MSRP vs retail pricing. How do you know whats a good deal
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. Now, 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 actually paid for the machine.
At that point, we're going to go through and we're going to add our setup and delivery costs, we bring a machine in here. If you've seen some of our other videos before, they show up here often crated in a lot of bits and, typically, we have several hours in the shop in order to prep a machine, so we're going to go through and figure out what we call our pre-delivery costs, our setup and prep costs.
From that point forward, we're going to look at delivery costs, depending on how far away you happen to be 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 exactly how markets are moving or inventories are looking at the time. We're going to apply those discounts from there.
Then once we've done that, we've taken out all the discounts that are available, we've added our setup costs, at that point, 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. You can also find, too, when we're working through those equations, a lot of guys that are really getting some of the great, great discounts that you might see floating around out there on the internet might be buying products that are either aged, demos, or rentals.
When we go into those three categories, there can be some further discounting that's offered off of 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 really 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?
The recommendation that I typically would give would be to do a little bit checking in your local area. There can be regional differences in pricing and even discounts that change from month to month, and week to week, so looking for information that you might be finding 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 typically 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 through this process, 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.