Dealer What do you think is a fair profit for dealers.

[glsweet]

I would like to poll the members of TBN to ask: What would be a fair profit for a dealer to make on a new Kioti Tractor w/ Loader (value $15,000). Yes, I am a dealer.

 

[Bob_Skurka]

Superficially I think your question is unfair because most of us have no idea what the costs and margins are in your dealership, nor do we know if your dealership is run efficiently by industry standards. That said I believe your profit should be enough to keep your business growing. While that is not a very good answer, it is fair to both the buyer and the seller.

All that said, I still don't have an answer for you because there are generally 2 main theories to sales (and lots of sub theroies that spin from these 2 concepts). #1 is make what you can and sell what you can . . . this is generally a higher price theory. Tiffany jewlery stores follows this theory. #2 is the high volume theory that says chop the margins (and costs too) and make profit via increased sales. Wal Mart follows this theory.

So my question to you is what theory of retail do you choose to follow? Would you rather sell 100+ tractors a year, with each sold at a 20% discount from "list" price or would you rather sell 40 tractors a year at or near "list" price?

 

[glsweet]

The reason I ask is because I have been told by several customers. After I tell them a price for a particular model Kioti. They usually say something like, "I priced a Kubota equipped the same way and it was about the same price as your Kioti. " They are implying that an off brand should be a lot cheaper. I hear this at least 2 to 3 times per week. Have I been asleep?
Are Kioti's prices right up there with the big 3 or 4?

 

[Dargo]

No, they shouldn't be, and that is why I bought my Kubota. The only Kioti dealer close to me was apparently looking to make 5 or 6 grand on me. I say that based upon what the same Kioti sold for elsewhere in the country. I know a few of the Kioti owners would disagree, and that is fine, but I feel that if they are the same price, Kioti will lose the sale almost every single time.

I don't mean that to necessarily reflect on their tractor, but based upon established market share, resale value, and name recognition, there is no comparison. I recall about 15 years ago my local JD dealer was complaining about the low priced Kubota tractors trying to move in on his market. Guess what? They passed him. All things being equal, I believe that the facts point to Kioti having to be priced less to break into the market. Just look on eBay at what prices used Kioti's actually sold for. Most don't sell, and those that do are at bargain prices. If you want a Kioti, that is where I'd look for a bargain.

 

[Bob_Skurka]

<font color="red"> "I priced a Kubota equipped the same way and it was about the same price as your Kioti. " They are implying that an off brand should be a lot cheaper. I hear this at least 2 to 3 times per week. Have I been asleep?
Are Kioti's prices right up there with the big 3 or 4? </font>


I get PMs fairly regularly from people pricing tractors (probably because I post so darn often) and it is common for me to get questions/comments just like you get that they are surprised that Kioti prices are very similar to Kubota, sometimes lower, sometimes higher. I still think it is regional the way some brands gets priced.

Florida reports that Kioti is still a bargain down there. Virginia and the Carolinas have reported to me that Kubota is cheaper than Kioti. We just got a couple Kioti dealers up here where I live, I have no idea what the prices are here. A shopper in Michigan reported a $1700 price spread between identical tractors from 2 different Kioti dealers; I'm just guessing but I'd say a $1700 higher price would certainly put some Kioti models at/above some Kubota models. Prices in the NY area seem to be all over, but there was a long thread several months ago stating that Kioti was priced right along with Kubota. I certainly have no hard data. I am just a guy likes to play with tractors. If you have been "asleep" at all it is in regards to the brand. I think it is fair to say that in many areas of the country (but maybe not your area?) the Kioti brand is now a big name not an off brand. There are still areas where nobody has heard of a Kioti, in those areas I would think the customers would expect a lower price. The other thing to take into account is that Kioti recently took a price increase recently, JD, NH, Case/Farmall took increases earlier, Kubota is increasing some prices now on existing products and rolling out new models that not going up and may actually be cheaper than the models they replaced.

Just my thoughts based on what I read and what people send me.

 

[btolle]

First, I would not pay as much for a Kioti as I paid for a Kubota because the Kubota is a much better known brand (at least in East Texas) and I expect the resale value to be higher.

"Price is never a valid objection" was what Mr. Koch taught me when I took the Dale Carnegie Sales Course in 1974. He is right.

If price was a valid objection tell me why people are still buying Mercedes automobiles? After all, the cheapest Toyota or Chevy made will go everywhere a Mercedes will go. It must be that they perceive the Mercedes to be worth the $$$ paid for some reason.

As a salesman when I heard a customer say "The price is too high" I realized that what he was really saying was "I am not convinced that your product is worth the price you are asking. Tell me why your product is worth the price you are asking?".

I did not compare prices to other brands since I didn't consider other brands but you should be able to compare list price to list price by doing some research. But be sure you are comparing truly comparable models as far as features, HP, etc.

I supect you may have to undercut the big 3's prices for a while until Kioti becomes a better known brand. Whether you can do that and stay in business is a question only you can answer.

You need to maintain enough of a margin so that you can provide service after the sale. Reading this forum it is obvious to me that a large number of members consider the dealer to be more important than the brand. Obviously, service after the sale costs you money for labor, parts that you might provide that warranty does not cover, and anything else that will make folks see that you are willing to go above and beyond what other dealers in the area will do.

I want my dealer to make a reasonable profit so he will be in business next year in case I have a warranty issue and in 5 years so I can get parts and service.

An example of the kind of treatment I get from my Kubota dealer: I went in about 4 days after I bought the tractor to pick up a spinner knob. They were in a box on the counter and cost $6.95. I laid it up on the parts counter and the parts man (who is part owner of the dealership) pushed it back across the counter and said "Here, take it as our way of saying thanks for buying a tratctor from us". That $6.95 bought him a lot of loyalty from me. He'll sell me a lot more in the future than that knob cost him. In fact, I bought a $750 rotary cutter from them a couple of weeks later.

Never forget what an old friend of mine taught me when I was in the used car business: "You can shear a sheep once a year, but if you ever skin him it is all over". I don't mind being sheared I just don't want to be skinned.

Bill Tolle

 

[DK35vince]

</font><font color="blue" class="small">( ( Are Kioti's prices right up there with the big 3 or 4? ))</font>

Seems to depend on the area.
In my area (Western,Pa.) Kioti is still a good bit less exspensive.
Mostly because the Big 3 dealers in my area are asking near list prices..

 

[Bob_Skurka]

Vince, just curious, but if the Big 3 are selling near full list, are the Kioti tractors less expensive because the Kioti dealers are discounting deeper, or because the list prices are lower?

 

[depratt_equip]

One thing that I also try to remind customers to do when the price shop is to compare apples to apples. Many times I find that a customer looks at HP alone and not what all they are getting on the tractor. Sometimes when you compare HP to HP and not true apples to apples the Kioti price is higher due to the fact that Kioti puts more standard features on their tractors, once they option at the other brands the same as the Kioti you start to see the price gap widen and Kioti being the better buy.

 

[depratt_equip]

I re-read your post and noticed you said your customers usually say "I priced a Kubota equipped the same way and it was about the same price as your Kioti.” Usually when I have a customer say this I sit down and take a look at what they are pricing and 99% of the time I find they are not doing a apples to apples comparison. In this area I don't consider Kioti an "off brand" anymore. They are doing quite well here and are hold there valve very well. I consider them one of the top players in the tractor market.