Like most used items, bikes also lose value and face the inevitable reality of depreciation from the moment you buy them. The depreciation rate will depend on a few different factors, from how often you use your bicycle to where you are riding it. Furthermore, since bicycles are not the most durable items, their depreciation rate is often hard to calculate. For anyone looking to buy a bike or sell one, it can be hard to know how much you should pay for or sell one.
It doesn’t matter what type of bike it is; whether it’s a mountain bike, road bike, hybrid bike, electric bike, they all depreciate. In this article, I’ll go over everything you need to know about bike depreciation.
What is bike depreciation, and why does it exist?
The term depreciation refers to the decrease in a fixed asset’s value over time due to use, age, or external factors such as changes in technology. Bicycle depreciation isn’t any different as it comes from improvements in bike technology, usage, and how many years a bike has been used.
Why does bicycle depreciation exist?
I’m no expert in depreciation, but common sense would tell you that depreciation is tied to the value of a product, whether it’s perceived or actual. For example, all of us want the newest features a bike offers. Therefore, we accept whatever price said new features cost since it is marketed to us as ‘valuable.’ However, as time goes by and newer features come along, there’s no way the old will keep the same value as the new.
There’s also the consideration of wear and tear that happens over time with an item. I’d never pay the same or more for a bicycle that has been beaten and battered for years over a new bike with all the bells and whistles from one of the best bike brands. So it’s only natural that as things age and are used, they get cheaper.
What causes bicycle depreciation?
The two main factors that cause depreciation for a bicycle are external and internal like it is for all other items. External factors include changes in technology and how often you use your bike. Internal factors include the wear and tear you cause to it over time.
With that in mind, you should now realize that you can’t escape your bike losing value if you are a seller. And if you are planning to buy a used bike, all of this should be great news.
How much does the price of a new bike drop after buying it?
I’ve done a great deal of research on how much new bikes depreciate, and here’s what I found. A new bicycle will depreciate anywhere between 21% up to 45% on average based on factors such as the brand, type of bike, and the cost of the new bike.
Some brands such as Trek, Specialized, and Cannondale bicycles hold their value better than others because they are truly one of a kind or have a rich history that many people recognize. These brands are also internationally recognized for winning competitions, so people perceive their bikes as the best.
Furthermore, since these brands typically produce high-quality products, their bikes are often in limited quantity. So the rule of supply and demand will take effect to some extent. Of course, you can always find cheap mountain bikes under $500 anywhere you look. But the chances of finding a great used Yeti SB6 mountain bike or a Santa Cruz Heckler mountain bike readily available will be slim to none.
Why do some types of bikes depreciate faster?
Different types of bikes are going to depreciate at different rates. Mountain bikes, for example, will depreciate a lot faster than road bikes because they’re used more often and go through a lot more wear and tear faster. There’s also the fact that some bicycles such as road bikes or even electric bikes are also stored and maintained more often than mountain bikes.
How much does a mountain bike depreciate each year?
Depending on the type of mountain bike you buy, it can depreciate anywhere between 45% and 60% in the first and second years. Following that initial depreciation, mountain bikes will lose value at a rate of about 10% each year. The more expensive brands such as Specialized or Trek will lose value slower than a cheaper brand such as Huffy mountain bikes. This is because more low-end models mountain bikes are available to choose from, and people don’t value a cheap mountain bike as much as the rare high-end ones.
Supply and demand in action.
However, one thing to note is that high-priced mountain bikes usually take a huge initial dip in value more than mid-ranged bicycles. So while their resale value is still high, they do drop in price the minute you buy it.
The Consumer Price Index (CPI) can also affect how much your bicycle depreciates each year as well. A higher CPI typically means that prices will go up for things used to manufacture the mountain bike. This could make a certain type of mountain bike cost more to purchase at a given time.
Of course, the loss in value will also depend on other factors such as components, wear and tear, usage, and location.
How much do road bikes depreciate each year?
The average loss in value I’ve seen for road bikes is from 20% to 40%. It all depends on the quality of the bike, brand, how much you use it, and how it is maintained.
Generally, road bikes are known for holding their value longer than mountain bikes because they’re used in more controlled environments.
How much do electric bikes depreciate each year?
Electric bikes are known for retaining their first-year value very well. As such, the depreciation rate for e-bikes is usually lower at 15%-25% within the first year. You have to keep in mind what I said at the beginning, where I explained that the loss in value is tied to the value of the item. An electric bike isn’t as common as most other types of bikes, so this increases the resale value when they are fairly new.
However, this dip in value drops faster as they age over the years because e-bikes use batteries that typically have a lifespan of 2-3 years. Once the batteries are taken out of the equation, electric bikes aren’t very different than other bicycles, such as mountain bikes or hybrid bikes. Furthermore, the components aren’t often comparable to what you get on the other types of bikes. And the technology used in them is updated every year, so you’ll never have an e-bike with a very long lifespan.
All in all, a newer e-bike with a good battery holds its worth. But once the battery starts going downhill with age and use.
How to calculate bike depreciation?
