Monday, May 19, 2008

ROI on a $10,000 bicycle

I've done a few reviews on the "return on investment" for hybrid cars, light rail, bus transit, and more, and I figure that I ought to continue with the ROI for really primo bicycles, say like this Trek graphite from a local bike shop. Look here, though, and you'll find that if you go European custom, you can easily pay as much for your ride as for a nice new minivan.

So what's the ROI here in Minnesota? Well, let's assume that you ordinarily can ride six months per year, and you drive the ordinary distance per year of about 12,000 miles in your car. If you're a really "gonzo" cyclist, you might be able to get a good 4000 miles per year.

At an average cost to drive of about fifty cents per mile, that would be an annual return of about $2000. Not too shabby. Of course, you might be able to achieve that with an ordinary $1000 bike with clipless pedals. What do you get, then, by going from a 30lb bike to a 15 lb super-bike?

Well, if you're the average 150 lb person, you've got a 10% reduction in rolling resistance--you can thus go about 10% farther with the same effort.

No self-respecting cyclist, though, would be content to go the same speed, of course, and you then go that extra 10% about 10% faster--realizing (being a gonzo cyclist) that you can now can go 10% further yet and still get home in time for dinner. For those who drive partway and then ride due to time constraints, this is even better--you can go about 15% further and not encur further loss of time.

There is a cost, of course; you're now about 10% stronger, and hence you can go another 10% further--35% in all, or about 1400 miles per year or $700 annually. If we assume a bike can last 10 years/50,000 miles and a P/E of 10, this justifies a $3500 bicycle.

Not quite at the $10k mark yet, but let's look at the gorilla in the corner; medical care. It's estimated that smoking, poor diet, and lack of exercise accounts for 55% of the ~$6k/person spent on medical care annually--let's assume that exercise amounts to about 1/3 of the needless cost, or about 18% or $1080 of the total.

You could argue that it's not realizable, but keep in mind that Mediscare is going to be insolvent soon, and you'll be stuck with the bill in your retirement; yes you will realize the cost or savings of your actions. So we're at about $1800/year in savings from bicycling, enough to cost justify a $9000 bicycle.

We didn't quite get to cost-justify a $10k bike, but we came a lot closer than we could with, say, transit or hybrid cars. No, I haven't bought one yet, but I did buy a pair of cycling shoes/pedals to see if I could start getting a 10% boost over what I've had.

6 comments:

jroosh said...

Please don't use the words "nice" and "minivan" in the same sentence or I will stop reading your blog.

Bike Bubba said...

OK, I'll start saying "sweet" or "awesome." :^)

(for the minivan-averse, what about a "nice sedan"...?)

And what kind of way is that to thank me for helping you to justify your dream bike to your wife. :^)

Natros said...

I've never been able to justify a $10k bike before--I'll be saving this article! Unfortunately, I broke my leg the weekend before I was going to start riding my bike to work this year, but next year I'm sure it'll still be justified. Enjoy the new shoes & pedals--Once I moved to cycling shoes, I realized I'd never go back.

Bike Bubba said...

One difficulty (actually two) with my logic here; you get the health benefits on a beater, so it's a little harder to justify the sweet new ride. Plus, breaking your leg might reduce the health cost benefits, too. :^)

Personally, I'm having trouble with the idea of riding a bike that's worth more than my truck. Granted, that's not that much (nowhere near $10k even), but still.....

brian compton said...

http://www.inhabitat.com/2008/05/20/transportation-tuesday-the-80mph-triac-goes-on-sale/

Tim said...

Priceless, dear brother. You're gonna have made my brother's day--I promise.