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Infinite Prospects, Inc. (Adam Ross)

Infinite Prospects, Inc. (Adam Ross)

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How should dealerships price new cars online?

As an Automotive Internet Sales Expert, I am often asked:

How should I price my cars online for my dealership?

Dealerships need to have a strategy for setting markup on new vehicle pricing online. Of course, consumers want to see the lowest price for the car they want. So... give them what they want!

Remember that front-end gross is only one of the many ways to profit from a sale: you also have the Accessories/Warranty avenue, plus the potential of profiting from a trade-in. That doesn't even count the future service revenue or ancillary profit received from any referrals the consumer may send you.

The best practice I've seen, after years of experience, research and thought, is:

Mirror-image the markup and pricing offered in your traditional offline advertising, most often your newspaper ad.

Mirror-imaging your traditional advertising pricing gives the consumer a consistent, trustworthy experience. It's also legally and ethically the right way to treat a customer.

Many consumers shop using a combination of tools: reading offline ads, communicating directly via email, visiting the showroom, calling the sales department, visiting your dealership's website, etc. Shouldn't consumers receive the same price on a vehicle regardless of which channel they use to communicate with your dealership? (That's a rhetorical question).

A good friend and I were discussing the matter and he brilliantly observed, "When a dealership purchases a newspaper ad, they place an offer out there having little to no idea exactly who is going to read the ad, and whether it's resonating. But with a price email you know exactly who is receiving it, and depending on which CRM tool you use, whether they saw that price. Why wouldn't you hit them with the ad pricing?"

What are your thoughts about pricing strategies for car dealerships?

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