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PostPosted: Tue Mar 13, 2018 3:38 am 
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msommers wrote:
Why does a new customer warrant 0% discount? Especially when said customer knows there are discounts given. Isn't that then insulting to the new customer?

You seem to equate a repeat customer, who may have spent thousands of $$ at the dealer, with a brand new customer?

No one is "owed" a discount.

Your underlying premise is that dealers sell their products at such a huge markup that there is *always* room to cut their price. The reality is quite different.

Sure, a dealer's price on a piece of equipment may be $500, so he sells it for $750. Does that mean he should sell it to you for $600? That $250 "profit" may only cover his operating costs.

It's not a sustainable business practice to not cover the costs of running your business.

I buy a hundreds of thousands of $$ of enterprise-level software (security, server, monitoring tools, etc.). If the company owns the software code, then the price is often negotiable as they have long since recovered their sunk (i.e. development) costs. These companies sell their software through a website so their operating costs are very low. I pay for support and maintenance separately.

Some people approach buying audio equipment like buying software. They shop around on websites for the lowest price.

Which is fine.

Just don't expect a dealer who owns a storefront to match (or beat) that price, or demand support from them for something you bought from an online wholesaler.

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PostPosted: Tue Mar 13, 2018 7:01 am 
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I was speaking with old family friend who is a contractor. I'm mentioned that the profit margin on siding jobs is tremendous and that you can figure the contractor could give at least 20% and still make a good profit. He seemed to take bit of offens(c)e to this even though he specializes in inside work. I assumed he was a bit defensive because he is probably getting "beaten up" by customers all day long. I didn't get the words out of my mouth, but if he quoted a price to me on a job, I'd accept it without question.
I think the retail game in the US is a bit different than in Canada. Sony puts a list price of $2000 on a product but every retailer sells it for about $1500. Macy's dept stores gets fined by NYS for deceptive advertising practices and it's cheaper to pay the fine than change their advertising policies. 50 yrs ago an item had to be sold at list price before it could be put on sale. In theory, that legitimized the value of the item. They would have to record the name and address of the purchaser. Today the rules are written so far in favor of business it's not funny.
I used to sell Boats and you always offered 10% on a new boat even if the customer didn't ask for it. Why? because after they bought it and they talked to other boaters and found out they got taken, they probably would come back when it was time to trade up. If you only gave 10% on a new boat that was considered a " HOME RUN". Our used boat pricing factored in price negotiating.
If you look at Magnepan's pricing policy, It is very fair to the buyer and it's been that way since about day 1. That's a company I can trust and if I were to buy a pair I would know that there isn't any negotiating. If I were looking at another line I would have no such confidence. My guess the real crunch time for the retailer is about 20%. Not long ago, I refered a friend to a dealer to buy a rega TT cart and phono preamp. At the same time, i bought a new Cart and He set it up on my TT. We got about 20% each without asking. I genuinely like this dealer and didn't feel I was beating him up, He had the opportunity to gain a customer and he succeeded, with many referrals. Given that the price of an item is about 50% of retail once it's out the door, I think it's wise to find the bottom when purchasing new.


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PostPosted: Tue Mar 13, 2018 7:14 am 
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@NordicNorm

Do they get the same discount? No

Does a new customer not warrant ANY discount? Also no.

It's pretty simple. Like the auto industry, the audio industry provides discounts and the amount depends on a lot of things. But lets be real here, if you wanted a new car and the dealer didn't budge at all on the price, didn't provide a test drive when you know these are all common practices, you wouldn't go there you'd go to another dealer in town. You don't have to be friends with the sales guy or earn your way in. It's the experience and overall price that would make you recommend other people looking at the same brand to go there.

I was ignorant once and thought "the price is the price" like going to Bestbuy. Later I realized this is not what happens and feel taken advantage of.


Last edited by msommers on Tue Mar 13, 2018 7:37 am, edited 2 times in total.

