discounting on state contracts

[onegreenday]

I came across an Alabama state contract to buy NH tractors and one of the dealers sold a new NH TL80A for almost 40% off list price. $25,750 list and sold to the state for $15,455.

Seems like a lot off list. How many percent off could a regular joe get? Thanks.

 

[jinman]

If the regular joe bought as many tractors as the state, he could get the same price. /forums/images/graemlins/smile.gif

Seriously, I think you will find 15% to be pretty common and 20% to be rare, but available in some areas. If I could find a dealer I liked and he offered me 15% off, he'd have a new customer. I would not try to make my local dealer meet any price I found on the internet. /forums/images/graemlins/smirk.gif

 

[woodlot]

I saw a dealers contract for a state neighboring AL that offered the state a 34.66% discount off list. Unless I just plain don't understand how this contracting works I've concluded the avj. joe pays WAY over and above what would be considered a reasonable profit margin for the dealer. Volume alone should not explain such a huge difference in price.

 

[spencer200]

New Holland issues a special discount to state agencies that is subtracted from the standard invoice at time of settlement this is called buying the business. Believe me the standard invoice does not contain 34-40% discounts!

 

[Inspector507]

Must be a manufacturers incentive to get a greater number of a certain color tractor out on the road side

 

[hazmat]

<font color="blue">Must be a manufacturers incentive to get a greater number of a certain color tractor out on the road side </font>

In Mass they paint them all yellow. /forums/images/graemlins/crazy.gif

Maybe they want to keep the production numbers up? Same way automakers sell tons of cars to rental agencies...

 

[LarryRB]

I know my father in law had to jump the hoop pf fire when he sold and International dump to a local town.. He had to ask IH for special pricing to compete with Ford at the time... Most all instances, IH would respond with a couple thousand less to him which, he obviously had to push forward to whatever town was buying.. The worse was when I was a selectnan in town and had to deal with tractor mfg. One of them, a very popular color, was famous for bait and switch on a town bid.. they tried it with me and I wouldn't acfept their bids...

 

[MikePA]

<font color="blue"> Unless I just plain don't understand how this contracting works </font>
As Spencer200 said
It could be NH/dealer simply wanting to buy the business or

Could be a long term contract where NH/dealer is willing to take a loss on the sale of the tractors because they'll make it up somewhere else in some other contracted for service

Could be the local dealer has a service department they want to keep employed and will make the money up there.

Could be NH has inventory they want to get rid of

Could be AL agreed to leave the tractors NH blue and NH/dealer sees this as free advertising.

Lots of possible explanations. The least likely, IMO. is there's an almost 35% profit margin.

 

[woodlot]

Those are all good points. IMO only one is vaild, the one where NH choses to sell excess inventory at a loss. If the colaboration of NH and the dealer can sell a 25,000 tractor to an end user (in this case the state) for 16,335 it seems intuitively obvious that there is a huge profit being made somewhere by someone. Unless of course it is being sold for a loss. Now, I'm all about capitalism, and a lesse-fair society, and free market economics, I'm just bitter that I can't get a new tractor for less $$$$$. The members of TBN should consider forming a "BUYING GROUP" and elect a president to negotiate contratcts for the members. We could have greater buying power than the state. I want some of the inventory being sold at a loss too!

 

[MessickFarmEqu]

Every manufacturer works like this. They extend an extra discount when you are in bidding situations. Non-profits also get this discount. Some of the terms are very aggressive and force the dealer to take almost no margin in order to get the max discount. The whole process is far too time consuming and complicated for the margin you make off the sale. The hope is to get the long term service work.