Price Check TC29D Price Check

[toolman]

I am looking to buy a TC29D Hydro, 4wd, Turf Tires and No Super Steer. With a 60" MMM and the 7308 HD FEL. The dealear qutoed me $18,750 before the dreaded taxes. Does this sound like a good price? I am still tinkering with the idea of a 72" mmm, he said it would be an additional $500. Thanks in advance for any info.

 

[spencer200]

he should include the 72" mid mount mower for that price he is very high!

 

[toolman]

Spencer. Thanks for the feedback. I got quotes from two other dealers in my area today and unfortunately they were both a couple of hundred bucks higher then my previous quotes. (i am going the wrong direction on price). None of the dealers want to haggle. Have you seen where some markets seem to dictate a much higher price? They all seem to be take it or leave it. I was hoping i could get one of the dealers to budge and go from there but it didn't work.

 

[SCOTTO]

Toolman,
I'm having the same problem. Does geographic location dictate price? I hope Spencer reads this and replies. He's a dealer ya know (sounds like a good one too). Spencer, if ya read this, where about are you located? Give us some negotiating tips!

 

[JonLeonard]

I know from reading here that tractor prices vary widely from geographic region to region. In WV, we have a dealer that has some of the very best prices Ive seen on Kubotas. (Even better than Carvers) There is also a dealer here that charges more then retail for some products. Talk about extremes.

In the Northern Mid-West I understand that John Deere dealers beat both NH and Kubota dealers by a wide margin on price, because of JD's higher markup. In my area, even with the discounts they are offering right now, JD is higher then Kubota or NH. A JD dealer just smiles and starts talking about resale value when you suggest the prices are too high.

What irks me is that (to the best of my knowledge) all dealers buy these items for exactly the same price. Why one wants substantially more for the same thing is beyond me. I will concede that shipping distance might make a slight difference in price, but it would have to be on a truck traveling by way of Brazil to justifying the thousand of dollars difference i see from shipping costs alone. The difference must either be overhead costs, or dealer greed, maybe both.

Like I said, im my area, we have some dealers willing to give a fair deal (except for JD /w3tcompact/icons/sad.gif). Maybe some more looking around is in order?

Jon

 

[DVerbarg]

I think that dealer markups will vary not only by local competition but also by what tractor segment the dealer focuses on.

For instance, if a dealer's primary bread 'n butter is large ag then compacts could tend to be a customer service add on, not worried about making money on these items. If however the dealer is primarily a consumer (as JD calls them) compact tractor sales oriented place then the dealer won't have the big bucks rolling in from the large equipment sales and will need to have somewhat healthier margins and yet try to remain competitive.

It seems that it could also vary by whether the dealer is focused on markup % or markup $. Spencer has talked about a 7% markup. As someone who used to own a retail store (health food) that feels awfully small to me. There is no way I could have survived on that small a gross margin.

What seems like a healthy margin %? How many units would a good dealership sell per month? How much would their overhead $ for that level of sales?

 

[JonLeonard]

I believe you are right in your assessment about the primary business of the dealer making a difference. The Kubota dealer that I mentioned that has such good prices is a Case construction equipment dealer primarily. Im sure Kubota compacts are just a way to generate a little extra cash flow and they dont depend on it to survive.

As a consumer though, I really dont care why a dealer has a particular price, I want the best possible deal. If a dealer pays alot of rent on a building, or doesnt keep close tabs on labor costs, etc., they will have to charge more for the equipment they sell. Im not sure that I want to buy from such a place, they could easily mismanage things to the point they have to close.

Well established dealers will likely have lower overhead costs, and thus lower prices, at least in my experience. They also have the most knowledgeable salespeople.

Jon

 

[DVerbarg]

<font color=blue>As a consumer though, I really dont care why a dealer has a particular price, I want the best possible deal....If a dealer pays alot of rent on a building...they could easily mismanage things to the point they have to close. Well established dealers will likely have lower overhead costs, and thus lower prices, at least in my experience.</font color=blue>

The dealer I bought from was the lowest in my area and was in business for around 30 years. About 11 months after I bought they went out of business. Mismanaged? Maybe, I don't know enough to pass judgement. Now I have to work with other dealers and have to create new relationships.

 

[spencer200]

A good dealer will sell at least one compact a day and 7% is more than a healthy profit when you sell this many. You are dealing with a lot more money than a health food store item so 7% is more money per sale.

 

[DVerbarg]

Wow, a good dealer sells at least one unit a day. But if an average unit sells for $20k that would be $1400 gross profit. From this the overhead of payroll, rent/mortgage, utilities, capital investments, etc seems like it would leave very little. How brutally competitive is the tractor business?

 

[MDNY]

I would have to say it can be as tough as the auto industry. However I get the feeling that the floor plan the mfg.'s provide is better than the auto industry. Figure a dealer moves allot more cars a day than a tractor dealer, and they make less (sometimes) per unit profit.

 

[spencer200]

Yeah but good dealers like us dont have a rent/or mortgage. we have no operating loans and we pay cash for everything and take advantage of all cash discount. Plus we sell other than compact tractors. Other product lines are less competitive and allow for larger margins, as far as competion it can be brutal in certain areas margins can be depressed as low as 3-5% on some deals for compact tractors. I do agree with you that a healthier margin would be nice like 10-12% but when the market does not allow it you get with the program and cut your operating expenses. You also have your parts and service business which carry larger margins and profit opportunities. This has always been the basics for all business. We have 12-15 employees year round and keep up all maintance and make a major investment in our business every year. We still pay taxes every year and have some left over for a rainy day so I guess what I am trying to say is it can be done and it can work if you are good at what you do.

 

[DVerbarg]

<font color=blue>good dealers like us dont have a rent/or mortgage</font color=blue>

Bingo! the magic words! That's how you do it. Now it makes sense how you can operate on margins that size and not lose your sanity /w3tcompact/icons/crazy.gif.

Thanks for all your input spencer200!