Hot Tub Forum
Original => Hot Tub Forum => Topic started by: stuart on December 14, 2004, 04:04:19 pm
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I have a question brought on by a post I read from Chas on another topic;
How many of you that have bought or are buying truly believe someone when they tell you they are giving a discount of $1000 or more on a spa? I'm not saying that they are not I just want to know the confidence level from a customers side.
Consequently, I would also like to know your feelings towards a lesser offer like a $200 to $800 discount.
I guess what I'm trying to say here is that if someone can, at the drop of a hat, knock $2000 off of a spa then I have to wonder just how much of a markup they really have, including the chemicals I will have to buy later? In our store we keep our margins very fair for both customer and us, meaning that we make enough money to provide the service at a level they would expect and still stay in business without "gouging" them on price.
No one sells at full retail, that I know of, unless it is perhaps Thermo but every now and then I hear someone say they bought elsewhere because the guy gave them thousands off on a new spa because he was running a special, my guess is he was quoting a “made up retail”. Does this mean that he overcharges everyone else by thousands?
There are real reasons for price drops that include demos, blems, volume discounts for special sales and even factory incentive sales but as far as I know NO ONE can offer thousands off on every spa purchase and survive!
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I considered my buying experience very much like buying a car. Sundance was offering their $2000 off special but I think if I went back to that same dealer today I could buy the same Spa for around the same price. On the weekend we purchased, he did drop the price a bit more (cost of the ozonator and lifter I think). I think his 'discount' was probably around what he gives everyone. In this case it just started off with using Sundance's deal as a baseline.
I honestly can't see anyone spending the $10,000 or so 'sticker' price on the spa that we purchased. He basically told me that the 'incentives' at any one time usually come out to about the same. Sometimes it's right off the base price and sometimes its in the form of 'extras'. In any case I definitely don't feel our dealer was trying to do any 'gouging' and didn't feel he was hiding anything or trying to mislead us about the price he was offering. In the end we were very happy with our purchase experience and would recommend our dealer to anyone.
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The short answer...
a discount of $1000 or more = an exagerated price mark up of $2000 or more == sales tactic that I am not willing to support. There is the exception of those real reasons that you mention... demos and blems and such.
(I believe it has been determined that I am not the average sheepish consumer)
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So to add to my question, do you feel that if a dealer offers you a spa at $500 off vs $2000 off he's holding out on you or would you feel that his spas are already fairly priced? If you've been shopping and everyone came down over $1000 except one dealer would you walk because all of the others you've been to played a price game and this guy didn't?
I had a customer that I dropped the spa considerably below margin recently because he gave me a credible reason to do so, he came in with the names, phone numbers and address of 6 people that he knew to be shopping for spas! He was a realtor and these where all clients of his, we've already sold 3 of them! I can write his discount off as an advertising cost as he's saving me that money so it's a win win for both of us!
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I shopped at 4 different places and 4 different brands. None of them offered me $1000 off the price.
They all offered to take something off the price or "throw" in some extras.
If a dealer told me he could knock off a thousand or two thousand, I would assume that the original price was inflated to begin with. But that's just me.
Remember, I am not a dealer and I haven't played one on TV !
:D
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Stuart,
I actually shopped opposite of what you stated.
I wanted to know the price of the spa and what it had in it. I couldn't care if the spa "retailed" for more but wanted to compare apples to apples so to speak.
Actually my local Sundance and Hot Springs dealers told me I was getting "what a deal" and gave me a list price and a selling price. I was turned off by this. I actually "helped" the Sundance dealer make a sale (I bought my AG pool from him) by talking him up to a customer that was waffling and I don't think he gave me such a "special" price as he said he was going to.
I picked the tub I did based on what I got for my money. It wasn't the cheapest (I could have bought a few for about $400 less), although it is a secondary line I felt after talking to the dealer as though it will perform as well as a primary line of other brands.
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So to add to my question, do you feel that if a dealer offers you a spa at $500 off vs $2000 off he's holding out on you or would you feel that his spas are already fairly priced? If you've been shopping and everyone came down over $1000 except one dealer would you walk because all of the others you've been to played a price game and this guy didn't?
$500 off is more creadible... but if his spas were truly "already fairly priced" he shouldn't be able to reduce $500, maybe throw in some chemicals and duckies... As you've shown there can be good reasons to give such a price break - though the reason will be clear to the customer as well as the dealer. In general, the less $$ off the spa the more creadible the "deal" (assuming no special circumstance and that the customer is somewhat educated, as in knowing that $500 off is not really $1500 overpriced).
