Re: Fair price....

[Otterboy <jong@xxxxxxxxxxxx>]

>>>>> "Eric" == Eric Sheley <eric@xxxxxxxxxx> writes:

  Eric> First, let me preface this message with the following - I am not making 
  Eric> these comments to single anyone out for attack - these are just my 
  Eric> thoughts.....

  I started the whole damn thing, so I guess I'm included in
that, and I do not read this as an attack at all, but you do bring up
some interesting points that are certainly relevant.   This will
probably go WAAAY off topic, so I will post this, then probably if
there is further discussion, we can take it off the list.

  Eric> As I read the recent thread on ST pricing, I couldn't help but wonder, "who 
  Eric> are you (addressed to no one in particular) to determine what is an 
  Eric> acceptable profit margin for the dealer ?"

  This is an EXCELLENT point.  Who am I to determine what an
acceptable profit margin for the dealer is?  I guess I like to know
what I am paying for when I fork over 10-15 grand for something.  I
like to know

     o what the base cost of the item is
     o what the markup is
     o what all the associated fees are for

  I also know (for instance) that many factories will pay dealers to
uncrate and build up the bikes.  If this is the case, and "uncrating
and buildup" is included as a fee, then I how do I know that at that
crucial first service I won't be charged for "polishing the carb
throats" on a fuel injected bike?

  I don't like fighting with dealers, and establishing some basic,
reasonable markup, and then getting all the "fees" explained and
established allows me to determine the relative honesty of a given
dealer.  I have been burned by car dealers in the past (hence this
weight chip on my shoulder), and I cannot take the sales managers word 
for it.  If I am dealt with in an up-front manner, all the fees are
explained, and I am satisfied with it, then I will buy the bike.

  I guess I don't need to establish what a reasonable markup on a bike
is, but I would like to know *between dealers* what the markup
difference is.  I will drive 30-60 minutes out of my way to get
service done at a dealer that didn't gouge me when I bought it.

  I bought my Suzuki from Aurora Suzuki here in Seattle, WA (USA), was 
dealt with very reasonably, and would unreservedly recommend them for
someone looking for a fair price and good service, discounts on
accessories if you buy your bike there, etc etc.  (but they don't sell 
Triumphs, damn!  :))

  Eric> I saw numbers batted around and the figure of 10% used repeatedly. 
  Eric> Obviously you have a much better idea of your dealers financial standing 
  Eric> than the average consumer...... 

  I try to make informed decisions when blowing 12K on a admittedly
gorgeous ride...

  Eric> How much does it cost the dealer to get the bike (freight is
  Eric> charged to US dealers) and to prep it (oil and setup)? 
  
I'll take these point by point, because this is exactly what I am
concerned with when buying a new bike!  I am perfectly willing to pay
freight on it.  If the factory pays for oil and setup (which many do
I've been led to understand), then I am not willing to pay for it.

  Eric> Do you have any idea how much he pays his sales staff ? Who
  Eric> pays the costs of salaries and overhead during the slow times
  Eric> of the year (or should they just lay everyone off during the
  Eric> slow times) ?

  These are problems with any type of retail business.  There have
been plenty of articles dealing with the fact that dealerships can do
quite nicely for themselves on a certain markup (10-15%).  I certainly
want to know if they are marking up more, since that may indicate
unsound business practices.  I plan to have my Sprint for a long time,
and I want a good sound dealer behind it.  A 30% markup indicates to
me that the dealer could be making better business decisions, instead
of trying to make it up in higher costs to the consumer.  I think this
is as good a gauge as any to the health of your local dealer.  If they
are marking the price up beyond what is reasonable (where 'reasonable'
is defined by articles in publications like MCN, which I personally
have chosen to trust for a lot of my information), then the longevity
and fairness of subsequent dealings with them is questionable.

  Eric> industry has some similar types of programs, they are no where
  Eric> near the level found in the auto industry. And of course there
  Eric> is the issue of volume - lower margins can be sustained if the
  Eric> volume is high enough - but look at an average car dealership
  Eric> and compare the number of units sold per month with the
  Eric> average motorcycle dealership......

  This is definitely true, and I am very willing to pay a higher
markup on a motorcycle than I am a car.

  Eric> Also, volume has a limit - the point was made that it was
  Eric> better to sell 3 bikes at 500 profit than 1 bike at 1500. That
  Eric> may be true, IF there is sufficient volume (demand) to support
  Eric> those lower margins. However dropping the price to that level
  Eric> does not guarantee a three fold increase in sales - if the
  Eric> market is 2 purchases at the $9500 price point in a month, who
  Eric> is better off, the dealer that sold one with $1,500 profit or
  Eric> the dealer that sold two and only has $1,000 in profit ?


   I guess I would say that the dealer that sold two for $1000 profit
is better off on the long term.  The long term viability of a dealer
is on service, accessories, and the like.  The cheaper initial profit
of the dealer that sold two will pay off *in the long term*.  I think
that was the point made in the previous mail. 

  Eric> I was in a position to shop between two dealers when I bought
  Eric> my ST and could have easily pitted one against the other and
  Eric> knocked more off my purchase price. I then weighed that
  Eric> against how I had been treated by the dealer in the past and
  Eric> what I expected from them in the future. For me it was an easy
  Eric> choice.... my dealer had earned my business.

  Then you made the perfect choice!  I would have most certainly have
done the same thing.  When I talk about shopping around, I don't mean
pitting dealers against each other directly (hopping from one to other 
with written estimates, or some other such ball-breaking practice!),
rather I mean pitting them both against my concept of getting a fair
price, and fair treatment.

  Eric> Knowing what I know now about the ST, I would be happy paying
  Eric> full retail for the bike and the accessories....... if that
  Eric> makes me a "sucker" that's fine - at least I am a sucker with
  Eric> a big ass grin on my face riding down the open road........

  I was probably over-excited when I wrote previous e-mails about this 
topic.  I apologize for implying that anyone was a "sucker".
Responding to your e-mail has clarified a lot in my own head about
what I am looking for in a dealer.

  Oh, and I'm jealous as hell that your ass in the a Sprint saddle,
and mine isn't.  :)

  I *think* we are in violent agreement, but I was slightly
inflammatory in my initial postings about this having just come away
from a dealer with a bitter taste on my tongue...
- -- 
- -jong

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