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Thread: Msrp ?

  1. #61
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    Quote Originally Posted by ClassicVW View Post
    I don't know how much it relates to today, but many years ago while in HS/College I worked at an auto parts business. (New parts). The best customers (like car dealerships) received a 30-40% discount on everything, so the markup had to be humongous.
    Having never worked with cars I can't address your example beyond a few facts. However, most OEM motorcycle "hard" (not accessories as they are marked up less usually) parts provide for a gross profit (GP) margin of high 20's to 40% gross profit margin. Much of the lower priced parts allow for the 40% GP.

    1) If you take a dealer net of $1.00 and use a 1.70 multiplier you arrive at $1.70 retail value. A 1.7 multiplier allows for a 40% GP. Using your self-stated 40% discount you would be retailing the product for $1.02. With overhead a substantial loss.

    2) Using your 30% discount you would be retailing the product for $1.19. Throw overhead into the picture and you're way too close to break even to even consider.

    Neither of the above examples take merchant account fees into consideration. The 40% discount would put you at a loss and the 30% would probably be a loss as well. A few mistakes in inventory which cannot be returned can turn the whole thing upside down.

    Even a 10% discount off a 40% GP results in a 20% (rounded) drop in GP when compared to full retail. Pretty big differences. The margin's have decreased through the years and unless you run a tight ship you can expect problems. The whole motorcycle clothing arena is nothing but a pure joke so we won't get into that.

    Auto parts business has a number of price levels depending on where in the chain the parts house is buying their inventory. This simply doesn't exist in the motorcycle business.

    NOTE: I did this while on-hold so hopefully my math is correct.

  2. #62
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    Quote Originally Posted by billy walker View Post
    Do people here on the forum think one-price (no haggling) motorcycles would be beneficial?
    I have developed my own "no haggling" system that I use for both cars and bikes. First I do the research. Then I go to the dealer (or seller) and say, "I want THAT vehicle. I'm willing to pay THIS amount for it. If you can sell it for this amount, then you should. If you can't sell it for this amount, then just tell me now and I will keep looking." No time wasted on either side. The trick is not to get attached to any vehicle before you own it.
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    When I bought my Corvette in 1990, GM employees and their families could still buy cars at "dealer net" (which is quite a bit below invoice). We could obtain a list of all vehicles and the dealer net percentage off of MSRP.
    That percentage varied quite a bit from model to model. For both the Corvette and the Cadillac Allante it was the highest at 20% for the base vehicle and all options. Other, cheaper vehicles went down significantly as low as 12% off the base vehicle price. Most options were still 20% off

  4. #64
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    Quote Originally Posted by themayer View Post
    I have developed my own "no haggling" system that I use for both cars and bikes. First I do the research. Then I go to the dealer (or seller) and say, "I want THAT vehicle. I'm willing to pay THIS amount for it. If you can sell it for this amount, then you should. If you can't sell it for this amount, then just tell me now and I will keep looking." No time wasted on either side. The trick is not to get attached to any vehicle before you own it.
    Sounds like an intelligent way to buy. How are you determining your offer?

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    Quote Originally Posted by billy walker View Post
    OK, but 2 questions:
    1) What percentage was the perishable marked up?
    2) Was the perishable a mass market item or specialized small market?
    2) Yes, a mass market items
    1) Varied with industry and markets. What is the point of your question and how would my answering it move the thread along?
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    Quote Originally Posted by mika View Post
    2) Yes, a mass market items
    1) Varied with industry and markets. What is the point of your question and how would my answering it move the thread along?
    I agree mika, apparently a case of questioning for the sake of questioning. I'll answer that in kind...no real data about this industry's "backroom" operations, but one perishable product available throughout the US, for mass markets, with a minimum 1,000% markup....theater popcorn. Not sure how this furthers an MSRP thread either.
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  7. #67
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    Quote Originally Posted by mika View Post
    2) Yes, a mass market items
    1) Varied with industry and markets. What is the point of your question and how would my answering it move the thread along?
    There is a reason behind the question.

    The motorcycle industry is a fairly low profit margin industry especially given the fact that it is a true speciality industry at least in the USA. On a nationwide basis there is no such thing as selling major quantity as there is in automotive. I was just interested in seeing profit margins from other industry's and how they compared and whether a given industry had mass market appeal or was considered speciality as I assume the margins would probably be different between the two.