If everyone but one dealer "came down" $1000 I would not walk from that dealer because everyone else played the price game, I would consider buying from him if he had the tub that I wanted.
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I have to say I was lucky! The 3 dealers I ended up seriously looking at (one closed a week after the wet test, which was my first) all gave me a fair price for their product. No one said they would knock off $$$$, they all included the same basic options (lifter, ozone, start up chems...etc.) and were within a few hundred dollars of each other.
I like to think that I was an informed consumer. I asked a lot of questions. I asked each one about the competition. No one bad mouthed anyone. I really think they all wanted me to be happy with my purchase. I like to think that everyone in the industry in my area were fairly priced, without me having to do any work of negotiating! I have to do that every day at work!
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Stuart - No I would not believe a spa dealer if they offered me this or wouldnt feel too good about them if they did. I think the tatic of "I will knock $2000 off the price if you buy it right now" works with the uneducated spa buyer.
Let me give you and example....To go with your other post about home show and fairs, My wife and I decided to buy a spa late this summer. We had been toying with the idea - but decided now was the right time. We waited to start our seach at our local (Big E) fair becuause we knew there would be many different makes and models to compare and learn.
Boy - can I tell you what a mistake that was ..... We spent all day looking at spas - but we learned alot.
We learned what dealers/spas to AVOID. One company - Elite Spas by Spa Depot dicounted a spa after 20 mins of talking by $2,000 - even showing us "other" customers price sheets where he charged them the higher price. He even pulled out a binder full of "other" dealers spas to show us how their spa was superior. Did I believe him...somewhat - because he had pictures...but for the novice its tough to tell what spa is what by a picture or two.
Are saving grace was meeting the nice people from American Leisure who showed us quality spas from Saratoga and Sundance and didnt give us the pitch of "buy it now for $2000 less" - it was then we learned what to start looking for. Its too bad we went to them last and they wound up being too far away from us for the conveinence factor. ( I actaually think they are on this site sometimes) - So the bottom line is......I feel this tatic will work on the un-educated spa buyer (who doesnt frequent this site) and NO to educated buyer.
Edit - it was elite spas by spa depot.
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Stuart - My recommendation is that you price "aggressively" from the start and then don't waive much at in in any additional discounts. The infortunate truth is that many spa dealers are more like car salesman than anything thing else (not the dealer's on here of course, but rather the competition down the street). If the MSRP is $8,999 and you can make $2K selling it for $7,200, then I recommend that you do not "TRY" to get $7,900 from one buyer and then $7,500 from another but rather offer the unit at $7,200 for all. If your feeling particularily generous, give "maybe" another $200 off to get them to buy it that day. Consumers don't really buy off of "how much the discount is" but rather buy off of "what the value" is to other competitors out there. In example... The SunDance Cameo and the Jacuzzi J375 are pretty darn close relatives. When I was shopping I was willing to spend a little more for the Sundance ($700) to get certain features (Jets, filters, bubblers) but the dealer was trying to get "every penny" he could out of what he thought was a "sucker". Being in a form of sales myself I even "gave away" my hand by telling him what I was "willing" to apy him for his Cameo (the fair street price at the time of $7,200). He stated that the tub was a real of $8,900 and that he was "doing me a favor" by selling it to me at $7,900 or $1K off. Of course, this was the same amount he was offering the unit for sale in the paper so in real life, he wasn't offering me anything different than he offered anyone else. I also learned later that he had not sold a tub in mearly two months at that point. After I informed him of my purchase decision J370 for $6500 INCLUDING stereo (not part of the Cameo $7,200 deal), he quickly started discounting in an effort to get me to call up the Jacuzzi dealer and cancel my order. Amazingly enough he agreed to the original $7,200 deal at this point. Needless to say, I told him where he could stick his Cameo...
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When I went shopping, the 4 spas that I wanted to buy was either the HS, D1, the Jac or the Sundance.
The D1 dealer gave me the creeps, (pool, patio, pool table dealer, spas last) and it was like he was doing me a favor spending time showing me his spas. Only 2 spas had water in them, and he really didn't sound like he was willing to fill the 2 I liked. He told me his prices on the 2 I liked and said they are firm, too much IMHO. No wet test for me.
Wet tested a few Sundances from a highly reputable pool and spa dealer. After that, the Sundance salesman showed me a flyer on a recently expired promo and told me he would give it to me even though the sale was over a few weeks ago. ;) Mind you, this promo wasn't any thing to shake a stick at, about $900-$1000 higher than I wanted to pay based on numbers from this forum. I knew he could come lower but refused to do so at that time. He would probably do so if I came back again, ready to haggle some more.
