Bushy,
I'm excited for you...as most of the guys reading this.
I used to be a dealer (3 dealerships) and sell equipment...9 years. Family owned business.
The dealer would like to deal in LIST $$ (Manufacturer's Suggested Retail Price -or- MRSP). Depending on the equipment the base unit will typically have a LIST price that allows them to have a markup of 18 to 22%, plus A & H (Assembly and Handling) and any freight/taxes. The accessories, or add-ons, will typically have a 5% higher margin than the base unit. This, what seems to be a lot of profit, is not what the dealer will end up making on the deal. There is something called and "over allowance" for trade-ins. If you were to buy it outright...without a trade...(when you begin to ask prices the salesman will first ask what you have to trade in before he begins dealing)...you can usually get them to give you a pretty good discount. The "over allowance" gives the dealer the ability to make it "look" like you are getting a good trade price for your unit. The reality is, when they "book" the trade-in they will adjust the allowance to you by the "over-allowance". You don't know this is being done.
Here's how it works (example):
New JD 110 TLB (Total W/frt, etc) LIST $50,000
Less:
Trade-in Allowance < 20,000 > = Net Cash ("Boot") Difference $30,000 paid to dealer
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Dealer COST $40,000 less 30,000 paid
"Hard Cash" invested in Trade-In by dealer of $10,000
=========
Dealer "Booking" of Trade-In:
Dealer Trade-In Allowance to Customer $20,000 Less "Over-Allowance" (not known by customer) < 6,000 > = Net "Booking" of the trade-in by dealer of $14,000
But the dealer's "Hard Cash" in trade-in is... $10,000 leaving a Gross Profit to Dealer on sale of JD110 of $4,000
(Notice that this is only a %10 Gross Profit)
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Now the Dealer has to sell the trade-in. He can easily put it on his lot and ask $18,000 to 20,000 for it without offending you and have a $4,000 to 6,000 markup to "deal" with the next customer who may want to buy it. Typically, used equipment sales has the POTENTIAL to be more profitable than the new sale. You see, from JD dealer to JD dealer, the cost of the new equipment is nearly the same.....but used equipment can be costed at virtually anything! ! This depends on how well the deal goes on the new!
The dealer may get a "volume" discount or rebate from the factory on the new equipment which augments...or is the dealer's profit.
Remember, the dealer has a lot of costs/expenses to cover running a dealership. Rent, interest, payroll, taxes, utilities, advertising, repairs, insurance, on...and...on. What seems like a big margin on sales (service 65%, parts 45%, new equipment 10%, and used equipment 15%) the typical "Net Profit" is only around 1 - 3% of sales, if they are lucky or good at what they do. They have to work on volume and provide good customer service.
Price is important to you, of course, but your relationship with the dealership should "weigh-in" around 70% of your decision. When the time comes...and it ALWAYS does...you will need a strong and responsive dealer to go back to when you need parts and service or to get you next piece of equipment.
Good Luck, and enjoy your new JD110 .... I, too, would like to get one .... so keep us up-to-date on the status.
- Dave
