Best Negotiation Technique

bmac · May 22, 2003

Dave,
Please don't take this the wrong way, but why the games? Customer comes in and asks how much a tractor costs, why not just tell him the price? Better yet, why not have the actual sales price marked on each item at your store? Why do customers have to jump through hoops? Just give us the price you will sell the tractor for and if we don't like it we'll go somewhere else.

You know, Saturn turned the automobile market around when they started marking their autos with a no haggle price. Sure, lots of dealers still do it your way, but many are changing to a model similar to Saturn's. Why? Because many customers find the traditional way of buying a car offensive. When I am in the market for a vehicle, I give them one chance for an acceptable price. Too high and I walk. Of course, I go in armed with pricing information and have an idea of what I think a fair price is.

Now, there are those who enjoy the gamesmanship of trying to squeeze every penny they can out of the deal. But I would bet that the vast majority of your customers would rather have a fair price posted on your merchandise than to have to go through the hassle of negotiations.

OK, I'm done ranting. Anyone agree with this?

Gary_in_Indiana · May 23, 2003

If you don't hear from a dealer with a price on the package within a week, then bug them by e-mail or phone. 

I might suggest contacting someone else at the dealership. If you were talking with a manager, go to the owner or a salesman, etc. If it's a small Mom & Pop type operation that becomes more difficult.

Gary_in_Indiana · May 23, 2003

I'm done ranting. Anyone agree with this? 

I'm sure this won't be a popular response, but there is another way to look at this. To the best of my knowledge, these tractors all have an MSRP so why not just pay that for the tractor if you're interested in getting 'one price' on it and avoiding the haggling? That's a sure solution and levels the playing field among dealers of the same brand if not between competing brands. It alsot allows you to make your choice solely on your comfort with the dealer and the service you anticipate he'll provide after the sale.

I'm sure no one wants to do that, of course, but I just thought I would point out that there's not a dealer around who would be unhappy if you did. /forums/images/graemlins/wink.gif /forums/images/graemlins/smile.gif /forums/images/graemlins/grin.gif That would certainly eliminate your concern over the haggling, too. /forums/images/graemlins/smile.gif

Given my background, I probably have a different perspective on this so I want to share a bit of it here. From the dealer's viewpoint, the customer who comes in and tries to wring every last nickel out of a transaction is seldom a customer you want. Not only is it unprofitable business on the front end, but that customer is seldom happy with anything you do after that, either. In the vast majority of cases, they'll do nothing but continue to cost you money and tarnish your reputation unfairly. There's no percentage in that at all. A dealer is better off letting that customer walk down the road and buy elsewhere.

As a customer, you should want your dealer to sell his wares for enough money that he can cover his overhead, maintain and improve his facilities and staff and make a profit. That way he'll continue to be successful in business so that if and when there is a problem with which you need help down the road, he'll be there ready, willing and able to take care of it for you as you want him to do. /forums/images/graemlins/smile.gif

DavesTractor · May 23, 2003

bmac, you misunderstood my post. I guess my post wasn't very clear. I don't play games, and I meant to make that point, but in re-reading my post I can see how I did not put that across well. I'll try again.

We have a standard price for every item on the lot, and it is significantly off MSRP, and it is intended as the actual selling price and normally is. However if a guy comes in and wants to buy a new Branson with a loader, then decides he wants a backhoe and about 6 implements, he may feel his purchase is significant enough to warrant a little better price, or perhaps free delivery, maybe a free first service, or whatever. That is a reasonable way for a buyer to think and as a seller we can reduce our percentage of margin a little on a big package and still have a good bottom line. That is just one example.

For most people there needs to be a little flexibility on price. We all say we want one price, no haggle deals, but when it comes right down to it, most of us want to make the best deal we can and there is absolutely nothing wrong with a little negotiation. It need not be a big deal, and at our business it isn't gamemanship, just a little flexibility.

In any event, the purchase process should be simple, friendly, and low pressure.

Rocketman · May 23, 2003

( From the dealer's viewpoint, the customer who comes in and tries to wring every last nickel out of a transaction is seldom a customer you want. Not only is it unprofitable business on the front end, but that customer is seldom happy with anything you do after that, either. In the vast majority of cases, they'll do nothing but continue to cost you money and tarnish your reputation unfairly. There's no percentage in that at all. A dealer is better off letting that customer walk down the road and buy elsewhere.
) 

Gary you have hit the nail on the head. In a previous life, I owned a small tractor dealership here in Texas (sold it lock stock and barrel in 1997). Our approach was to establish and maintain a "long term" relationship with our customers......it was just good for business and our reputation. If the prospective customer seemed to want to squeeze every penney out of the deal, I would generaly walk from it.