The Jacuzzi dealer, was mainly a pool dealer but had a few spas in their "showroom" if you could call it that. All were empty and didn't look like they would ever be filled except for one. This one had been drained, not completely, mind you, the seats had water left in them, with ugly green water with dead flies in it. :o :o :o Nice! :-X This dealer listed the prices on a card next to each spa. About $900 more than the comparable Sundance (if there is one). I asked if they move on the price and was to told no way, these are the best prices and Jacuzzi is the best spa built, much better than Sundance in all respects. "You know that Jacuzzi owns Sundance....", they told me. :-/ I knew that and also knew that the Sundance was a better spa IMHO. This is debated, but I think most agree with my thought on this if prices are equal on both spas. No way am I wet testing their spas if they leave them in that condition. Disgusting. >:( Left his store and went to wet test HS and Caldera a few days later.
Tested a few of them at a dealer who only sells spas, HS, Caldera, hot spot and Tiger River out of 3 stores. Plaques on the walls, "Service Dealer of the Year", year after year, blah, blah, blah. After testing, the owner of the store laid out his selling price including all of the necessary "extras" on the models I was interested in and said this was his price and what he sells it for all the time. Floor models were cheaper but he was not ready to sell them yet. I saw a few invoices on his desk when he left the area to get my daughter a cup of water and that was the price he sold 2 others for. His price was a few of hundred dollars higher than most on this forum but not totally out of line. I also asked him to show me the list price which he did without a problem. Big difference in price without me having to haggle or feel like he was going out of his way to give me the promo price or any 'Special Deal'. The price was reasonable and I really liked the HS Vista and Grandee.
I do not like to monkey around with price on anything. If I have to haggle and work for it, then I will go elsewhere. Give me a fair price up front, save me the trouble of the haggle and I will be a happy soaker.
I am now going to soak in my HS Vista ::) . I never went back to haggle with the Sundance dealer, too much work, I wanted to buy a spa to relax, not to haggle.
That's my story and I'm sticking to it! :P
Jonathan
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I guess i'll weigh in here.
As someone who's in the pool & spa biz I hear or read things from time to time that make my skin crawl. One is the "buy today and save 2000$" sales tactic. Now normally this is usually used at shows/fair events or by unethical dealers. We, however, have firm prices on all of our spas that are either at or slightly belowmthe national average for the brands we sell. If you look back at what our customers pay for a particular model you would see that they all pay the same for that selected model. Whether they buy iy in the showrrom or at one of the two show events we run each year. the only time we put deep discounts on a spa is for one of two reasons: One being if it is a scratch & dent model, and Two if we decide to stop carrying a particular brand for some reason and want to get rid of our stock of that brand quickly. That's it. We believe in taking care of our customers before, during and after the sale (which is the most important). And we must be doing something right if Dimension One has named us their national dealer of the year for customer service and sales two years running.
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I think price should be the last thing to consider when making a major purchase like this. Find the tub you like the most from a dealer your comfortable with and then do the "price grind" thing. I'm sure the dealer wants to make a sale as much as you want it in your yard.
Think about the car you drove out of the dealership and lost 10k to 15k in value by leaving the parking lot. Maybe I shouldn't drag cars into this but I wanted to compare it something we all use on a daily basis.
Life is short...spoil yourself while you still can!
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It would take a believeable story for me to accept the validity of a$1000 discount. If your showroom was full, a customer special ordered a spa, put 10% down, then in the coming weeks had something major like suddenly having to move out of town and he willingly gave up his deposit, would you reduce the price $1000 if you didn't have any place to store it?
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Our dealer pretty much sticks to their price tags, from what I've observed over the years I've been going there to buy chems. and filters. They occasionally have a sale, but it's maybe a couple hundred off. They also offer long term no interest financing.
If someone offers me a deal to reduce the price by $2000 if I buy right now, I'd be very suspect.
There is no real competition in my area between Sundance dealers, one shop has a lock on this area- lots of dealers, but all owned by the same corporation.
But there is plenty of representation between brands out here, to keep someone from being too over priced.
Brewman
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I thought I would offer a discount scenario. When we get our factory discount for our bi-annual parking lot event, combined with the expectation of higher volume for the event, we would offer $1000-$1500 off. Adjusting for exchange this translates to:$815-$1220 off.
Nothing slimy or deceptive about it. Coleman offers us a discount expecting good sales for the event, we do the same. The rusult is approximately 13% for the consumer.
I do dislike the fact that near the end of the sale, I end up sounding like one of those "other guys". Saying "This is offer is only good until the end of the weekend...." but in this case its true!