    We run an extremely transparent store. I've operated that way for maybe 2 decades. Anyone who walks in the door is welcome to see dealer cost on anything. The margin of profit is nothing that needs to be hidden and I find it to be an educational tool as many people tend to assume we make more than reality.

  8. #68
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    Quote Originally Posted by Motodan View Post
    I agree mika, apparently a case of questioning for the sake of questioning. .......
    I agree... the question was asked for the sake of questioning in wondering how other industries mark-up in order to discount off MSRP. Low markups mean small discounts. Large discounts I assume are operating at fatter margins than this industry allows. Just stuff for my own head as I find it interesting.

  9. #69
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    Quote Originally Posted by mika View Post
    1) Varied with industry and markets. What is the point of your question and how would my answering it move the thread along?
    By the way you can ignore this question if you feel it's none of my business.

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    Quote Originally Posted by ClassicVW View Post
    That would have to be an iron-clad rule from the manufacturer so no dealer could deviate from that way. I haven't heard of any dealers asking for that. It did work for Saturn and does work presently for Scion though.
    There are other cage dealers doing the so called one price thing. It doesn't stand up in the true sense as the customer often trades & the "wholesale" price the dealer pays for the trade in varies wildly. I have run into several Toyota dealers that do that "system" & there are other brands around. IMO, all it does is "take away my bargaining rights" to the extent that it there are no really "good deals" going to come my way at that dealership. In truthfulness, it's usually that way anyway most vehicle stores as the seller controls the price point other than your right of refusal to buy. Whats the difference as an e.g., if the dealer advertises: "so much above/below invoice"? That's a price point just like one price purports to be.
    I don't feel that the Saturn sales system caused that brand to go away. Scion is made by Toyota a sold at the same dealers as their other stuff?
    "If I had my life to live over, I'd dare to make more mistakes next time...I'd relax,I'd limber up... I would take fewer things seriously...take more chances... take more trips...climb more mountains...swim more rivers...eat more ice cream." Jorge Luis Borges at age 85.

  11. #71
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    Quote Originally Posted by billy walker View Post
    A good salesperson will move a number of units at MSRP although MSRP is a joke at best and a possible way to piss off people for those unable to negotiate well or feel uncomfortable with negotiating. Depending on the variables and your business model an average of $1k to $1.3k unit gross profit will typically keep the doors open. It's difficult to overcome your average negotiating shopper even with one-price because they don't believe you can't negotiate it. One-price has failed for the most part in the automotive industry although like anything there are a few who make it work.
    You hit on the crux of any sales system,(and I certainly agree that I am NOT! a sales type!!! but have been a student of human behavior)i.e., "feel uncomfortable with negotiating" which equals the opening the sales type needs to make their $$$! When a person simply lacks the desire to haggle or "find" the bargains out there they will lose money to the person that will, pretty simple, huh? The less gregarious amongst us pay more(maybe they're happier?) and others win the day?
    One Toyota dealer in NC has had the 1-price system for years. If you shop aggressively it doesn't stack up to haggling or better yet to looking until you find a dealer that has a model where they want volume vs. price point. We have a dealer in Toyo dealer Nicholasville, KY whose motto is "where price sells cars" & I have tried on each of my 4 Tundras to buy there(close by) & they have been off the mark by a range of several thousand$$$ each time. All of which proves that for the most part the sellers can say whatever they want to attract you in their store-I suppose many lawyers could make far more $$$ selling cars.
    "If I had my life to live over, I'd dare to make more mistakes next time...I'd relax,I'd limber up... I would take fewer things seriously...take more chances... take more trips...climb more mountains...swim more rivers...eat more ice cream." Jorge Luis Borges at age 85.

