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MSRP vs retail pricing. How do you know what’s a good deal? – TMT


[MUSIC] It’s Thursday and I’ve
got three minutes, so we’re going to run through
a Messick’s Three-Minute Thursday, and have a short
conversation today about pricing tractors based off of MSRP. [MUSIC] I personally frequent internet
message boards and Facebook groups for tractor owners and buyers,
and one of the things I frequently see done is guys taking
a look at what a company’s MSRP is and the quote that they were
given, and trying to work through that to figure out if they’re
getting a good deal or not. Frequently you’ll see guys saying,
“If you’re buying tractor brand X and you’re getting 12% off,
you’re doing pretty well.” And from our seat, that seems
a little silly sometimes. As a tractor and equipment dealer,
we typically have no idea what MSRP typically is,
we don’t pick out an MSRP price for a tractor and price at that or
knock 5% off or anything like that. We’re really wholly unaware.
The pricing process that we go through is really
a lot more nuanced than that. When we go through and do pricing
at the dealership level, we typically start with our invoice, with the price that
we paid for the machine. We’re going to go through
and add our setup and delivery costs,
we bring a machine in here. If you’ve seen some of
our videos before, they show up here often crated
in a lot of bits and, typically, we have several hours in
the shop to prep a machine. We’re going to go through
and figure out what we call our pre-delivery costs,
setup and prep costs. We’re going to look
at delivery costs, depending on how far
you are from a dealership. Trucking time costs money
and so we’ll figure that into our cost typically, and then we’re
going to apply manufacturer programs. There’s a lot of differentiation
between product series and manufacturers on how much we’re
receiving in manufacturer programs. On a lot of high-term products,
it’s nothing at all, but some machines can have a lot of
further discounting applied to them, depending on how markets are moving
or inventories are looking. We’ll apply those
discounts from there. Once we’ve done it, taken out
all discounts, we’ve added our setup costs, we’re going
to look to add our margin and come up a little
bit from that point. While we work through those numbers
and nowhere are we ever going to this mythical MSRP number
and working from that point. When we’re working
through the equations, a lot of guys that are getting some great discounts might
be buying products that are either aged,
demos, or rentals. When we go into the three categories,
there can be some further discounting offered off a machine that’s
not necessarily applied to something that just
showed up on the lot. You’ve got to take those
scenarios with a grain of salt. When you see somebody throw out
some aggressive numbers out there for certain pricing, there
might be a little bit more to it than what you
might be expecting. How do you know if you’re
getting a good deal? My recommendation is do
a checking in your local area. There can be regional differences in
pricing and discounts that change from month to month, and week
to week, so the information that you may find on the internet is
not necessarily going to give you the most current or
correct information, so check with
a couple local dealers. Take some steps to keep us honest. If you’re a better dealer,
like we like to think we are– we know where the local market
is and where other dealers are and you’re usually going
to find good dealers being very close in
price to one another. So if we can help you,
if you’re in our local area here, we can help sell you a tractor. Give us a call, we’re
available at 800 222 3373 or online at Messicks.com. [MUSIC]

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