I dont understand their model at all. I don't understand why they don't take 100% cash up front for shipments and everything is shipped in the order in which it is ordered. That gives them operating cash-flow and means you don't have to deal with the lottery type ordering situation that we have now.

The question is not "how many would sell?" (The answer, BTW, is "exactly what the demand is' ). The question is "how much more profit could they generate?"

One could make a case that they would still sell the same amount as they sell now (demand greatly out strips supply)....so for argument's sake, let's go with that assumption (since this is Econ 101, you always make assumptions!!)

For easy, round numbers, let's say they sell 1,000 wheelsets in each sale. Further, let's assume that they make $100 in profit for each wheelset. (totally making that up....have zero idea what their profitability is). So for each sale, they are making $100,000 in profit.

Now, for grins & giggles, let's assume they raise the price to $1500 and demand stays the same, but their sell-through rate slows slightly (sell out in a few days vs. minutes). Their overhead remains largely the same, so their profitability just went up by 50%, or $50,000. No extra work, no additional promotional cost, nothing....just adjusting the pricing to correctly reflect market demand.

The guys at FLO have been pretty open about not taking in outside investments, but also being somewhat cash-strapped. I respect trying to hold to their ideals, but access to cash to invest in their company is sitting right in front of them.

If you are looking for something like a Flo 30 check out the Boyd Altamont. They actually hold inventory...what a concept.

Not that it matters, because it's all hypothetical, but in your above example, what was the starting price you assumed? $1000? Because if they made $100 profit at $1000 sale price, and then raised the price to $1500, wouldn't they then be making $600 profit per sale? That's a lot more dineros in the bank.

Maybe also they recognize that part of their success is being affordable, and they want to stay true to that successful tactic in what is a competitive market. If they priced themselves closer to the higher priced competition, it is almost guaranteed their sales would drop.

I want to sell my services to them as a consultant.
"Guys we are going to raise prices until we sell stuff at the same rate that we make stuff"

I dont understand their model at all. I don't understand why they don't take 100% cash up front for shipments and everything is shipped in the order in which it is ordered.

Still think you mean $500,000 not $50,000 (1000 units x $500 extra profit)

Well then you also have to question their reading comprehension when you clearly point out that the numbers are "big, easy" numbers and based on assumptions to illustrate a point.

My point was that 50% was not a realistic number because of competition. You should have used 10-20% if you want to WAG some numbers. It's not just the limited supply that's at issue. It's the gamble you take to even successfully order FLO Wheels. Look at Williams wheels as a comparison. They are sold out of their carbon clinchers @$1200/set (basically on par with Zipp 404's in the wind tunnel) but you can order them right now on the website and they give you an estimated ship date.

You're still missing the point. They probably can't raise prices as much as people here seem to think. And this same FLO pre-order hoopla has been going on for what 3-4 years now? I'm sure it's great for the owners of FLO because they don't need to give away a portion of their company to build up inventory. But their customers/potential customers have been suffering for quite some time now. I'm not aware of any other cycling company that handles orders the way FLO does. Even just the ones who sell direct to customer.

Well then you also have to question their reading comprehension when you clearly point out that the numbers are "big, easy" numbers and based on assumptions to illustrate a point.

If you are looking for something like a Flo 30 check out the Boyd Altamont. They actually hold inventory...what a concept.

They may have some sort of stochastic and unpredictable arrangement with the manufacturer in order to keep costs lower.

Like the factory makes their wheels when they have spare capacity.

I dunno

Probably a combination of:
- They're probably not big enough to sustain continuous production and buy time as it comes available (probably cheaper)
- Volume discounts / logistical simplicity for ocean-based shipping
- Same, except for customs declarations, etc.
- It's easier (both for them and for process) to spend a week shipping wheels than intermittently doing it

They wrote a blog post about it a couple years ago. In the bike industry you basically have to predict your entire sales for the year and pay for them ahead of time. You get essentially one shot to order wheels for the next 12 months. If you overestimate sales you get stuck with unsold inventory. They could order more wheels and stock inventory but they basically admitted that they were unwilling to do that. Their sales model is specifically designed to minimize the financial risk to FLO. They defend this by saying that they would have to raise prices to stock inventory. We've already established other brands are managing to better meet customer demand while charging competitive prices. And yes, the blog post basically came off as them complaining about how hard it is to start a business.

but that's ridiculous.

You're still missing the point. They probably can't raise prices as much as people here seem to think. And this same FLO pre-order hoopla has been going on for what 3-4 years now? I'm sure it's great for the owners of FLO because they don't need to give away a portion of their company to build up inventory. But their customers/potential customers have been suffering for quite some time now. I'm not aware of any other cycling company that handles orders the way FLO does. Even just the ones who sell direct to customer.

Shocking, a business seeking to maximize its own financial interests. I bought a pair of 60/90s and their support is good. If they don't want to increase their operating leverage, that's their prerogative.

As I said, I get what's in it for Flo. Not so much for their customers...3 years down the line when their pre-orders still sell out in minutes. And yet their competitors somehow manage to offer wheels at competitive prices without making their customers wait for months for the potential opportunity to pre-order them.