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    Quote Originally Posted by Motodan View Post
    Have to disagree to an extent...since 2007, seniority was very much in use and still is today....it denotes who'll be "let go" next! (tongue-in-cheek) LOL
    The "rank & tenure" scale under which I was payed as a teacher,counselor,administrator had years of service down one side & educational attainments down the other , which =$$$. When I worked for Goodyear the retirement amt.,shift/job bidding,vacations & overtime was based on years of service(with zero for those that leave & zero COL) which means seniority. I am appalled at some of the "letting go" I see in our society these days. They turn em loose with $$$pkgs$$ because they are incompetent. Boards that don't oversee take our money and pay them to leave then in the case of an area development district near me they hire them as a $8k/mo consultant after they are fired Seniority may be more attractive?
    My "let go" moment got me a tiny buy out & I moved on to a better place & made space for a bargain hire.
    "If I had my life to live over, I'd dare to make more mistakes next time...I'd relax,I'd limber up... I would take fewer things seriously...take more chances... take more trips...climb more mountains...swim more rivers...eat more ice cream." Jorge Luis Borges at age 85.

  13. #73
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    Quote Originally Posted by billy walker View Post
    I agree... the question was asked for the sake of questioning in wondering how other industries mark-up in order to discount off MSRP. Low markups mean small discounts. Large discounts I assume are operating at fatter margins than this industry allows. Just stuff for my own head as I find it interesting.
    Sorry but, not sure I've received a discount on theater popcorn? However, on second thought may be so, given the $4.50 for 20 ounces bag compared to an $8.50 40-ounce "economy" sized "bucket". Now I only need to apply this popcorn pricing/discounting model to motorcycle MSRP discounting....there must be something to learn from this?
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  14. #74
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    Quote Originally Posted by ClassicVW View Post
    I don't know how much it relates to today, but many years ago while in HS/College I worked at an auto parts business. (New parts). The best customers (like car dealerships) received a 30-40% discount on everything, so the markup had to be humongous.
    I had that same experience in my college days. I worked at a local garage and a national auto parts chain would sell us mufflers and such with an invoice price that was 2X the dealer cost. When a customer would question the cost of a repair, the shop owner would simply produce the invoice from the parts distributor and show that the labor costs were peanuts and his profit was nearly zero................

    From another industry, home building, customer costs are often calculated as a fixed percentage mark-up on all material costs plus the labor costs. Accordingly, the customer has an incentive to buy the lowest priced material to build the largest house........which is a bit perverse.
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  15. #75
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    Quote Originally Posted by kantuckid View Post
    The "rank & tenure" scale under which I was payed as a teacher,counselor,administrator had years of service down one side & educational attainments down the other , which =$$$. When I worked for Goodyear the retirement amt.,shift/job bidding,vacations & overtime was based on years of service(with zero for those that leave & zero COL) which means seniority. I am appalled at some of the "letting go" I see in our society these days. They turn em loose with $$$pkgs$$ because they are incompetent. Boards that don't oversee take our money and pay them to leave then in the case of an area development district near me they hire them as a $8k/mo consultant after they are fired Seniority may be more attractive?
    My "let go" moment got me a tiny buy out & I moved on to a better place & made space for a bargain hire.
    That seems to be pretty much what we have turned out in our generation. A long time ago people that didn't even graduate high school pretty much built America. Now you have MBA's schooled to the hilt on profitability and take-overs but severly lacking in ethics and the let's do what is right mentality. We can be real proud of our generation (NOT). Greed has always existed and, as an old guy myself, we always like to declare how the old day's were better. We have been exceptionally good at building a society of 2-wage earner families that have the capability to purchase and/or finance far more "stuff" then we'll ever need.

    At the same time we toss God out of the classroom as if it's some kind of a disease. Even a non-believer will typically have no issues with what is taught in the majority of the Bible. So we go on to become successful at bringing up many of our children to be fully educated on how to get every thin dime out of everyone all the while forgetting about doing what is right. People have remarked on this very forum that is how capitalism works. Capitalism only works that way if you choose to operate that way. Believe it or not you can actually operate a profitable business while maintaining morals and integrity.

    That might comes as a shocker to a gentleman I worked for in the 70's. This individual owned a Yamaha dealership and would tell employees right to their face you cannot operate a business honestly and stay in business. And then we would go on and steal money from customers by charging for parts never installed. Quite a shameful part of my career a short time after I graduated high school. His moral character, or lack thereof, became one of the larger motivations in my life to simply do what is right. And be profitable at the same time. Imagine that.

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