Pricing, Specifically Book Values

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Pricing, Specifically Book Values

Postby cubaautosales.8238 » Sun Apr 30, 2017 2:26 pm

So I'm probably opening a can of worms here. I am interested in hearing how some of you guys come up with pricing. It seems to me like back in the day, a bhph car lot had a purpose and that was offering transportation to those who couldn't get it elsewhere. It was risky, so the prices were higher to justify said risk. Now days with all the online pricing tools, mobile apps, "educated buyers" etc. Not to mention trash talk about bhph just taking advantage of people, fair lending practices, etc. I run across nearly every day someone who thinks we are over priced simply because we have a sign up that says we're a car dealership, specifically one that says we finance in house. So, they just assume we're over-priced.

Our business is going through a little case of identity crisis. We are primarily a BHPH dealer. However, we have sent some deals to outside finance companies as well. We also like to do some cash sales. I've also piddled with selling some fixer-upper type vehicles and some classics. Basically, we've been all over the spectrum trying to find what works best. I'm a sucker for cash deals and those deals where a local lender puts a full price check in my hand. But our bread and butter is that BHPH note each month. So I'm torn. I cannot find a happy medium when pricing to satisfy the BHPH guy, the Cash guy and the Outside Finance guy.

Honestly, we cannot stay in business as a BHPH dealer offering competitive pricing. I just can't wait 1-2 years to start seeing a return and that return be less than a single note. Then have to factor in losses. We don't have the capital for that. Obviously, we have to price accordingly. Most of our inventory retails around $5k we have some that start at $2995 up to $9995. $5k being our sweet spot. We normally charge 15-25% interest and then we have people complain that that's too high!

We're usually into the deal about $2500-$3000 after reconditioning, taking down payment, then paying our other expenses (taxes, an outside warranty if one is applied, gps, etc) Typically we price our cars ABOUT what NADA says retail should be, some times a little over. Some times more than just a little over, depending on how deep we are into the vehicle. Then you have that "educated by an app" customer come onto the lot and talk trash because that one car is so higher than "book value."

But when I look an neighboring towns, they seem to price as high as the sky, especially Car Mart. But everyday more and more customers go to these bigger lots and before they know it they are driving off in a car. I don't see anyone complaining to Car-Mart or other dealers in town about their $10k 2004 Buick LeSabre. But they come give me crap if mine is priced $4995. It's enough to make your head spin.

How are you guys pricing your cars?
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Re: Pricing, Specifically Book Values

Postby Josh.9699 » Sun May 21, 2017 1:41 pm

I usually charge about a 1000 dollars over KBB retail value.
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Re: Pricing, Specifically Book Values

Postby Josh.9699 » Sun May 21, 2017 1:42 pm

As long as I can double my money I'm happy
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Re: Pricing, Specifically Book Values

Postby Brownings.5298 » Tue May 23, 2017 1:28 pm

I feel your pain, we are all fighting a very similar battle and I don't believe there is any single answer. Like you, everyone's business model is a little different. I am strictly BHPH with a few cash deals through the year. When it comes to pricing I do try to be competitive but we have to make money and every dealer needs to know how much that is.

I will tell you that due to today's regulation we do only offer ONE Price, cash or finance is doesn't matter, the price is the same.

A tool I use is vAuto which allows me to have access to MMR, KBB, NADA, and Carfax. With this tool and the knowledge of how our model works I come up with a price.

Hope this helps.
Justin Browning
Browning's Reliable Cars & Trucks
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