Review - Little Dealer Little Prices, Prescott Valley, AZ

[KE6IRJ]

Mods, if this is the wrong place, please move.

I wanted to pay a review of my "Little Dealer, Little Prices" service department here in Prescott Valley.

Background: Due to a jack under the axle slipping, my trailer fell and bent the rear electric stabilizer jack. Due to my schedule and a cross country trip in a couple weeks, I need to use a dealer to repair because my schedule won't allow.

After ordering the part and hearing their price of 542.00 for parts plus labor, I thought that was high, but paid my deposit and decided to research more myself. I found the replacement for between 240.00 at the low end to 425.00 on the high end, so I decided to call them on their price gouging. Yesterday, I spoke with the guy I was using and he assured me they only have a 40-percent markup! So I asked his cost.

----HERE IS WHEN IT GOT INTERESTING----


He told me their computer is programmed to a strict 40-percent markup on parts. Their cost for my part was 325.00.
WAIT RIGHT THERE!

I explained that due to basic math, 325.00 + 40-percent was NOT 542.00!

After trying to convince me my calculator was wrong and even "checking with his boss" I gave up explaining what apparently was a foreign idea.

Unfortunately, I will have to use them due to schedule issues and part availability at my other shops in town, but be warned, the "calculator" in the parts computers are not using normal math and the markup is huge at this location!

I wish I had the time to fix this myself.

[jarata1]

SoundGuy wrote:

JnJnKatiebug wrote:
If you have a calculator with with cost and sell buttons do the following. Put in 325, hit the cost button, put in 542 and hit the sell button. It equals 40.036 just like this post says. That is how a business works but apparently whoever you talked to does not know how to explain it.

Just an observation but if I was a business owner I wouldn't want any employee discussing dealer costs and markup with any customer. :E This is private business information and no business of any customer ... a retail quote is just that, how the dealer gets to that number is his business and not the customer's who's only task is to decide if that's a price he's willing to pay for the part / service he's seeking. Secondly, any business that operates on a single pricing strategy for all products and services is doomed to failure ... considering this particular dealer has been around for awhile would suggest this employee who erred in even discussing this with the customer has no idea what he's taking about anyway. :R

If I'm paying it I want to know how they got to that price

[SoundGuy]

JnJnKatiebug wrote:
If you have a calculator with with cost and sell buttons do the following. Put in 325, hit the cost button, put in 542 and hit the sell button. It equals 40.036 just like this post says. That is how a business works but apparently whoever you talked to does not know how to explain it.

Just an observation but if I was a business owner I wouldn't want any employee discussing dealer costs and markup with any customer. :E This is private business information and no business of any customer ... a retail quote is just that, how the dealer gets to that number is his business and not the customer's who's only task is to decide if that's a price he's willing to pay for the part / service he's seeking. Secondly, any business that operates on a single pricing strategy for all products and services is doomed to failure ... considering this particular dealer has been around for awhile would suggest this employee who erred in even discussing this with the customer has no idea what he's taking about anyway. :R

[KE6IRJ]

Wow. I guess I am a tight wad Father of 3 kids who understands making a living as a business owner, but not lying.

My final comment, the manager followed up with me, took responsibility for the mistake in communication, and helped. My opinion is neutral on their service department practices, but at least they asked wrong.

[stripit]

I was just in that place today and bought a few small parts, about $50 worth, could have saved about 10 bucks going on line to other places and waited for them to be shipped, so the small extra costs were worth it to me. But, I've seen mobile RV repair trucks around town and if you felt you are about to be paying much more than you should how about looking for one of the mobile techs? At least get a price and see of they can save you any money.

[JnJnKatiebug]

Len in PHoenix wrote:
I think the clerk got the number correct but not the business term. Instead of 40 "percent" he should have said 40 "gross margin points" or just "gross margin."

Here's the math: (selling price - cost of goods)/selling price

$542 selling price - $325 cost = $217 gross margin dollars

$217 gross margin dollars / $542 selling price = 40.036 gross margin points

By the time you factor in all the other costs related to running a business they are actually working on a rather thin profit. The best way to get their prices down and still make a profit would be to improve their purchasing strategy.

And yes, I play the corporate game during the week. Sometimes it's hard to shut it off.

This is the correct answer. If you have a calculator with with cost and sell buttons do the following. Put in 325, hit the cost button, put in 542 and hit the sell button. It equals 40.036 just like this post says. That is how a business works but apparently whoever you talked to does not know how to explain it.

Or, put in 325 and hit cost then put in 40 and hit margin = $541.67
It's not 40 percent markup it's 40 percent margin.

[azjeffh]

I bought my first RV (pop-up) from them in 2001 from their Mesa store. We call them, "Little dealer, hidden prices".

[Len_in_PHoenix]

I think the clerk got the number correct but not the business term. Instead of 40 "percent" he should have said 40 "gross margin points" or just "gross margin."

Here's the math: (selling price - cost of goods)/selling price

$542 selling price - $325 cost = $217 gross margin dollars

$217 gross margin dollars / $542 selling price = 40.036 gross margin points

By the time you factor in all the other costs related to running a business they are actually working on a rather thin profit. The best way to get their prices down and still make a profit would be to improve their purchasing strategy.

And yes, I play the corporate game during the week. Sometimes it's hard to shut it off.

[KE6IRJ]

Clarification. $542 is pays coast they billed me. Labor is $120/hour and still to be completed.

I wish I could go elsewhere, but I work 2 jobs and don't have time before my vacation trip in another week.

[SoundGuy]

vic46 wrote:
...the 40% markup on non-inventoried parts seems a little stiff to me!

Retailers, including RV dealers, will each have their own preferred formulae but it all starts with keystone pricing - i.e. wholesale cost x 2. To suggest 40% markup over wholesale as "stiff" displays a clear lack of understanding how retail pricing works. :R

[vic46]

NYCgrrl wrote:
$325.00 plus 40% equals $455.00 so I guess the labour cost is $87.00? Sounds like a reasonable amt to stay in business and pay your overhead to me:h

Agreed! The labour seems to have disappeared in the OP's calculation. The $542 is the labour in price! The $87 for labour seems low to me but, the 40% markup on non-inventoried parts seems a little stiff to me! Likely all comes out in the wash. Is the repair worth $542 to get the rig back on the road?

[JnJnKatiebug]

NYCgrrl wrote:
$325.00 plus 40% equals $455.00 so I guess the labour cost is $87.00? Sounds like a reasonable amt to stay in business and pay your overhead to me:h

OP said he was quoted $542 for parts plus labor. Sounds to me like they don't know what they are talking about. I would go elsewhere.

[NYCgrrl]

$325.00 plus 40% equals $455.00 so I guess the labour cost is $87.00? Sounds like a reasonable amt to stay in business and pay your overhead to me:h