Raw materials are cheap. Most bike frames are produced in mass on assembly lines in China or Taiwan. The stuff that goes on the bikes (components/wheels/brackets etc) is what really jacks the price up and can often cost three and four times what the frame itself costs. Then the bike is sold to a dealer, and the dealer is the person you buy the bike from. After going through multiple streams of production like this, the markup between the production cost of a bike and the MSRP can be pretty high. The markup from what a local shop alone buys/sells a bike for is usually 3X: $500 bike sells for $1500. This isn't a shock or anything, everything is like this. But next time you're around a bike shop, go in and check out some of their carbon bikes and try not to ask yourself w..t..f.. makes this bicycle cost $8,000?