To calculate the depreciation of a bicycle is pretty easy. Here are the steps you need to follow:
- Find the purchase price of the bicycle(MSRP).
- Estimate the life expectancy of the bike. On average most bicycles have a lifespan of 5 years.
- Divide the purchase price by the life of the bike. (You can also factor in the initial drop in price for the first year.
- Subtract the loss in value from the original purchase price.
To give you an example, let’s say you found a Trek marlin mountain bike that usually costs $950. I’d say these bikes have a 7-year lifespan. So I would divide $950 by 7, which would give $135.71. Next, I’ll look at the age of the bike from the date the first seller bought it. Let’s say the mountain bike is now 5 years old; then it will be the $135.71 multiplied by 5, which would give you $678.57. Now you can go ahead and subtract the 678.57 from the $950 initial purchase price.
So this 5-year-old Trek Marlin used bike in the example above will now cost $271.42.
How do I find out what my bike is worth?
The simplest way to find the value of your bike is by checking it on the price guide for your bike model. Bike shops, bicycle forums, and classified ads can be good places to research prices. It’s also a good idea to check other websites that provide information on used bike values, such as bicyclebluebook.com.
If you can’t find a good price estimate anywhere online, you can use the calculation given above. Then factor in things like condition, usage, and upgrades into the price and base the worth of your bicycle on that. However, I’ve found most used bikes on that side, so you shouldn’t have to calculate yourself.
Tips for buying a Used Bicycle
- Consider what type of bike you want (Mountain Bike, Road, Hybrid, Electric, etc.)
- Decide on a price range you can afford.
- Figure out the age, condition, and usage of the bike
- Inspect for wear and tear before finalizing the purchase
- Check with the seller about the history of repairs or malfunctions in the past year(s).
- Read reviews from other buyers who have purchased similar used bikes. (optional)
How is the condition of a bike Scaled?
The condition of a bicycle is scaled by quality and condition. To determine the condition of your bike, you will need to find the information in a written number scale or picture. The most common scales for bikes are Mint(Like New), Excellent, Good, and Fair.
Mint/Like New Condition
Finding a bike in mint condition is like finding a unicorn. Unfortunately, they are rare, especially in the case of used mountain bikes. These used bikes typically have the highest cost to purchase of all the conditions. A mint condition bike is one that was barely ridden from the time it was bought and should’ve been stored properly. In most cases, these bikes won’t be more than a year old.
Used bikes in excellent condition will have little to no rust and will be in good overall condition. They may have some small, barely noticeable scratches or dirt but nothing major. Most of the time, mountain bikes that have been well maintained during their first season tend to fall into this category.
Very Good Condition
Bikes in the very good condition category are typically bicycles that have been used for several seasons and will have some wear. These bicycles may also require minor repairs. However, they should be in good mechanical condition and don’t require any major expense to repair.
Used bicycles that fall in the good condition category will tend to have dents here and there or other paint defects. They may also need tire changes or have a worn saddle. However, they will still be free from major mechanical issues that will prevent you from immediately riding them.
This condition is whatever you see is whatever you’ll get in a nutshell. Anything could be wrong with them, but for the most part, they will be functioning. Furthermore, they shouldn’t be too hard to repair.
Do MTBs hold value?
Yes, mountain bikes do hold value, just like other bikes. The key is to find a used mountain bike that’s in good condition and fits your needs. If the bike is not in good condition, you’ll need to spend some of the money you would have used on it on repairs which will be a bargaining point to get it for cheaper. However, if the repairs are costly (depending on the components that need to be fixed/replaced), then you buying that one might not be a great option.
Buying any used piece of equipment always comes with a risk, but there are ways to minimize that risk, especially when it comes to mountain bikes.
First, know what size and style you’re looking for. What kind of suspension? Do you want any added features? Knowing specifics will enable you to narrow down your search a lot.
In the world of mountain bikes, there are dozens of sizes and shapes to choose from; having details will save you a lot of time during your search.
Old mountain bikes are still a great option if you’re starting out. However, getting into the groove of mountain biking will take a while because it is so vastly different from casual on the road or sidewalk bikes.
A less used bike that already has worn in shocks and tires would benefit a new rider. Then, you won’t have to deal with the initial stiffness and get the bike and yourself used to off-roading simultaneously.
It can be a comfort knowing that the bike you’re looking at can handle the terrains you plan on taking it through, too—no playing the guessing game of what’s going to be too tough on the bike.
The Bottom Line
By now, you should understand all that goes into the price point of a used bike. So whether you are buying or selling, you should be able to make a more informed decision. The main thing to keep in mind is that if you buy a mountain bike, it will be worth 45% less after one year and 10%-15% less each year after that. Road bikes hold their value better than mountains bikes in some cases because they don’t get as much wear and tear. Electric bikes also hold their value differently depending on age, technology(battery), and usage.
At the end of the day, it all comes down to the bike’s condition, the components it features the brand, type of bike, age, and usage. Once you grasp these factors, you’ll never overpay for a used bike or sell your bike for cheap.