real life Email exchange about the cost of vintage parts.  Not for the squeamish…

CyclArtist,
Did you see that creep dealer advertising  the NOS (New Old Stock) Campagnolo Nuovo Record triple crankset for $700?  What a pirate!  I have one I'd sell for $200, just to make him look bad. I think that greedy bastards like that should be run out of business.

Regards,
Slen@AOL  (not his real name)

Actually, he was much more vile and hostile than that, his prose filled with nasty expletives… but you get the idea.  The hostility troubled me, so I wrote back:

Dear Slen,  (not his real name)
I'd like to buy those cranks. 

I must comment on the rest of your post, however:

I don't feel any hostility toward someone running a legitimate business asking top dollar for hard to find parts which are in demand among those who are maintaining or restoring fine old bikes. 

Such businesses need and deserve your support.  It is stupendously hard to be a small business owner in this country, so I'm careful to give anyone courageous enough to try all the consideration I can.  Last I heard, small business still pays something like 70% of all taxes in the US.  Giving most of us a relatively free ride. Don't forget that 30% of whatever margin our Small Business Owner had goes to taxes.

For those who appreciate and remember the "good old stuff", it should be obvious that dealers with long experience, deep technical expertise, patience, compassion and dedication to cycling have mostly been replaced by corporate chains, big box super stores or narrow mainstream shops with their focus on profit margins.  I think much of the attraction we feel for certain bikes was instilled by dealers passionate about cycling.  If you are lucky enough to find one who still has it, support him today, or he'll be gone tomorrow. 

Let's see… The last time those crank sets were available through distributors was many years ago, the price was about

$229.  Retail overhead averages about 33% according to NBDA (National Bicycle Dealers Association), so a minimum margin  makes $343.50.  Note, however, that this margin presumes normal modern retail practices. NDBA assumes efficient and predictable parts ordering, while I suspect that our vintage parts retailer may have spent many hours and considerable expense locating such inventory. I certainly have spent hundreds of dollars traveling and advertising for what sometimes amounts to a handful of parts. NDBA also assumes local, not national advertising, average bicycle consumers, not rabid, anal, vintage enthusiasts.

Another frequently misunderstood factor is that, for a while,  it WAS possible to move such goods to Japan for much more than the domestic market would pay.  I'm not jingoistic, but I'd like to see enough of this stuff stay in the US to give enthusiasts something to work with.  Pricing for worldwide market value is one way of helping that cause.  You might consider someone advertising high prices for stuff you have, or have easy access to, as doing you a real favor! 
The sin, it would seem, would be denying the value to buy cheap and selling quietly overseas to maximize profit. I know that has been done, quite deliberately, on a large scale by people and organizations probably not on your shit list.  There is not an endless supply of this stuff, as enthusiasts of several categories of collectibles can tell you.  I understand certain classes of cameras & stereo equipment, have been strip-mined to extinction from the US, leaving no possibility for those here who love the stuff to work with it. 

Lastly, it is unfair to compare prices offered by a small business owner to those offered by hobbyists, swap meeters or guys just clearing out their garage. Cyclists, bless 'em, still sometimes give (or sell cheap) old parts rather than trashing, hoarding or maximizing their resale value.  It's a bit of a tradition, perhaps, one I'd like to see preserved.  But remember, there's a difference between moving  midline mundane mass produced stuff along to riders who can't afford better and selling parts which were considered the pinnacle of excellence in their time and which always were expensive, for market value.   

As to what the market value of any of this stuff actually is, that's another story.  The markets too thin for there to be any guideline pricing. Here are a couple of ways to look at it:

One starting point for an old bike or part could be the value of it's contemporary equivalent. Nice, rare, old stuff has nostalgia, exclusivity, classic styling and usually, simplicity, serviceability and durability going for it.  It's value may increase with time.  New stuff has today's buzz and "tech" appeal, availability, contemporary styling, and usually, is easier to use and requires less servicing.  Depending on what you want these considerations could balance.

In the case of the crankset with bottom bracket mentioned above, we could start with a current Record, worth about $392 retail.  Which seems about right for NOS 170 NR/SR doubles.  Campy does not make a triple in the top quality range, as was the NR triple, so if they did, we're probably about $445.  A good starting point, from there we adjust for demand and rarity.  Long cranks were not popular in the 1970's now they are, so the demand for long, vintae cranks is especially high.  Does that get us to $700?  I don't think so, I've never seen any trade that high. 

The second method is to consider actual cost.  Start with the original purchase years ago of about $90 wholesale. The first year, that part was still sitting in inventory, it cost 30% or so in taxes so add $27.  Interest on the $90 cash laid out plus the $27 tax @15%, for 20 years is  $468. After all if the money was not in inventory, it would be invested in something else, or if money was borrowed to buy that inventory, the interest would be a direct cost paid to the lender.  Proper storage, (for NOS you'd need reasonable climate control in most areas) a little labor to move it a few times, dust it, etc. for 20 years, let's allow $5 a year or $100.  OK, by this method,  the real COST of that crank is: $90 purchase + $27 tax, + $468 interest + $100 overhead.  =  $685 COST

I hope I've helped you see the dealer's point of view and trust you will temper your accusations of piracy with a little understanding.  I'm disappointed, to see such vitriol.  Are you equally angry about the price of certain big name shoes? 

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