The Science of Service Menus

A question I challenge many bike retailers to answer is how to get their star services to produce as much revenue as possible while at the same time giving customers more options to buy and a customized service.

The most successful answer I’ve seen executed is to offer four tune-up services instead of one. A menu of one means the customer has no choices. The customer has no way to buy more and the technician has no clear way to upsell the package. Having four tune-up services will appeal to the price conscious shopper, the lost shopper, and the price-is-no-object shopper. Here is an example of a four tier tune-up menu.

Tune-up Menu:

  • Level 1 Service: $230
  • Level 2 Service: $100
  • Level 3 Service: $70
  • Level 4 Service: $30

First I will explain the psychology of the pricing structure and then I will present ideas for what can be included in each service.

Retailers who are using this pricing structure have shown the most popular selling items on the menu will be Level 2 and Level 3. With the scale tipping just slightly toward the Level 3 Service. Level 1 takes roughly 10% of the orders and Level 4 takes only 5%. When compared to an $80 tune-up, we can break down the potential growth:

$80 x 100 sales = $8000


$230 x 10 sales = $2300
$100 x 40 sales = $4000
$70 x 45 sales = $3150
$30 x 5 sales = $150

The second scenario brings in $9600; a 20% growth. So why does this work?

First, Level 4 ($30) service will always be the worst seller. No one wants to purchase the worst option of anything. Level 4 Service is focused on serving the truly price conscious.

Level 1 ($230) will cater to those customers who have purchased high ticket items. If someone buys a $9000 bike they deserve the option to buy a more comparable service than someone who buys a $900 bike. Another way to think of it- when someone buys a Ferrari they understand that servicing the vehicle will cost more than the service on a Toyota. It is acceptable for many people that high ticket items equal high ticket service.

Level 2 and 3 ($100 and $70 respectively) are for customers who are not sure what they want. Notice the gap between these levels is the smallest price gap on the menu. The jump from Level 3 to Level 2 was $10 cheaper than the jump from Level 1 to Level 2. Since the majority of people buy in the middle, we want the middle to have options.

Below is a formula for creating a service menu using these pricing tactics. Start by taking the price of the most popular tune-up, usually between $50-$90 for US retailers, and replace that number with X in the formula below. From there multiply out each level and round out to the nearest 5 or 0.

Level 1: 3.25X
Level 2: 1.5X
Level 3: X
Level 4: 0.45X

Below is three example price structures using this formula. 

In this example, if your most popular tune-up price is currently $70, your new menu would have a Level 1 service of $230. 

Once the pricing structure is set, the next step is to define what is offered in each service. Here is a recommendation to start with.

Level 4 ($30)

  • Bike inspection
  • Bolt/torque check
  • Lube drivetrain
  • Inflate tires

In many ways Level 4 Service acts as a quote or estimate. The bike inspection is where the value of this purchase is. Many people who purchase this package will often walk away with an idea of what services need to be done the next time they return.

Level 3 ($70)

  • Everything in Level 4
  • Perfect braking
  • Perfect shifting
  • Wheel inspection and adjustment

The Level 3 Service is, as many bike retailers would define it, the standard tune-up. Notice that I stayed away from using technical terminology. Telling someone to purchase a  “wheel true” can be confusing so I opted for “wheel inspection and adjustment”.

Level 2 ($100)

  • Everything in Level 3
  • Remove chain and cassette, clean with solvent
  • Complete wash, lust, and detailing

Since most people will be choosing between Level 2 and 3, the best carrot is kept in Level 2. Cleaning parts with solvent and offering a wash, lust, and detailing is a huge hook for people to make the jump. Many technicians have spent hours trying to get something to shift properly and when the customer saw the bike they were only excited by how clean it looked. A clean bike is something the customer can see, it makes sense to them. A perfect shifting bike is expected and can’t be enjoyed until after they leave the bike shop. 

Level 1 ($230)

  • Everything in Level 2
  • New brake pads
  • New cables
  • New bar tape or grips
  • Remove brakes, crankset, and derailleurs- clean with solvent

In order to justify higher prices in the service area begin tying parts to the costs of service. New brake pads, cables, and bar tape or grips are key elements to making the bike work as if it were new off the floor. Someone buying in at this level expects a perfect machine in every way, and these are just the services that will achieve it. It is worth noting that the Level 1 buyer is also the buyer who is most susceptible to additional sales like a new saddle, new tires, or even a new wheelset. If a technician sees the opportunity, they should never be afraid to ask.