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The response on this topic has been great! Concise, on topic, and very detailed. This is the info I was looking for. The two biggest culprits in our area for deceptive pricing are the CalSpa dealer and The Arctic dealer.....They do get sales off of doing that but I have a problem with it. IMO, I believe that most people are better educated than that but it's frustrating to run into those that buy into it!
We are very fair with how we price and the one thing we might have a tendency to do is price the spa with the options, sell the value of the options and then throw them in as a closing tool but even at that I have to control salespeople to not get greedy with a customer. For the most part though my crew shares the ethics of my wife and I. Funny the last employee that I had that seemed to try and "gouge" the customer on price didn't like the parameters that we put on him and went to work for the CalSpa dealer!
Thanks again
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My thoughts are by the time your ready to buy you should have a pretty good idea what the market place has to offer. Which means, you should be able to compare the different brands and features and options against other brands and make an informed decision. He's a great example of what I mean. Lets suppose your in the new car market and have a trade in. The sticker price is 30k. One dealer tells you he'll sell you the new car for 28k and give you 4k for your trade. Another dealer tells you car is 30k but I'll give you 6k for your trade. Tax consequences aside, your getting the same thing. All retailers are the same. You should make your decision based upon whether you feel you are getting your monies worth. Is what you are buying worth "X" amount of dollars? The market and your "education" about the product should be your guide!
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Something that I don't feel has been taken into consideration is that, with few exceptions, the people who have used this forum and other sources to gather info, in addition to spending time at the daelerships and wet testing, are most definitely SMART shoppers.
Unfortunately, many people spend a bare minimum amount of time looking, and buy because they see something that looks/sounds really neat, whether it be 7 hp pumps, 150 jets, or that $2999.00 price tag.
If little to no time is spent looking at hot tubs, and somebody walks in to hear about an amazing deal "this weekend only!" they may choose to look no further.
There are a lot of people who don't spend a lot of time, so to them hearing big pumps, lots of jets, at a really low price "today only" sounds great.
If you don't believe me just think about the number of people who choose to wet test your tubs before buying. Probably not a large percentage if I had to guess. I always mention/emphasize wet testing before buying, but am rarely taken up on the idea.
Just some ramblings from a man looking to fill his last hour till home time.
Joe
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Great topic.
IMO people shop differently at different stores, based on the advertising that a store does.
Example A.
I come into your store because of the “save thousands of dollars” advertising and ask the salesperson what’s the best deal on a hot tub, he/she shows me a model or two and my main concern is price. Finally find a size I like, it’s the best deal in town, this model normally lists at 7,995 but today he/she can sell it to me for 4,995 I would probably say “Hot Deal” I’ll take it.
Example B.
I come into your store because of advertising that promoted the benefits of owning a spa. I introduce myself, ask the salespersons name and proceed to tell him/her what I'm looking for allowing him/her to ask questions and finally showing me the spa he/she feels best meets my needs/wants, than presents the benefits of owning that spa concluding the presentation with the price and an invitation to own it today, if I am ready, I would buy from this store.
The difference is the customer in example A would rarely buy from an example B store because price is most important.
The customer in example B would not buy from an example A store, because value, quality and service is more important than just the price.
My 3CDN cents worth :)
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I doubt any of us who post here regularly could have said it any better wetone. Great post.
I'd like to add to it, that often times the advertising our "evil" price competitors run, bring shoppers in to all dealers in the area. Customers like to look to see what's out there. But you are right, customers whose main concern is solely price driven will hardly EVER buy a premium spa. They will almost always go for the deeply discounted tim the toolman taylor spas.
Also, an earlier post hit the nail on the head with the number of wet tests that are done. Sadly, not enough customers take advantage of this. I would say maybe 1 out of every 10 spa customers wet tests before buying. I'm not positive, but I think we are the only dealer that does regualr wet tests, and encourages potential customers to do it. It should also be pointed out that the majority of spa shoppers do not do alot of internet research or contribute to the forums. The ones that do make up a very minute percentage of all new spa shoppers.
Jason,
Store manager for a D-1 and Caldera Dealer
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Great topic.
IMO people shop differently at different stores, based on the advertising that a store does.
This is the meat and potatoes of what I'm trying to get to. I want to be able to advertise an honest savings to the general public without over inflating it but don't want my offer to sound insignificant compared to those with exaggerated price and savings.
Example A.
I come into your store because of the “save thousands of dollars” advertising and ask the salesperson what’s the best deal on a hot tub, he/she shows me a model or two and my main concern is price. Finally find a size I like, it’s the best deal in town, this model normally lists at 7,995 but today he/she can sell it to me for 4,995 I would probably say “Hot Deal” I’ll take it.