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PostPosted: Tue Mar 13, 2018 7:29 am 
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When I was in graduate school, I worked part-time at a stereo store in a mall near the university. Guys would walk in and immediately start asking "how much you best price?". I would point to the Tim Horton's coffee they were holding and ask how much they paid for it ... and if they asked for a discount. They didn't get it ... nor did they get their "best price", because it was a chain store and prices were fixed in the computer. They usually left. I was OK with that, and I did learn a lot about lowballers ... not to waste a lot of time on them. :mrgreen:

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PostPosted: Tue Mar 13, 2018 8:01 am 
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jmstrick812 wrote:
I was speaking with old family friend who is a contractor. I'm mentioned that the profit margin on siding jobs is tremendous and that you can figure the contractor could give at least 20% and still make a good profit. He seemed to take bit of offens(c)e to this even though he specializes in inside work. I assumed he was a bit defensive because he is probably getting "beaten up" by customers all day long. I didn't get the words out of my mouth, but if he quoted a price to me on a job, I'd accept it without question.
I think the retail game in the US is a bit different than in Canada. Sony puts a list price of $2000 on a product but every retailer sells it for about $1500. Macy's dept stores gets fined by NYS for deceptive advertising practices and it's cheaper to pay the fine than change their advertising policies. 50 yrs ago an item had to be sold at list price before it could be put on sale. In theory, that legitimized the value of the item. They would have to record the name and address of the purchaser. Today the rules are written so far in favor of business it's not funny.
I used to sell Boats and you always offered 10% on a new boat even if the customer didn't ask for it. Why? because after they bought it and they talked to other boaters and found out they got taken, they probably would come back when it was time to trade up. If you only gave 10% on a new boat that was considered a " HOME RUN". Our used boat pricing factored in price negotiating.
If you look at Magnepan's pricing policy, It is very fair to the buyer and it's been that way since about day 1. That's a company I can trust and if I were to buy a pair I would know that there isn't any negotiating. If I were looking at another line I would have no such confidence. My guess the real crunch time for the retailer is about 20%. Not long ago, I refered a friend to a dealer to buy a rega TT cart and phono preamp. At the same time, i bought a new Cart and He set it up on my TT. We got about 20% each without asking. I genuinely like this dealer and didn't feel I was beating him up, He had the opportunity to gain a customer and he succeeded, with many referrals. Given that the price of an item is about 50% of retail once it's out the door, I think it's wise to find the bottom when purchasing new.


He (your contractor friend ) likely was upset because of the widely held (and wrong) idea that contractors make “so” much money...

I have been contracting residentially and commercially for 30 years and while it has provided me a good living the vast majority of the advantages I have received have been because of the tax loopholes available to corporations. Through a lot of hard work and endless conversations with a very good accountant(s) I have learned how to keep my money and not give it to the tax man. I honestly believe that any business upwards to 20 employees has these advantages if structured and financially organized properly... this is where all success lies

The other way I got ahead was buying and flipping high end homes. I’m on my 16 th house and as a contractor this has huge advantages. The obvious is that my cost to renovate is far less than the average homeowner because of my day job but more importantly if I live in that home for more than a year I convert the profit of the sale to tax free money.... again I have learned how to not give money ( legally) to the tax man.

Anyway, the contractors and subcontractors I work in and around are not making 20 points on any kind of a regular basis. I would say 12-15 max as an average and that would be a very organized and capable business person.
The only time we see big margins is when risk goes up, this applies to both residential and commercial projects. Meaning, when I’m asked to have a large sum of money at risk I need to take a position that to have that money absorbed into a project I need to know that I’m not just making money as contractor but my money is earning high risk interest as well. This is true with any contractor that has the ability to float a large project for long periods of time.
Trust me, this is not a fun way to earn your money and requires some series balls at times and when we here from the uninitiated how rich we all are I just roll my eyes....


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PostPosted: Tue Mar 13, 2018 11:05 am 
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Adriankn wrote:
Those were purchased as discounted open box, discontinued etc. I know for a fact Devialet does not have much profit margin at all. Some brands, as mentioned in all the comments above, are different and can accommodate a friendlier discount. Relationships matter with dealers that wish to provide real service as well.

I offer to assist with in home set up with new product before or after (preferable for break in) the customer has put a few hours on their system. This developments a much better understanding of their needs going forward as well. I've been blown away by how much I've learned within minutes of being in someones room that I've known every cable and component. Like them wanting to upgrade their amp and seeing that the first thing that needs to be addressed is what their turn table is sitting on. Can save someone a lot more than 25%!

