Raising your prices can be a very touchy subject. Pricing is both an art and a science. It has a lot to do with how you see your dealership vs. the competition, as well as how your customers see you. But if you can make it happen without losing sales, your profitability will increase immediately.
Is your dealership the rock-bottom low-price leader, willing to undercut all other deals to get the sale? Or are you the high-touch luxury brand flagship, with hot and cold running cappuccino and Italian leather sofas for your customers to lounge on?
As you might expect, price increases can be more difficult for a low-price leader type of dealership, where the price of every aspect of the sales and service experience is closely scrutinized. Increasing the prices at the high-end luxury dealer tends to be less of an issue, because the dealership’s image can justify it, in terms of their customers’ expectations.
What about the majority of dealerships that fall somewhere in between these extremes? An in-depth analysis of your business’ products and services will yield numerous opportunities to raise prices, as long as you do it in a targeted fashion. Knowing what competing dealers charge is also useful information.
Do not increase prices on routine, everyday service procedures like oil changes and tire rotations. People tend to remember those prices and will notice any significant increases. Instead, try to improve your pricing in less sensitive areas like these:
- F&I items
- Accessories added to vehicles at point of sale
- Servicing done at manufacturer-recommended intervals
- Complex mechanical repairs
- Parts not used in routine services
- Branded accessories sold in the parts department
- “Elective” services like detailing and dent removal
As long as you have a good relationship with your customers and they trust you to do the right thing where their transportation needs are concerned, you should not have a problem with reasonable price increases over time.