A better solution?

[Autoswaprz]

I recently started a company with the intention of creating a better marketplace for the user. It seemed all the current big name sites cater to creating features to upsell the dealerships but none addressed the poor user experience for the car shopper.


Long story short we got accepted into a business accelerator and now have investor backing. We developed our site and did a soft launch last month. We did some preliminary testing and our numbers are as good or better than the industry leaders. Last week we partnered with one of the bigger CRM companies and they will be providing inventory to our site.


We are currently targeting only Kansas City as our beta market and not charging for our service. Our goal is to eventually generate revenue by providing a listing service to dealerships in other cities as we expand.


I do believe we will be able to provide results as good as the top sites because we are so locally targeted and our usability increases user retention and return. In short, users like our site, they stick around, and they keep coming back because it's a better experience.


My question is how do we price our service? CPC, Cost per Lead, monthly fee based on vehicle inventory?

We have created a great site for the car shoppers. Now we need to figure out how to create the best value for dealerships.

 

[yagoparamo]

Chris,

In a nutshell;


Why is your site better technically? (faster, easier to navigate, etc).

Why is your site a better for the consumer? (no advertisement, etc)

Why is it better for the dealer? (more customizable, cheaper to advertise, etc)


I think that if you drill down specifics it will help possible dealer clients in that area identify your strengthens and perhaps become a client of yours.

 

[Autoswaprz]

Essentially the site was built for simplicity. We don't do advertisements and we don't do premium or "featured" listings. Results are based on what the user is looking for, not which dealership pays the most. We give the user a cleaner, simpler platform to find the vehicle they are looking.


We provide the dealership with a listing resource that increases their inventory exposure and creates local leads. No matter which revenue model we use, we will be substantially less expensive than the industry leaders. The goal even at the dealership level is simplicity and providing the best ROI possible.


What I am trying to figure out is what is the best structure for pricing our services. Depending on the model we are projecting:


Monthly Range (based on inventory): $39mo - $149mo


If we did a CPC model the range would be around $.30-$.50 per click.


If we did a per lead model: unsure

 

[JoeyD]

I personally believe a low monthly price would attract more dealers, although a CPC model could be a nice option for small mom and pop stores. With a CPC, you're going to have dealers only paying a few dollars a month where others may be paying a couple hundred (as long as you have the traffic)... but honestly, and to be frank, the domain name throws me off a little bit, because until I memorized "rz" I still wanted to type in autoswappers.com, and since you have investor backing you might want to consider buying that domain, although Nokta is askingabout $2800 for it... just food for thought.. because if your site is a success, someone will buy that domain and you want it to be you. Just my two cents! Good luck!

 

[Autoswaprz]

The domain has been a point of contention and there has been a lot of discussion about it. The majority voted to keep it, at least for now.


I tend to agree with you the low monthly price. As of our last meeting we had it broken down as follows:


1-100 vehicles: $79mo, 6mo $59, 1yr $39
100-500 vehicles: $149mo, 6mo $99, 1yr $79
500+ vehicles: $299mo, 6mo $225, 1yr $149


I want to make sure the pricing structure is such that it is affordable for the smaller dealerships. On other sites it is impossible for smaller dealerships to complete with the larger higher paying dealerships.

 

[JoeyD]

Well at least you've discussed it, that's a starting point.

The prices seem great from the dealer side of me, but on the consultant or provider side, I feel as if you're selling yourself short on the 1 year commitment. Of course, the costs of upkeep and running a site are relatively small for a start up, but will you make enough money after advertising, employee wages, hosting and equipment costs? Might I also ask, how are you hosting the site? As long as you don't say GoDaddy I think we can be friends Feel free to PM me this one though.

But overall you do have a truly affordable pricing structure and I don't see how anyone could disagree. There's also a site that reminds me of the idea you're doing here, PM me and we'll see if you've heard of them.. I know they offer a free and paid service. You might want to look at that model also.

 

[Autoswaprz]

Our pricing is based on getting a significant marketshare as quickly as possible. In other words we want to price it low enough that it would be crazy to say no.


Being part of the accelerator program provides us with a lot of resources we would otherwise have to pay for such as office space. Since the majority of development is complete our major overhead will be advertising. We have a substantial monthly advertising budget which will be rolled out here in KC once our inventory reaches critical mass. So hopefully next week.


Oh, and no our hosting is not through GoDaddy We are currently with Network Solutions but are getting ready to transfer over to Rackspace.

I'm curious about the site that you are referring to. I'll pm you. Thanks.

 

[yagoparamo]

Our pricing is based on getting a significant marketshare as quickly as possible. In other words we want to price it low enough that it would be crazy to say no.


Being part of the accelerator program provides us with a lot of resources we would otherwise have to pay for such as office space. Since the majority of development is complete our major overhead will be advertising. We have a substantial monthly advertising budget which will be rolled out here in KC once our inventory reaches critical mass. So hopefully next week.


Oh, and no our hosting is not through GoDaddy We are currently with Network Solutions but are getting ready to transfer over to Rackspace.

I'm curious about the site that you are referring to. I'll pm you. Thanks.

GoDaddy/NTSolutions = Good systems for those people that think websites are free, WordPress is free, designing graphics is free, servers never go down, etc.

Rackspace is expensive but it is the real deal.

 

[joe.pistell]

Chris,

Dealers dont pay to get listed, they pay for ACTION. They will pay a PREMIUM if you can prove you brought them a shopper that they could not land without you.

Don't fall prey "they charge too much, we're nice people" pitch. If your solution delivers results, then stand tall and tell the world why.

 

[Autoswaprz]

I agree dealers pay for action; website traffic, calls, walk ins, email leads..etc.


Sales is a numbers game. More visibility, more listing views, more website traffic, more leads. We provide this additional visibility and we provide it on a targeted local level.


We can show that we have 500 local car shoppers on our site daily, that our bounce rate is in the teens, that they stay on our site longer and view more listings than they do on the leading sites, that 60% of our visitors come back...etc.


I know what you mean about "they charge too much, we're nice people". I don't think that is what we are going for. It's more we simply want to provide an affordable local service.


But, if our pricing is such that the perceived value is low I would like to know and we definitely should rethink it.