-- 10 Mar 2018 16:12 --

mpublicover wrote:
alboettcher wrote:
There is only a discount when the buyers shows the seller the selling price at another store . Thus the seller will match or adjust his price to close the deal. That's why most knowledgable shoppers do their homework on line first then negosiate with the store for their discount.

not my experience with it at all. This is counter productive to building a good relationship, which has been a better approach for me. I have also found this to extend well beyond audio.


+1.

Big friggin' +1!

+

There is an unassuming ,small hole-in-the-wall AV store in the NW end of Toronto that I have used as a benchmark,when asked by clients to talk about the core meaning of 'market oriented > customer driven'.The store owner's formula for success (good luck ? or by design?),imo,may be even more relevant to-day in the face of increasing internet competition.
For 30+ years,I have watched Harley treat customers with respect,is friendly,knows the meaning of customer partnering,value added,post sales support,diversification,supplier/distributor relationship & practical discounting .In return,he seems to have built up a loyal group of happy customers.
He does all this from a small,cluttered 4x8 storefront.


Last edited by dupont62 on Wed Mar 14, 2018 5:16 am, edited 1 time in total.

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PostPosted: Tue Mar 13, 2018 11:47 am 
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If the price of New and Used equipment were not so high, most people would not need to ask for a discount. Are you really gonna pay FULL MSRP on something that is way overpriced to start with, and then add 13% HST tax. Only a Fool would be willing to do something so stupid!!


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PostPosted: Tue Mar 13, 2018 10:02 pm 
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Quadzilla wrote:
When I was in graduate school, I worked part-time at a stereo store in a mall near the university. Guys would walk in and immediately start asking "how much you best price?". I would point to the Tim Horton's coffee they were holding and ask how much they paid for it ... and if they asked for a discount. They didn't get it ... nor did they get their "best price", because it was a chain store and prices were fixed in the computer. They usually left. I was OK with that, and I did learn a lot about lowballers ... not to waste a lot of time on them. :mrgreen:
So you probably lost some sales, maybe the customer already decided to buy the item and was price shopping between a couple of retailers. Did you ever ask the manager to use his key or code to override a price? From my experience on both sides of the fence, management is reluctant to let money walk out the door and will take a thin deal over nothing. If a salesperson used your Tim Hortons example to me, I'd ask for another salesperson, Do you understand why?


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PostPosted: Tue Mar 13, 2018 10:55 pm 
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ADCO wrote:
jmstrick812 wrote:
I was speaking with old family friend who is a contractor. I'm mentioned that the profit margin on siding jobs is tremendous and that you can figure the contractor could give at least 20% and still make a good profit. He seemed to take bit of offens(c)e to this even though he specializes in inside work. I assumed he was a bit defensive because he is probably getting "beaten up" by customers all day long. I didn't get the words out of my mouth, but if he quoted a price to me on a job, I'd accept it without question.
I think the retail game in the US is a bit different than in Canada. Sony puts a list price of $2000 on a product but every retailer sells it for about $1500. Macy's dept stores gets fined by NYS for deceptive advertising practices and it's cheaper to pay the fine than change their advertising policies. 50 yrs ago an item had to be sold at list price before it could be put on sale. In theory, that legitimized the value of the item. They would have to record the name and address of the purchaser. Today the rules are written so far in favor of business it's not funny.
I used to sell Boats and you always offered 10% on a new boat even if the customer didn't ask for it. Why? because after they bought it and they talked to other boaters and found out they got taken, they probably would come back when it was time to trade up. If you only gave 10% on a new boat that was considered a " HOME RUN". Our used boat pricing factored in price negotiating.
If you look at Magnepan's pricing policy, It is very fair to the buyer and it's been that way since about day 1. That's a company I can trust and if I were to buy a pair I would know that there isn't any negotiating. If I were looking at another line I would have no such confidence. My guess the real crunch time for the retailer is about 20%. Not long ago, I refered a friend to a dealer to buy a rega TT cart and phono preamp. At the same time, i bought a new Cart and He set it up on my TT. We got about 20% each without asking. I genuinely like this dealer and didn't feel I was beating him up, He had the opportunity to gain a customer and he succeeded, with many referrals. Given that the price of an item is about 50% of retail once it's out the door, I think it's wise to find the bottom when purchasing new.