Want more? Take a look at Leading Out Retail. This book is a creative look at bicycle retail and teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

5 Things From 1977 That Changed Everything

In my opinion, 1977 was one of the greatest years in human history for five reasons. 1) It was the year I was born, April 5th to be exact, born in Des Moines, Iowa. I was adorable. 2) Star Wars opened in theaters and introduced us to the force, the evil empire, and the Wookie. The definition of nerd would change forever. 3) Atari 2600 was released and we were moving things on the television screen with our hands- it must have been an absolute mind melting experience. 4) Britain changed the way we think about music with Nevermind The Bullocks Here’s The Sex Pistols and number 5) Lyrca shorts.

Lycra was the name for a highly elastic fiber from Dupont that combined elastene and spandex. Both Assos and Castelli claim to have been the first to make and sell a pair of Lycra shorts, and the moment they were on sale the factories could not make them fast enough. Lycra was a runaway hit because up until that point cyclists were riding in heavy, itchy wool shorts, which meant that when Lycra was available the choice was easy. Lyrca was tight, thin, and looked absolutely wonderful (conjecture). Lyrca made such a cultural impact on the sport of cycling that even today, when shorts are made of all sorts of artificial fibers, people will still call them Lycra.

Lycra shorts, like Star Wars and Atari 2600, was a great idea. It was an idea that changed the way people thought, spoke, and acted. Right now you might be stewing on your own great idea. An idea for your bike shop, that if you implement, will change the way people think and speak about you. Perhaps you want to change your product offering, maybe open a second or third location, or completely revamp how you do service.

Whatever your idea may be it is important to know the six stages of growth a business idea goes through. being aware of the stages will allow you to plan for the future and help ensure your idea gets traction.

1. Idea Buy-In. If you are not the owner or decision maker in the bike shop you have to get buy-in on your idea. You may have an absolutely brilliant idea, but if your idea lies outside the abilities or desires of the bike shop’s owners, then your idea will likely fail. The folks at Assos and Castelli could easily get buy-in on Lycra shorts. It was a brand new product in a clothing category than had gone unchanged for years. The price was reasonable, the demand was there, and the potential profit was high. If you need to get buy-in on your idea be sure to show how it affects the bottom line. Cost, time investment, and potential upside all need to be in your calculations. You can’t make something amazing and then your bike shop can’t sell it.

If you are the manager or owner of the bike shop then you may be able to skip this step unless you need to get buy-in from third parties such as vendors, local associations, the bank, or governmental agencies.

2. Empathy. Having empathy and understanding of your customer needs is crucial. Ideas that will make life easier on you but more confusing or complicated for your customer can be detrimental to the business. We have to put ourselves in our customers shoes and ask, “how can we make their lives’ better?” Wool shorts were itchy, heavy, they smelled bad, and they stretched over time. These were the pain points that Lycra solved.

Be sure to look at your idea from your customers point of view. What pain-point are you solving? Some examples of ideas that consider the customer needs: Faster turn around on a repair, worry free delivery and pickup, buy online and pick up in store.

3. Stickiness. How will our ideas inspire customers to use your services regularly? Perhaps you want to build a service booklet for your customers to track when they need services. Or take it a step further and record their miles through a social fitness app. Perhaps you have a follow-up survey you do will all customers 2 months after they purchase a bike.

4. Virality. An idea is only as good as its market. How will people learn about your business? How will your idea spread? Are new customers acquired entirely by marketing strategies or do you have a referral model in place. Lycra had massive virality, primarily through word of mouth and endemic marketing, but everyone who wore a pair of Lycra shorts got asked the question, “What are your shorts made out of?” They were conversation starters.

5. Revenue. How do we take some of the money you’re now earning from the product or service and pour it back into future customer acquisition? Both Castelli and Assos are still around and thriving businesses today. The sales of Lycra shorts were a groundbreaking moment for them in their growth, from those sales they were able to reinvest in the company, create new products, and blossom into the brands they are today.

For your idea how will it feed growth into the business. An idea that gets launched, sees a profit, and never changes again is a one hit wonder of business. Your ideas should foster future opportunities.

6. Scale. At some point in the growth of your idea it will grow beyond your capabilities. The high demand for Lycra shorts meant hiring more project managers, seamsters, and back of house logistics to get everything shipped. No one person can handle great ideas, it will take a team of people. As your idea grows how can it grow without you having to be involved every step of the way?

Thanks for taking the time to read this far. If you found value in this piece would you please consider sharing it on social? Thanks again. Donny