There is a book called "Retail Business for Dummies" that explains these differences well. In it he says that for our blow out loss leaders that you are trying to dump regardless of profit you should keep a list of those people that could care less about quality and just want a deal and direct market them when you have these products.
Example B.
I come into your store because of advertising that promoted the benefits of owning a spa. I introduce myself, ask the salespersons name and proceed to tell him/her what I'm looking for allowing him/her to ask questions and finally showing me the spa he/she feels best meets my needs/wants, than presents the benefits of owning that spa concluding the presentation with the price and an invitation to own it today, if I am ready, I would buy from this store.
This is the customer that I most want, educated, canny, wants a deal but also wants quality and performance.
The difference is the customer in example A would rarely buy from an example B store because price is most important.
The customer in example B would not buy from an example A store, because value, quality and service is more important than just the price.
Again I refer to the series "Retail Business for Dummies", if you own or manage a store it is a must for targeting your marketing.
My 3CDN cents worth :)
I don't think that would equal 2 cents US would it? ;)
Thanks again for your input!
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When we decided to purchase a spa we first went to a Thermospa show advertising big savings on overstock and discontinued and ordered but not taken spas. You could not walk the floor without a high pressure salesman and they did not even have a tub filled and running We ran after he gave us the prices. Next I Googled the names of spas thermospa was better than and looked for them in my area. Saratoga, Hot Springs, D1 and Jacuzzi were close by so I went and checked the dealers out. All had a book with the retail prices and their price no haggle. I had signed up for catalogs on the web sits and the Caldera dealer sent a letter to me with a coupon for 100$ off. After we wet tested the Diplomat at the D1 dealer they would not fill the aurora II for us . I decided to check out the Caldera dealer as he was only 40 miles away. When I left I told him I would only buy a spa from him and as soon as I could bring my wife back to test the spas. We didnt haggle he said Caldera had a 500$ sale and I had a coupon so the price is 600 less. Before I brought my wife back I recieved another coupon from them for 100$. When My wife and I went in he said we does not honor more than one coupon but he would for us. So it was a combination of the right dealer the right spa Geneva Utopia and the right price. Sorry for the long post.
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I don't think that would equal 2 cents US would it? ;)
I think it's actually about 2.4 cents US with today's conversion rate... 8)
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I went to 8 different dealers and spent over 40 hours of on-line research or travelling/time in a dealership while looking for a spa.
There were dealers who quoted me THOUSANDS above what I could see people were paying----and then offered me the "$1500 off this month" deal. It didn't turn me away from those dealers (I even wet tested one of the "big quoters"); but in the end I returned to the dealerships whose initial "price ranges" were closer to the purchase prices I found on-line. I felt they were more "honest" and would be easier to find a bottom line.
Do that many people really think they're getting such a "great deal" that these dealerships use those tactics? Are that many consumers fooled by this?
It must work, or the tactic wouldn't be used....
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Do that many people really think they're getting such a "great deal" that these dealerships use those tactics? Are that many consumers fooled by this?
You'd be surprised!
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When we were looking, I was looking for the final cost of the spa, not how much they were "knocking off". I found the whole experience similar to buying a car (sorry!), but without the knowledge I have gained from operating a car these many years (this was my first spa).
The flashy ads may get people in the door, but the bottom line is how much is it going to cost compared to other models (well, that and the sales staff).
Also, I was initially interested in a Sundance model. The salesman was pretty helpful and we were seriously considering it. Well, up until I asked him the price. Then I got mumbo jumbo about how they were running a sale, factory discounts change, and if I was still looking around to come back when I was ready to buy as he wasn't going to quote a price unless we were serious. Well, guess what... we WERE serious, and did buy a spa, but not from him. I guess I mention this because I know that a lot of you are in the business. I hope you don't do this, and from what I read here, I don't think you do. I don't play those silly games, but I suppose there are enough gullible souls that do. Just my 2 cents.
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Did you go back to that Sundance dealer and show them that you purchased a spa from one of their competitors?
Glad our Sundance dealer doesn't play those games.
Brewman
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Do that many people really think they're getting such a "great deal" that these dealerships use those tactics? Are that many consumers fooled by this?
It must work, or the tactic wouldn't be used....
If it didn't work, companies like Coast, Gulf Coast and anyone who sells out of a warehouse space with a classified ad would not be around and would not be able to afford to buy a four-star rating.
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I
Do that many people really think they're getting such a "great deal" that these dealerships use those tactics? Are that many consumers fooled by this?
It must work, or the tactic wouldn't be used....