He (your contractor friend ) likely was upset because of the widely held (and wrong) idea that contractors make “so” much money...

I have been contracting residentially and commercially for 30 years and while it has provided me a good living the vast majority of the advantages I have received have been because of the tax loopholes available to corporations. Through a lot of hard work and endless conversations with a very good accountant(s) I have learned how to keep my money and not give it to the tax man. I honestly believe that any business upwards to 20 employees has these advantages if structured and financially organized properly... this is where all success lies

The other way I got ahead was buying and flipping high end homes. I’m on my 16 th house and as a contractor this has huge advantages. The obvious is that my cost to renovate is far less than the average homeowner because of my day job but more importantly if I live in that home for more than a year I convert the profit of the sale to tax free money.... again I have learned how to not give money ( legally) to the tax man.

Anyway, the contractors and subcontractors I work in and around are not making 20 points on any kind of a regular basis. I would say 12-15 max as an average and that would be a very organized and capable business person.
The only time we see big margins is when risk goes up, this applies to both residential and commercial projects. Meaning, when I’m asked to have a large sum of money at risk I need to take a position that to have that money absorbed into a project I need to know that I’m not just making money as contractor but my money is earning high risk interest as well. This is true with any contractor that has the ability to float a large project for long periods of time.
Trust me, this is not a fun way to earn your money and requires some series balls at times and when we here from the uninitiated how rich we all are I just roll my eyes....
As John Rockefeller would say " The profit is in the details". Certainly structuring a business to minimize taxes is a key to success. I'd have to look at your books to to see about your 15% figure, but I'd bet there is a good amount of asset accumulation (equipment) that isn't profit, but helps the business remain profitable. I know a Family that has run a small restaurant for about 30yrs. They have over a million in real estate and a few hundred thousand in restaurant equipment, yet none of the 4 people in the family have ever made more than $15K in income reported to the IRS . I won't even mention that their personal food expense is minimal ( Oh, I guess I just did) As I said before, The rules are written so much in favor of business, it isn't funny.


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PostPosted: Wed Mar 14, 2018 4:45 am 
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Certainly your seeing how the structure works and my point to all this is every well structured business ( well structured being the key) has its own set of opportunities that can advance the cause so to speak. While I truely appreciate your example of equipment it does often apply in the generalized "construction " field however not as much as one would think in the "contractor" feild .These are not necessarily as closely aligned as some think.
In fact some of my subcontractors, specifically the ones that play in the dirt accumulate huge assets in equipment that would absolutely help the ultimate bottom line. We have very little of what would be an asset in that regard as our math consistently shows that any specialized equipment we require is best rented for the term needed and considered an expense against that project. Keeping in mind we might not use that expensive peice of equipment again for a very long time and having that money available to work is ultimately a better idea.
Where you certainly are correct is we are paying down some bricks and mortar and in the long run this will have a payoff... won't argue that except to say that the way I have it structured it's not really the business , or should I say my contracting business that will benifit from that.

What's an interesting number I had quantified a couple of years ago as I was considering shaking up my residential side of things is how much I would have to sell to hire a project manager ( as opposed to my site Forman) to handle what is basically my job ....managing 2-5 projects at once .
It turned out the industry suggested that a junior project manager of this type is valued at about 65-70K a year ( plus vehicle, insurance, benefits etc) , and more importantly if my business were to follow its current trajectory plus an estimated 10% in revenue because I would have some free time to cultivate revenue.... I would have to sell approx 400K in renovations to break even on the hire.
This just illustrated to me exactly why the vast number if not all residential contractors are owner operated and managed. We can afford to pay ourselves to run the business but not necessarily anyone else to assume our role...
I don't need to tell you how difficult finding yet another 400K in a grossly saturated marketplace in a city of under a half a million would be ....
Which leads to the biggest issue in our lexicon.... it seems anyone who has been layed off figures they will be a general contractor and all they need is a pickup truck and their cordless drill. While I would never fault anyone trying to turn a buck a huge percentage of these guys , I'm talking probably better than 95% fail to understand their own economy. It takes about three years for them to figure out the marketplace, the tax burdain , true cost of employees, proper insurance and most important of all the difference between cash flow and profit . The problem is they drive our sales down and we ( legitimate structured businesses ) are having our prices compared to this.

