Pricing in ads

Something that has always bothered me when buying a car from a dealer is how the negotiated price never seems to hold through the entire deal unless you play hardball. They want to add in “ad fees” “doc fees” and any other fee they can think of in an attempt to squeeze more money out of you.

The smart shopper asks for the “drive out price” when making a deal, but even then it’s hard to do as the sales guy will have a difficult time getting the exact price on his own, so you’re going to be sitting extra long as he goes back and forth with the business office.

Why do I bring this up? I’m looking over competitor ads and am noticing the same tactics being used.. “plus fees” is a common thing to read, and even those that don’t state it are still doing it.

So I’m wondering if I should use “drive out pricing” in my ads. It would certainly be different, but at the same time it makes my prices look higher than my competitors on first glance. Basically I’m left with the challenge of educating the customer, a task that is not easy to do.

And again… decisions, decisions.

Warranty Game

I’ve noticed that a good many of my competitors are offering warranties with their vehicles, which of course is a great sales tool. If you were choosing between two similar vehicles, of similar pricing, you’d choose the one with the warranty wouldn’t you?

So I’m looking into this. I have some theories as to how this particular game is played, but until I have a face-to-face with the warranty company I don’t want to speculate too much.

But you can bet that dealers aren’t losing money on these things, and in fact these are like warranties you get a Best Buy.. a nice profit center.

One is whipped, the other is lazy

Pardon this digression from cars, but I need to rant for a moment.

My office is in a fairly small professional building. I share a building with a law firm, a couple of doctors, a hair salon and an urban planning company. Very diverse group here, and it can make for some interesting interactions.

But right now I’m annoyed with a couple of guys near my office, the whipped and the lazy.

What am I referring to? The bathroom.

It’s a small bathroom that we share on this wing of the building, just a normal toilet and a sink.

Well, the whipped guy likes to use the bathroom in the morning, and since he’s whipped he always leaves the seat down.

You see where this is going I’m sure.

The lazy guy goes in a bit later, and being lazy he just pees without raising the seat.

So basically every time I go in to use the bathroom I’m treated to the site of piss all over the seat. It’s quite annoying.

I think I’ll start using the ladies room.

Wholesale prices are high and still going up

One of the things I like about buying cars at the auction is that you get to see what a vehicle should sell for before you bid. The data used to come up with these prices is very reliable as it’s based on actual sales data that’s updated daily. So if you see that a car in average condition should sell for $5000, then by golly it should sell for $5000.

Except that’s not what I was experiencing.

I make spreadsheets for each auction I’m bidding in, I list the cars, condition and the average price among other items. As the auction progresses I enter in what cars actually sold for and can then see how close “average” is to reality. My own research showed that cars were selling at about 115% of average, thus when bidding I used this data when coming up with my bids.

Well, I just read an article that confirmed my findings. System wide, Manheim is showing that cars are selling at 114.1% of average.

This means that prices are going up. It’s not like dealers just eat this increase and call it a day. No, dealers just adjust the retail pricing or more likely, they adjust their actual sales price on a car. So instead of putting in a floor of $7000 on a car, they may raise that up to $7300. The average buyer might not notice this as they paid $7800 for the car, but for the tough negotiator they’ll never get that price down below $7300.

What it means for me is annoyance at the auction. Having to tack 15% on the price, then adding in fees and such.. it’s annoying. But, all dealers are having to do this, even the cursed CarMax guy.

Large market, or small?

When shopping for a car at auction you have many decisions to make, but one stands above all the others… how easy will it be to re-sell the car.

Assuming all cars you look at get a 5/5 rating (ha!), some cars will still move faster than others due to their market size. Buy an Accord and you have hundreds of potential buyers, pick up a Porsche and your list of shoppers just got a lot smaller.

But, and here’s the big issue, which will sell faster? Sure, you have hundreds of people who would be interested in an Accord at any given time but you’re also competing with hundreds of other Accords that are available. Conversely if you go with a Porsche you’ll have relatively few people interested in it, but will also face much less competition.

This is a tough call. And one that I recently found myself facing.

So, given the choice between a Mazda RX8 and a Nissan Altima, which would you gamble on?

Mmmm… coffee…

OK, we’re good to go now, we have coffee at the office!

It’s a minor thing I know, but having a hot cup of quality coffee on demand is a great thing. If you haven’t discovered the joys of Keurig coffee machines yet you really should give it a try. Totally awesome.

I think I’ll go make a cup now to sip on while I return some phone calls.

That’s right, I’m getting calls! Now to just get those sales rolling along…

Computer upgraded

I’ve been working on the cheap ever since starting this thing up, and one way of keeping the budget in line was to use an old iMac I had stuck in closet. Not one of those multi-colored things, but the first of the flat screen iMacs with a G5 chip in it. Not the worst computer in the world, but not very fast by today’s standards.

I really hate slow computers.

But I trudged on, using the iMac for everything that I could. Unfortunately, some things require me to use a PC with IE/ActiveX, so many days I had to stay out of the office just to get work done.

Well, enough is enough and I finally snapped. I’m now running an quad core HP system with a 23″ monitor, 8GB of ram and a big honkin hard drive. I feel much better now.

Though I will say that this keyboard totally sucks. It has to have the worst tactile feedback I’ve had to use since my Timex Sinclair. The mouse kinda sucks too. I’ll use them until I can’t stand it, cause I really don’t want to spend more money.

And the iMac? It’s now sitting on my desk with FriendFeed full screen, keeping me in tune with what’s going on in the world.

Impressive

It’s impressive.. or depressing, I haven’t decided yet.. how much family matters can interrupt ones life.

For the last month I’ve been dealing with some issues involving siblings and elder care that I wouldn’t wish on anyone. But, it appears that the hardest part is behind me and I can get back to the task at hand, trying to make a go of this biz!

A few interesting things have happened since I last posted here, but one important thing hasn’t happened, I haven’t sold the Pathfinder. This isn’t the vehicles fault as I just haven’t advertised it worth a damn.

I’ve had more fun with the auctions, which I will detail in a later post.

So I’m delayed, but not out of the biz. I haven’t given up and will start back up with documenting things as they happen. Though don’t be overly surprised if not a lot happens here over the holiday weekend.

Spam call

Ever since the business has had a phone number it’s been getting sales calls. Everyone from superpages to people wanting to sell me software, but today’s was a good one.

“Hi my name is (noise) and my husband (noise)y and I were interested in a uh automobile you have on the lot. If you could please give us a call at (redacted) we would like to come by. Just give us a call whenever you’re available.”

Great! A customer!

Wait.. where did they find that number as it’s not the one used when advertising. And wait a second.. we don’t have a lot!

Sneaky way to get a call back though, I applaud their ingenuity.

Remote works perfectly

The new remote for the Pathfinder arrived in the mail a couple of days ago and I programmed it this morning. Everything works perfectly, and it cost less than $35.

The Pathfinder is ready to sell, and in fact would probably be gone by now if some family issues hadn’t come up. No details needed, but a week long hospital stay was involved.

Let hope that this week I’ll no only get the Pathfinder off to it’s new home but will get a new horse in the stable for training.