The business plan: affordability and justification

The company expects the retail price for its frame to be $2500 per frame or about 2.5x on a price to weight ratio basis. The average retail price for name brand carbon performance frames that Frame and Wheel beleives will be competitors is about $3,000 per frame. Frame and Wheel will be about 23% less than the market average of 3.2x on a price to weight ratio basis. The penetration of carbon frames at this price point and above suggests that the consumer can afford frames priced at this level. Consumers are justifying the purchase based on weight as well as the brand name recognition of the brand. Important factors include which pro temas use the frame, is the frame in the Tour de France, do other serious cyclists in the consumers immediate region use the frame, etc. Consumers also justify the expenditure because they ride frequently in order to stay fit and thus the bike equipment is viewed as a necessary piece of equipment for that purpose; there is also the notion that if you ride or race a lot you might as well use a good piece of equipment. Finally, consumers can justify the purchase if they know that other people view the brand as a good one and worth the money; no one wants to be spend large sums of money on a brand that is unknown or disliked.