So this comes full circle, those temporary contractors are basically the same to us as internet shops are to the audio shop guys in that it's a constant challenge to your bottom line. This requires stradegy , innovation and a real F'word good accountant to pull through.

Just a few more thoughts


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PostPosted: Wed Mar 14, 2018 5:06 am 
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ADCO wrote:
Certainly your seeing how the structure works and my point to all this is every well structured business ( well structured being the key) has its own set of opportunities that can advance the cause so to speak. While I truely appreciate your example of equipment it does often apply in the generalized "construction " field however not as much as one would think in the "contractor" feild .These are not necessarily as closely aligned as some think.
In fact some of my subcontractors, specifically the ones that play in the dirt accumulate huge assets in equipment that would absolutely help the ultimate bottom line. We have very little of what would be an asset in that regard as our math consistently shows that any specialized equipment we require is best rented for the term needed and considered an expense against that project. Keeping in mind we might not use that expensive peice of equipment again for a very long time and having that money available to work is ultimately a better idea.
Where you certainly are correct is we are paying down some bricks and mortar and in the long run this will have a payoff... won't argue that except to say that the way I have it structured it's not really the business , or should I say my contracting business that will benifit from that.

What's an interesting number I had quantified a couple of years ago as I was considering shaking up my residential side of things is how much I would have to sell to hire a project manager ( as opposed to my site Forman) to handle what is basically my job ....managing 2-5 projects at once .
It turned out the industry suggested that a junior project manager of this type is valued at about 65-70K a year ( plus vehicle, insurance, benefits etc) , and more importantly if my business were to follow its current trajectory plus an estimated 10% in revenue because I would have some free time to cultivate revenue.... I would have to sell approx 400K in renovations to break even on the hire.
This just illustrated to me exactly why the vast number if not all residential contractors are owner operated and managed. We can afford to pay ourselves to run the business but not necessarily anyone else to assume our role...
I don't need to tell you how difficult finding yet another 400K in a grossly saturated marketplace in a city of under a half a million would be ....
Which leads to the biggest issue in our lexicon.... it seems anyone who has been layed off figures they will be a general contractor and all they need is a pickup truck and their cordless drill. While I would never fault anyone trying to turn a buck a huge percentage of these guys , I'm talking probably better than 95% fail to understand their own economy. It takes about three years for them to figure out the marketplace, the tax burdain , true cost of employees, proper insurance and most important of all the difference between cash flow and profit . The problem is they drive our sales down and we ( legitimate structured businesses ) are having our prices compared to this.

So this comes full circle, those temporary contractors are basically the same to us as internet shops are to the audio shop guys in that it's a constant challenge to your bottom line. This requires stradegy , innovation and a real F'word good accountant to pull through.

Just a few more thoughts

I know a number of those who put a sign on a truck and call themselves a contractor.
It does remind me of a sign I once saw outside a hair salon
"we fix $5.00 haircuts"


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PostPosted: Wed Mar 14, 2018 9:14 am 
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I had enquired with a cable producer a few years ago, who didn't have a presence in Canada about selling direct. He sent me his MSRP and told me my price shipped would be half. Even then the costs were way more than I was willing to pay but I would guess the MSRP is 100% mark up at least.


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PostPosted: Wed Mar 14, 2018 9:52 am 
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NordicNorm wrote:
msommers wrote:
Why does a new customer warrant 0% discount? Especially when said customer knows there are discounts given. Isn't that then insulting to the new customer?

You seem to equate a repeat customer, who may have spent thousands of $$ at the dealer, with a brand new customer?

No one is "owed" a discount.

Your underlying premise is that dealers sell their products at such a huge markup that there is *always* room to cut their price. The reality is quite different.

Sure, a dealer's price on a piece of equipment may be $500, so he sells it for $750. Does that mean he should sell it to you for $600? That $250 "profit" may only cover his operating costs.

It's not a sustainable business practice to not cover the costs of running your business.