It works on those who tell themselves that by purchasing something they are saving money.
When you buy something, you are spending money.
Like everyone's saying, it must be working, or it wouldn't be so common.
Brewman
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A recent 'Monday Morning Memo' from the Wizard of Ads (Roy Williams) really caught my attention Stuart. Here's his perspective on this topic:
1. transactional customers are bargain hunters, and
2. brands are built on relational customers, and
3. the split between transactional and relational shoppers in most product categories is roughly 50/50, and
4. the key to successful advertising and profitable face-to-face selling is to speak to each group in their own language.
In the article, Williams also cites a recent MIT study that I think you would find interesting. I'll forward the article to you. Interesting stuff!
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Brewman, I never did go back as I really didn't think it would make much difference. Although you got me to thinking... you think a letter to the manufacturer would do any good?
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A recent 'Monday Morning Memo' from the Wizard of Ads (Roy Williams) really caught my attention Stuart. Here's his perspective on this topic:
1. transactional customers are bargain hunters, and
2. brands are built on relational customers, and
3. the split between transactional and relational shoppers in most product categories is roughly 50/50, and
4. the key to successful advertising and profitable face-to-face selling is to speak to each group in their own language.
In the article, Williams also cites a recent MIT study that I think you would find interesting. I'll forward the article to you. Interesting stuff!
Cgar,
Thanks for emailing me the info, this is pretty similar to what Rick Siegel says in the program I mentioned but he breaks customers down into more catagories.
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Everyone has been so good about staying on topic here I hate to do this but couldn't resist a Christmas greeting to cgar;
(http://img157.exs.cx/img157/421/snowmancigar9bw.png)
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Brewman, I never did go back as I really didn't think it would make much difference. Although you got me to thinking... you think a letter to the manufacturer would do any good?
I'm not sure it would do you any good, but I believe that It could possibly benefit the shop in the long run.
And any future customers.
I think giving businesses feedback on their performance can only improve a business, if they choose to listen and act. I do this frequently, I pass along positive as well as negative feedback.
Writing to Sundance about your experience is a good idea. If you do, let me know what their response to your letter or email is.
Brewman
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Hey stuart... I guess I'll take those Cuban cigars that I had packaged for you and return them to my humidor. I wouldn't want to send you something that would be hazardous to your health. ;)
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Hey stuart... I guess I'll take those Cuban cigars that I had packaged for you and return them to my humidor. I wouldn't want to send you something that would be hazardous to your health. ;)
>:( >:( >:( ;) ;) ;) ;D ;D ;D 8) 8)
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The buying public drives this phenomenon. Regardless of the brand youo sell. I have yet in my 13 years in this business to talk to a customer that didn't ask what is your best deal on this spa. Hmm, I can say You've got my best deal and wait and watch them walk out the door down the road to the other spa dealer who is boing to give them the "deal of the century" or I can GET IN THE GAME. You must have the prices set so you can give a fair and reasonable discount. That is the win win situation. You come down in price, the customer feels you went the extra mile to give them a good deal you make the sale, win win.
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I would (very respectfully) disagree with you Wisoki. While the issue of who drives this phenomenon is a bit of a chicken and egg issue, I don't believe that you have to play the game to be successful. I have helped many clients own spas at our posted (and very fair) prices. I personally don't believe in incorporating a cushion so that I, as a salesperson can discount to make the sale. In my mind, this practice doesn't show ultimate respect for our clients. After all, if client A asks for my 'best deal' and gets the built-in discount, but client B doesn't ask for the discount... ??? I'd rather expend a great deal of positive energy in conveying the incredible value in our product, AFTER demonstrating how it best meets the individual client's needs.
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I don't know that I would take as hard of a line on this as Wisoki. Buyers do drive this "phenomenom" however the selling vendors have a lot to do with training them to do that. We never walk into a McDonalds or Arbys and say "Whats the best deal on a sandwich" (at least very few of us do) do we?
I have more customers interested in what's the best spa for them long before asking what the best price they can get is.
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Buyers do drive this "phenomenom" however the selling vendors have a lot to do with training them to do that.
Amen.
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Who was that car company that touted everyone gets the same deal, no hidden costs, all prices clearly listed. How are they doing? Anyone know who I'm talking about?
My point is I don't remember because I want to be able to negotiate with my dealer when I purchase my car. It's the same in almost every spa deal. It's human nature, customers want at least two drops. It's my job to build value to the spa.
I do however think that a dealer must be consistant and set the retail prices consevatively. Dealers that show outrageous inflated starting costs lose credibility and make it harder for dealers that play the game fair and with integerty.
