Getting Pricing Right: 4 Keys to Value Pricing

Steve Min­er of First­Look looks at four parts of mak­ing the pric­ing process work for remar­keters…

1. Show me the data: Look­ing at your cur­rent mar­ket inven­to­ry and his­tor­i­cal mar­ket data are the start­ing point. What’s your Mar­ket Days Sup­ply? How are the list­ings in your mar­ket?

2. Unit cost does not mat­ter: In this day of trans­par­ent data from the inter­net, cus­tomers don’t care what you paid for the car. Tak­ing all the right steps to bring the vehi­cle in at the right cost deter­mines whether you make a good gross prof­it. There’s also the ques­tion of whether you’re going to charge for recon­di­tion­ing or not.

3. Not all used cars are cre­at­ed equal: Anoth­er key to suc­cess is deter­min­ing which cars are “com­mod­i­ty cars” and which are “gross cars.” You’ll be mak­ing sig­nif­i­cant­ly small­er front end gross prof­it on a com­mod­i­ty unit. They may not be easy to find, but a gross unit is where you recap­ture that mar­gin

4. Price to sell:  Look at your mar­ket to deter­mine the right prices to reach “prob­a­bil­i­ty of sale” on the com­mod­i­ty side, and max­i­mize your gross mar­gins in those spaces where there is real­ly not a lot of com­pe­ti­tion.

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