I buy a hundreds of thousands of $$ of enterprise-level software (security, server, monitoring tools, etc.). If the company owns the software code, then the price is often negotiable as they have long since recovered their sunk (i.e. development) costs. These companies sell their software through a website so their operating costs are very low. I pay for support and maintenance separately.

Some people approach buying audio equipment like buying software. They shop around on websites for the lowest price.

Which is fine.

Just don't expect a dealer who owns a storefront to match (or beat) that price, or demand support from them for something you bought from an online wholesaler.



I provide an on-line and telephone-access support tech line. If you bought the parts elsewhere we get very dumb at our end of the phone. We support those who support us.

Norm hit the nail on the head; a retailer's first priority is to make sufficient profit to pay his bills. Anyone who doesn't respect this is not going to become a "Valued Customer". Prove your value and support a vendor; then he'll support you. Discounts have to be earned. Unless I am dumping a product or item.


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PostPosted: Thu Mar 15, 2018 7:28 pm 
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brownslane wrote:
NordicNorm wrote:
msommers wrote:
Why does a new customer warrant 0% discount? Especially when said customer knows there are discounts given. Isn't that then insulting to the new customer?

You seem to equate a repeat customer, who may have spent thousands of $$ at the dealer, with a brand new customer?

No one is "owed" a discount.

Your underlying premise is that dealers sell their products at such a huge markup that there is *always* room to cut their price. The reality is quite different.

Sure, a dealer's price on a piece of equipment may be $500, so he sells it for $750. Does that mean he should sell it to you for $600? That $250 "profit" may only cover his operating costs.

It's not a sustainable business practice to not cover the costs of running your business.

I buy a hundreds of thousands of $$ of enterprise-level software (security, server, monitoring tools, etc.). If the company owns the software code, then the price is often negotiable as they have long since recovered their sunk (i.e. development) costs. These companies sell their software through a website so their operating costs are very low. I pay for support and maintenance separately.

Some people approach buying audio equipment like buying software. They shop around on websites for the lowest price.

Which is fine.

Just don't expect a dealer who owns a storefront to match (or beat) that price, or demand support from them for something you bought from an online wholesaler.



I provide an on-line and telephone-access support tech line. If you bought the parts elsewhere we get very dumb at our end of the phone. We support those who support us.

Norm hit the nail on the head; a retailer's first priority is to make sufficient profit to pay his bills. Anyone who doesn't respect this is not going to become a "Valued Customer". Prove your value and support a vendor; then he'll support you. Discounts have to be earned. Unless I am dumping a product or item.


With all due respect, you have it backwards.

Your comment: "If you bought the parts elsewhere we get very dumb at our end of the phone. We support those who support us" Like it or not, if a product is under nanufacturer warranty, you should provide service regardless of where the product was purchased. You might see in this the opportunity to win the client over so that his next purchase is purchased from you. Still, you might not want to get too dumb with a client over the phone. Some distributors and manufacturers will obviously not be too fond of this.

"Prove your value and support a vendor; then he'll support you"
I shake my head at this. Again, it's the other way around. You want (and need) to sell product. The customer has a need to fill. Whose job is it to "prove his value"? The value proposition is on the shoulders of the dealer, not the buyer. If the value (in the larger sense) is there, the potential customer will get that much closer to buying.

"Discounts have to be earned"
You are not obliged to provide any discount at all, and you can keep a ''full list price" policy. Again with all due respect, this seems like a very condescending old-school attitude. The dealer is not superior to any potential walking into a store. He ows you nothing. In fact, he did walk, take a bus, drive his car - meaning that he did decide to visit you. You have to earn HIS trust, not the other way around.

Stores have been closing in part because of snobbish attitude.

Good luck.


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PostPosted: Thu Mar 15, 2018 7:55 pm 
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Imagine going into a dealership for a new car trying to negotiate a price after a test drive and for the salesman to say, "sorry but discounts have to be earned. When you buy something first and then come in for your next vehicle, let's chat discounts then."

Even Toyota, who is notorious for not lowering their prices much, negotiated a bit when I bought my Limited 4Runner.

Discounts are earned...remind me never to shop there. Sounds better for the both of us.


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