Spahappy :D
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I do however think that a dealer must be consistant and set the retail prices consevatively. Dealers that show outrageous inflated starting costs lose credibility and make it harder for dealers that play the game fair and with integerty.Spahappy :D
Man is that ever true!! I sat with a man yesterday who had just come from another dealer. This other dealer was spouting off huge prices, which didn't scare this man: he was looking for a good tub as well as a good 'deal.'
But the first dealer had dropped two grand by the time they sat to write up a quote. It offended the guy, made him question the integrity of the dealer. But then when I wrote up a price for him, and gave him an honest $500 off (keep in mind: in my store if I take that much off it has to be a floor model, discontinued, or some other legit reason that I'm handing you $500 of my kid's college money!!) he laughed and said I must not want his business. I tried adding all the accessory items which were on the floor model already at no cost, but he had smelled blood and wanted more than I would give him. He walked.
I may yet sell him: I'll call him later today and see if he would be interested in the tub I have in my yard, (full warranty, more than $500 off, with free cover lift, remote, ozone and spaudio) but I don't hold out much hope.
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Man is that ever true!! I sat with a man yesterday who had just come from another dealer. This other dealer was spouting off huge prices, which didn't scare this man: he was looking for a good tub as well as a good 'deal.'
But the first dealer had dropped two grand by the time they sat to write up a quote. It offended the guy, made him question the integrity of the dealer. But then when I wrote up a price for him, and gave him an honest $500 off (keep in mind: in my store if I take that much off it has to be a floor model, discontinued, or some other legit reason that I'm handing you $500 of my kid's college money!!) he laughed and said I must not want his business. I tried adding all the accessory items which were on the floor model already at no cost, but he had smelled blood and wanted more than I would give him. He walked.
I may yet sell him: I'll call him later today and see if he would be interested in the tub I have in my yard, (full warranty, more than $500 off, with free cover lift, remote, ozone and spaudio) but I don't hold out much hope.
That's what I mean when I say we train them to do that! His first shopping experience the guy makes it seem like he will take thousands off and sets the pace for what the buyer will assume at other dealerships.
Often I tell them that if they would llike me to re-calculate the price to retail I would be happy to discount the spa that much for them.
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Questions to you professionals - How often do you lose a sale due to this type of pricing? And - Do you think that maybe it's unavoidable?
As a consumer, I tried to shop "apples to apples". As I have said - I went to what I considered a lot of dealers. Given that I don't have the insiders insite as you do - I tried to pick a tub that seemed to be what I want/needed assuming that the "quality is equal" (I know that this might not be the case).
To be honest with you - HS and Sundance was too expensive for what I was getting IMO and there is only so low the dealer can go and I know that. No matter how hard these dealers tried to sell me on their product - I wouldn't buy. I did consider the Sweetwater line. (funny - as I said earlier they both used the "discount" selling tactic)
I also believe as a consumer, WE are not ready for the sticker shock when we first start looking - so a "greatly" discounted unit seems like what a buy. As I shopped some more is when I realized that basically all tubs of similar stature are about the same price. By this I mean a HS high end tub is equal to a Sundance which is equal to D1 ... . And the same holds true for all the lines of tubs - True maybe some have more features in it at a similar price but that's why there are so many brands. It was after shopping for a while that I realized the I could not afford a "premium" tub.
I think it's unavoidable to get someone looking for that hugely discounted tub - Maybe a question to ask is how long have they been looking? - Maybe the person is buying on a whim and today is the day he/she decieded to buy the tub.
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No matter how much market research you do, honest and upfront advertising you buy, feel good conversation you have with the buyers letting them know your an ethical company and price fairly to start with, YOU WILL LOSE SALES to this type of hype....
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I was in a dealers showroom today looking at a Jacuzzi J375 and the salesperson told me all about the tub compairing it to the Optima then said he would take $1000 off the price. This makes me think he has all his tubs over-priced and makes me wonder if there is more room for him to discount. I believe he still has $200-$500 more.
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I was in a dealers showroom today looking at a Jacuzzi J375 and the salesperson told me all about the tub compairing it to the Optima then said he would take $1000 off the price. This makes me think he has all his tubs over-priced and makes me wonder if there is more room for him to discount. I believe he still has $200-$500 more.
We have dropped our margin at times to prevent losing a sale to our local Sundance dealer. They are new to town and have taken a bite out of our business.
Dropping the price was more of a spite thing than anything else.
