Quote:
Originally Posted by Jandrews
.....when I sell, I simply put a VERY fair price on my items, and they invariably sell SUPER-QUICKLY. I sometimes wonder if I am giving my stuff away, but I don't waste a lot of cycles second-guessing it, and my buyers always leave satified.
|
^^This is my philosophy^^
A little about my business, and why I do business ^^this way^^
I only 'sell' about a hundred cars a year through my little shop. That is, vehicles that I bought to resell, not bought on someone's behalf. I will usually purchase less expensive vehicles when nice ones come up, as they are impossible to buy 'on demand'. It doesn't cost me much to have them around, unlike a three year old GT3. But if a previous client needs a car for their college kid, I usually have a good one.
When it is time to sell them, I research the market, and put them on the money. I do not negotiate. They usually sell within a week, usually to the first person that comes out. Now these aren't typically people who already know, like, or trust me. These are people who found the car on Craigslist. I'm very thorough in my description and disclosure. Why not? I don't have to present a perfect car, just one that is priced accordingly. I make investments to make sure they're mechanically sound, about $600 on average. I'm only open to the public two hours a week (Fridays from 12-2, posted on my door). The rest is by appointment. I'm very selective when setting appointments, and dissuade people if it doesn't sound like the right fit. So no one comes around just to kick tires.
After a couple decades studying the market mechanisms, I do not negotiate.
First, times have changed. The average used car buyer does research online before stepping foot out their door. With sooooo many vehicles to choose from, most sort by price. If you aren't in the ballpark, maybe even on the first page, you'll never get the opportunity to negotiate. So the 'start high' strategy simply doesn't work.
Second, time is money. For me, as a business, I look at cash flow and turn time. If I can make $800 selling a $3000 car and it takes me 10 days total, that's $2400 profit each month on a $2200 investment as I turned my money three times. If I tried to hold out for $3200, but it took me 15 days, I'd only make $2000 turning my money twice. So what seems like more money really isn't.
Third, time is money. If I sell a car to the first person that comes out, that's a lot less work. Showing a car three or four times to sell it wastes a lot more of my time. I'd rather spend time preparing a car for sale than showing, negotiating, or making excuses for why something's not right and fixing it for the next showing. Most of my time is spent buying the right car in the first place.
Fourth, happy customers are great advertising. I spend next to nothing on advertising. But in the industry, advertising is a huge expense. When I ran large franschised dealers, my ad budget was as much as $60,000 a month. So we figured that each unique new visitor cost us $200 just to walk through the door. Closing one out of four opportunities (industry avg) meant that it cost $800 to sell a non-repeat, non-referral customer. So retaining them was the key. And their referrals were gold. At least that's how I see it.
So, negotiating plays a large role in how happy people are with their purchase. In several studies, negotiating was the least liked component of the car buying process. By far. So eliminating it allows people to avoid the conflict. Statistically, they are twice as likely to return.
Non-negotiating dealerships have healthier bottom lines. As a negotiating customer, that may be all the evidence you need to avoid them. But you'd be wrong. Their gross profit per car is
less, but they spend less on advertising, turn cars faster, and have happier customers that return for service and future purchases. For those of you who live in the Mpls area, I helped Morries and Walser transition from negotiating stores to one-price stores. All thirty stores are more profitable and sell more cars. Some stores went from #3 to #1 in their franchised brand within the region. I also managed Tousley Ford which hasn't negotiated since 1992, also the #1 Ford dealer in region. I also ran stores for Rydell (there are some in California too) and Grossman, pioneers in non-negotiating stores. I've also run some big negotiating dealerships, and I can tell you that both work.
But I think the future is non-negotiation. Even for private parties selling their own cars.
I'm interested to hear what you all think.