Regional tractor pricing

[ErikVann]

In the short time I have been really participating on this forum it has become apparent to me that there are significant differences in tractor pricing based upon ones geographic location. It seems that this is affects both new and used machines. I am curious to know if there is a particular reason for this. I am happy to hear a factual explanation or pure conjecture and opinion.

 

[MESSMAKER]

This is a guess, but I think supply would have something to do with it. I you are the only dealer for 75-100 miles you can get top dollar. Same with used. If you have 5 used tractors for sale, they will probably fetch more than if they were everywhere.

 

[MessickFarmEqu]

cost of doing business, sales volume, competitive environment, etc. There are lots of reasons.

 

[smstonypoint]

cost of doing business, sales volume, competitive environment, etc. There are lots of reasons.

Back in the day when I was teaching my undergraduate managerial economics course, I summarized the pricing of products/services with the three C's: Costs, Customers, Competition.


Steve

 

[Baby Grand]

To summarize:
If everthing costs more in area A than in area B, then everthing costs more in area A than in area B.

I used to work with a guy who left the Tulsa area after the oil business nearly collapsed, in the 1980's.
He got a "huge raise" to move to southwestern Connecticut, about a 50 minute drive (at 4 AM) from New York City.
He left a 4 bedroom house with a pool on a beautiful 2 acre lot in a really nice neighborhood and was shocked to find out that all he could afford was a 2 bedroom, beat, old dog of a house on a 1/4 acre lot in a sketchy neighborhood.

I think he cried when he got his first paycheck and realized that, thanks to his relocation, Connecticut State also got a huge raise. His wife ... well, let's just say she blamed him. Every day. She used to call him at work just to remind him that she did.

So I see similar when folks on TBN mention what they payed for their tractors. It can be a real eye opener.

 

[gwstang]

I'm wondering if transportation costs, distance from the port of arrival or where they are put together, can add more costs to different regions. If a tractor has to come from Georgia to be assembled and then carried to California to sell, wouldn't that add quite a bit to the costs of say a Kubota or such?

 

[smstonypoint]

I'm wondering if transportation costs, distance from the port of arrival or where they are put together, can add more costs to different regions. If a tractor has to come from Georgia to be assembled and then carried to California to sell, wouldn't that add quite a bit to the costs of say a Kubota or such?

I have no direct knowledge, so take my guess with a grain of salt.

It is my understanding that the destination/delivery charge that is added on the MSRPs of new car stickers does not vary with the distance from the distribution center,

I have never heard of a destination charge as an explicit add-on to tractor MSRPs, so I suspect that the destination charge is either an explicit or implicit item in the cost to the dealer. I suspect that destination charges do not vary by dealer location, so that a dealer in Georgia would have the same tractor cost as a dealer in California.

Steve

 

[ErikVann]

To summarize:
If everthing costs more in area A than in area B, then everthing costs more in area A than in area B.

I used to work with a guy who left the Tulsa area after the oil business nearly collapsed, in the 1980's.
He got a "huge raise" to move to southwestern Connecticut, about a 50 minute drive (at 4 AM) from New York City.
He left a 4 bedroom house with a pool on a beautiful 2 acre lot in a really nice neighborhood and was shocked to find out that all he could afford was a 2 bedroom, beat, old dog of a house on a 1/4 acre lot in a sketchy neighborhood.

I think he cried when he got his first paycheck and realized that, thanks to his relocation, Connecticut State also got a huge raise. His wife ... well, let's just say she blamed him. Every day. She used to call him at work just to remind him that she did.

So I see similar when folks on TBN mention what they payed for their tractors. It can be a real eye opener.

I understand what you are saying about cost of living and all but I don't think one can compare tractor to realestate markets which are highly variable based even from neighborhood to neighborhood.

It seems to me that tractors in the northeast tend to be higher priced than other areas of the country. While there isn't a tractor dealership on every corner they are not in short supply. Just a curiosity I guess.

 

[KiwiBro]

Perhaps the fear of commoditising tractors is the only reason they don't make 'em more reliable? I mean, if they were bullet-proof and extremely rarely broke down, they could sell the darn things direct online and ship 'em like commodities from regional distribution centres, bypassing agents/dealers, and just have a few tractor workshops dotted about the place. The only thing stopping me from buying a tractor from USA right now is the fact I may need warranty repairs.

 

[ErikVann]

Perhaps the fear of commoditising tractors is the only reason they don't make 'em more reliable? I mean, if they were bullet-proof and extremely rarely broke down, they could sell the darn things direct online and ship 'em like commodities from regional distribution centres, bypassing agents/dealers, and just have a few tractor workshops dotted about the place. The only thing stopping me from buying a tractor from USA right now is the fact I may need warranty repairs.

Not sure what take away from that but thanks for sharing. I just posted on you 50 shades of grey thread so not going to repeat myself here.