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Is there really a science behind car pricing?

Discussion in 'Vehicle Merchandising & Inventory Software' started by Jeff Kershner, Aug 20, 2015.

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  1. Jeff Kershner

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    Of course there's some degree of science behind an effective used car pricing strategy. BUT could there be one overlooked element that when used, could have an impact on opportunities and sales?

    According to our friends at CarStory/Vast, that overlooked element is the number "99". Vast looked at over 3.5 million vehicle listings and found that most dealers don’t end their prices with a "9." In fact, only 7% of them ended in “99,” while 18% ended in “95” and 14% ended in “00.”

    So what effect does ending a price in 9 have on consumer interest and conversion? Apparently quite a bit.
    • Prices that end in “99” vs. “00” showed a 16% lift in SRP-to-VDP conversion.
    • Prices that end in “999” performed 9% better than those ending in “000.”
    Do me a favor, jump over on the blog and give this article a quick run through for even more statistics (It's a short, to the point article, might take ya 1 minute to read. There's even a link to download their latest white-paper in it's entirety.)

    What science are you using when pricing your used cars, other than utilizing current market conditions or a pricing tool?

    What number(s) are you ending your pricing with?

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  3. joe.pistell

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    99 is a 'human behavior signal'. It's the fingerprint of an involved manager.

    The study needs to explore WHO these souls are and WHAT other tricks do they employ? (e.g. active price changes? Below market pricing?) The sum of the OF ALL THEIR MERCHANDISING TRICKS is seen in higher performance metrics.
     
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  4. craigh

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    Took the words right out of my keyboard.
    It's a sign that the manager thinks about things like this and understands consumer behaviour better than most, which usually is not a pricing only strategy.
     
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  5. LotPop

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    Pricing a vehicle at a "Flat Price" is the only way to go in today shopping venues. Flat price is pricing a vehicle at $20,000 instead of $19995 or, what CarStory has said that doesn't work as well, $19900. I have studied this all over the country for 4 years and here is some proof, you can also see my webinar on that covers all of this


    Also here are some screenshots
    [​IMG]
     
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  6. LotPop

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    Here is the SRP and VDP activity on a dealership that converted to flat pricing in July, you can see the SRP and VDP per car shot up
    [​IMG]
     
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  7. Bill Simmons

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    @LotPop@LotPop The spike in SRP/VDP also happened when the dealer dropped the price $1500. I'm thinking that had as much or more to do with the spike in activity than whatever the last two digits of the price were? Just my opinion.

    nissan-pricing.jpg
     
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  8. LotPop

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    How about this @Bill Simmons@Bill Simmons, the yellow line is the prices and it doesn't look like it changed at all, but we did move it from $19995 to $20000
    [​IMG]
    or this one that just had a $300 drop
    [​IMG]
     
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  9. LotPop

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    Or how about this one @Bill Simmons@Bill Simmons ....I can go all day
    [​IMG]
     
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  10. LotPop

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    This shows how the stores Autotrader and Cars.com SRP and VDP per car trended way up since switching to flat pricing along with what happened to a couple of cars activitiy
    [​IMG]
     
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  11. Tallcool1

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    @LotPop@LotPop and @Bill Simmons@Bill Simmons

    Pretty hard to argue with that type of spike in exposure. Pretty impressive stats.

    Jasen, would you say that this type of increase is typical or is this particular store somewhat of an unusual situation? I guess what I am asking is if that change in pricing strategy was the ONLY thing that changed or if you changed lots of things in addition to pricing strategy.

    Why does price make this kind of difference?
     
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