Slobud: my best advice to you for price negotiation is to purchase in the "Off" season. When the dealership has bills to pay, payroll to meet, and iron in the yard.......the price always seems a little more flexible.

dourobob · May 23, 2003

My experience has been a little different - it is also a little older. In 1985 my wife saw me trying to move 900 pound round bales with a 3PH on a 1951 Ferguson TEA 2085 (I had to most amazing power steering you could imagine /forums/images/graemlins/grin.gif) and said "You have to get a bigger tractor - that just is NOT safe." Of course she was right.

I talked to my neighbours, tried to get some idea of my needs (no TBN forums then /forums/images/graemlins/frown.gif) and visited dealers - green, blue, red.

When I finally narrowed it down, based on my idea of what I needed/wanted, my CFO went in to negotiate the price. She is an excellent negotiator and is very clear about laying the cards on the table. My recollection is she asked such straightforward questions as: "What is your cost on the tractor?", "What do you think is a fair profit based on the three hours you have invested in dealing with us as customers?", "What is your best price?".
Granted this was a time when there were four tractor dealerships within 3 miles of each other, competition between dealers was stiff (none of those dealers are in business today) and I don't think any of these dealers had negotiated with a woman before. I did the assessment of the machines and she did the financial work. I believe we ended up getting a very good price which was fair to both ourselves and the dealer who was also looking at the longer term potential for service and the purchase of other implements.

FWIW

Bob

rancar · May 23, 2003

Rocketman...

"...my best advice to you for price negotiation is to purchase in the "Off" season..." 

How do you define the "Off" season?

...Bob

r0GuE · May 23, 2003

( A dealer is better off letting that customer walk down the road and buy elsewhere. )

Uh huh... do that every time and see how long it takes to go out of bussiness. My Dad was a salesman for 45 years and if there's one thing I'll give him it is that he KNOWS how to run a business. He ALWAYS said,.. “NEVER let the other guy make a dime”. Now he didn't sell tractors, but I think the model applies. If everyone buys from you because you don't let them walk over $300 or even $1000, then you will get more secondary sales. As well your competitor will be forced to go higher the next time because he won’t do the volume. Your costs of overhead are not increased by making the sale. Therefore, if you can get a few hundred off a tightwad, you are $200 closer to paying your overhead than you would be if the tightwad goes next door.

( As a customer, you should want your dealer to sell his wares for enough money that he can cover his overhead, maintain and improve his facilities and staff and make a profit. )

I'm not trying to be rude (sometimes I come off that way in my posts, even when I read them /forums/images/graemlins/smile.gif BUT,, to your point above, That's not my problem. My problem is to make sure that MY customers are happy and are provided good service so that they don't go somewhere else. My dealer’s problem is to make ME happy. At the point of sale, my happiness is based on price. That is what a sale is. How much of my wealth do I have to relinquish for this commodity. That IS what a tractor is. It is not a one of a kind painting, or a service like house painting. It is a unit which can be obtained in may places. I guess if you live where there is only one dealership every 300 miles, I would just buy from whoever is closest because service would be an issue. But if you (like me) live where there is a dealership in every town (practically), then my money is on the low guy. The warrantee on these things is so short that by the time you actually need something done, you will find yourself footing the bill anyway. Then you can shop them out again, or choose the one with the best service department. Service is NOT a commodity. I’m sure they would love your $55 and hour regardless of where the tractor came from.

Woodbeef · May 23, 2003

Well now I'd have to say.........The best thing to do is be an informed purchser. Go into the dealership knowing what you want,and what a good realistic price is for both you and the dealer. So what if it costs a bit more to buy localy.......at least you can talk face to face with a real person(which sometimes is priceless!!). You don't have to finance the dealership on your one purchase. But then again if you do not pay a fair price how can you expect the dealer to be there down the road? Remember the dealer is a businessman that needs your business,just like you need him to survive for the long run. So in a nut shell if you go in with a honest realistic price for what you want,you have a much better chance of leaving with that new tractor you were looking for when you arrived!!

rancar · May 23, 2003

"...From the dealer's viewpoint, the customer who comes in and tries to wring every last nickel out of a transaction is seldom a customer you want..." 

Fully agree. And to expand a bit upon my previous post.....when I hand that shopping list to the dealers I just tell them, "Give me your best price!" I realize dealers have to earn a profit on each deal just to stay in business and to earn a decent living and it just seems right for the customer to grant them that privilage of earning a buck like everyone else who works hard for a living. Knowing then the dealer has given me their best price, I then take them at their word rather than always second guessing. One way though for the customer to avoid the haggling and second guessing but still try to get a 'good' deal is to do this comparison shopping where one can compare and evaluate one tractor package price against another. Knowing line item prices and how dealers provided them, a customer then is in a much better position to intelligently choose among dealers that will give them the most competitive price as well as perceived warranty coverage, service considerations, and the sense of a 'fair' deal.

...Bob