Skip to main content

Of Car Dealers and Bathroom Tissue

By August 17, 2010Energy Rant

Is there anything as mysterious as the price of a car, especially a new one?  I’ve heard the various prices so much, long ago, that I’ve pretty much blocked them out of my mind.  There is the sticker price, dealer cost, factory invoice cost, blah, blah…blah, blah, blah.

Sooner or later the dreaded haggling begins.  I’ve heard that the buyer should always have the seller make the first offer.  I don’t think it matters.  I think the last time I bought a car I scrounged about on Kelly Blue Book’s web site, which has dealer suggested retail, private party (for used) and trade in values or something like that.  I figured if I could get the private party price from the dealer I’m doing well.  I set a price in my head and once the dealer gets to that point I’m ready to go.  You do have to be willing to walk away.  Actually, I don’t think I’ve ever given a “bid”, now that I think of it.

At Michaels, we’ve had several proposals for engineering services in the past year where prospective clients have asked for “discounts” if we were to get all parts of a multi-part request for proposals.  Or maybe they want a discount if the contract is extended from three to five years.  For one we even had to provide the salaries we pay our people and overhead factor so they can essentially negotiate a profit – not negotiate the price but the profit!  Personally, I don’t really care how much profit the seller makes.  I don’t care if he’s losing money.  I don’t care if he’s making 50% profit.  What am I getting for my money from dude #1 versus dude #2, is the question.

When I bought the Acura seven years ago, the price was practically the same as a Chevy Monte Carlo, depending on options.  Are you kidding me, I thought?  Chevrolet was probably making less profit margin (if any at all) than Acura/Honda but am I going to buy the kludge because they have a 1% margin, or my car for probably 10% margin?  It took two or three offers and Zimbrick Acura met my strike price and I was off and driving.  Like my previous car, a Mazda I bought in 1990 and drove for 14 years, the Acura has never seen the dealer again.

We have a modest profit built into our hourly rates.  We are not car dealers with a manufacturer’s suggested retail billing rate that that would be 10% more than the price it takes to make a decent profit.  Or, it isn’t like summer apparel come August and we can clear it out by chopping prices in half to make room for fall/winter stuff.

Here’s the problem with the “discount” – it isn’t equitable.  (I hate “fair” because it’s too often used by whiners).  You may remember 20-30 years ago, there was no such thing as the double or quadruple roll of bathroom tissue or paper towels.  Don’t you find it interesting that the new double roll is the same as the ONLY roll there was 25 years ago?  Today’s regular roll is about 1/3 the size of the rolls back in the day.  See what I’m sayin?  If we’re going to play this game, we’ll build bargaining slop into our rates.  The inequity comes when the client who just wants a great project for a decent price doesn’t ask for the “discount”.  What are we going to do?  “Oh, we didn’t really mean that fee.  Here is a 5% discount because we love you so much.”  Then they think what kind of scam artists are these guys?  Or we leave the rates stand and they get ripped off.

We are not a sleazy car dealer, not that every last one of them is.  We are not going to artificially increase our rates by 10% so we can tell our clients we are giving them a 10% discount.  We also don’t slash our rates by 25% because we’re desperate, because we are not.

Jeff Ihnen

Author Jeff Ihnen

More posts by Jeff Ihnen

Leave a Reply