Monday, August 11, 2008

The True Cost of Cheap Parts

I was recently in a debate on a mailing list about using cheap standard hubs versus low-maintenance hubs like the Phil Wood. Most people take into consideration only the up front costs, and the pain that ensues, rather than the total cost of ownership. Here are two models for modeling that:

The resale model:
In 1993, I bought a pair of Phil Woods for $120. 13 years later, I sold the pair for $110. The expensive hubs cost $10 over 13 years. No matter how cheap the Deore LX hubs are, you can't beat the resale value of the expensive hubs.

The TCO model:
A typical hub overhaul costs about 30 minutes per hub. Let's say it costs you $15 per overhaul (valuing your time at about $30 an hour at half an hour per overhaul, and ignoring the cost of grease, cleaner and ball bearings). Let's say an overhaul happens every 5000 miles. I can get Phil Wood hubs for about $450 a pair. Since we're talking about a pair of hubs here, that's $30 every 5000 miles. At that rate, it'll take 75000 miles before the Phil Woods are cheaper from a Total Cost of Ownership perspective. Every mile after that, the Phils are saving you money. Over a total life time of around 300,000 miles (which is what Jobst reports for his ball bearing hubs), the Phils will save you about $1350 in maintenance costs. And then don't forget to add in the money you spent buying the special cone wrenches, and the additional time you need to preload the bearings, and the Phil wins even more.

Most people who make enough money to have multiple bikes or to be able to buy a nice bike value their time more than $15 an hour (and most people do have to pay something for ball bearings --- the cheapest place I found on ebay sold DuraAce/Record quality ball bearings for about $10/100, grease, and cleaners), so do the math for yourself as to whether using cheap hubs actually save you money.

Over and over again, I've learnt over the years that cheaping out on outdoor equipment is just not worth it. In the long run, you'll pay more for the cheap stuff than for the expensive goodies that come with lifetime warranties.
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