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That makes since. It's always good business to know about your computition. It's a known fact that any new business of any kind to get started must have very competitive pricing to gain it's fair share of the market. The bigger guys do have an advantage because they usually can beat the smaller guys with volumn sales even though they have more overhead. Usually the small guys are not in business over 3-5 years if they keep the marigins real low. A bigger supplier who sells other products like pools and such could make the spas a "lost leader" for a while. Just my 2 cents
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We started shopping for our tub in June 2004. We went to pretty much every dealer within 35 miles of us. There were two that offered 1000+ discounts. We didn't purchase from either. We finally bought from the dealer that seemed more interested in getting us in the right tub for us instead of leading us to one with a smaller price tag. We told each dealer what we were looking for. Quality,comfort,dealer support. Actually we purchased where we did because of the manager of the store. He was straight forward, didn't put down any other tub, actually I tried to get him to talk down the emerald and beachcomber but he said straight out that he would not get into down gradeing any other dealer. I really think this is probably why I ended up buying from them.
At least for us. The $1000.00 discounts didn't sway us to purchase. Now it would have been nice if he had given us a thousand off the Grandee, but that wasn't an option. He did give us a couple extra bottles of chemicals and some extra test strips and filter cleaner.
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Who was that car company that touted everyone gets the same deal, no hidden costs, all prices clearly listed. How are they doing? Anyone know who I'm talking about?
That would be Saturn. They've had a few problems, but they seem to be doing relatively well, considering their competition is Toyota and Honda.
My point is I don't remember because I want to be able to negotiate with my dealer when I purchase my car. It's the same in almost every spa deal. It's human nature, customers want at least two drops. It's my job to build value to the spa.
Why is this human nature?? Is the basic idea of negotiating that the dealer is out to cheat you and you need to squeeze out every last cent to make an honest man out of him? Consumer reports is probably partly responsible for this attitude, but what else causes consumers to think that every big ticket item should be sold at dealer cost?
So when do we start haggling over pizza prices?
Moderator note - fixed problem with quote bracket
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Why is this human nature??
It is not human nature, it is has become the norm due to "dealer industry" pricing.
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It is not human nature, it is has become the norm due to "dealer industry" pricing.
Agreed. Some where a long time ago, some one selling some big ticket item thought:
"I'll mark it up 200% and drop that price by 50%, I'll still double my money and the suckers will think its the deal of the century"
The cycle began.
Or maybe this is a chicken and egg scenario. For that matter who cares who started it, its here, its reality.
HTM
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So what is an average mark-up on a spa? I know in retail clothes (for example) it's usually a 100% mark-up (e.g. if a department store sells it for $200, they probably paid $100 for it).
Cars are usually about 6% over their invoice prices (they make most of their money on used cars and service).
Anyone willing to divulge the mark-up on a spa?
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car dealers don't pay that "invoice" price for their cars. Anyone who believes that.................c'mon now. And yes car dealers make a lot of their income on service, BUT in order to sustain their dealerships they have to make more then 6% off of a car. All of the advertising they do..........costs a LOT of money, not to mention the salaries they have to pay their employees..........
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e.g. if a department store sells it for $200, they probably paid $100 for it.
That would be a 50% markup. And it doesn't mean that the store keeps that hunred bucks either. Retail stores are some of the most expensive things to build and run...
A 100% markup would be when you get something for free, and sell it for anything above free - could be a dollar.
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That would be a 50% markup. And it doesn't mean that the store keeps that hunred bucks either. Retail stores are some of the most expensive things to build and run...
A 100% markup would be when you get something for free, and sell it for anything above free - could be a dollar.
Ahhh, I finally get to correct Chas!
Chas you are confusing markup and margin. If something costs (wholesale) $100 and sells for $200, that is a 100% markup and a 50% margin.
Like Chas says, that is just the markup, the store is lucky to retain $50 after factoring in rent, salaries, equipment, vehicles, insurance etc etc.
As far a profit margins dealers have, well it varies greatly. I am talking gross margin, not net margin. If the company is primairily a spa dealer margins can vary from 25%-50% or higher depending on many factors. I have seen some dealers that sell spas as a side business take as little as 10% margin.
I can tell you this for sure, operating expenses and salaries/commisions equal 25-30% off the price we sell our tubs for. We have very low rent.
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Ahhh, I finally get to correct Chas!
Well, I am glad to still learn a thing or two when I can. I feel very good about my definitions on this one, though. I have used these terms from accounting classes through seminars and on-line learning, all the way to simple conversation with other experienced biz folks such as our bookkeepers and CPAs.
From Dictionary.com:
mark·up Pronunciation Key (märkp)
n.
1. A raise in the price of an item for sale.
2. An amount added to a cost price in calculating a selling price, especially an amount that takes into account overhead and profit.
3. A session of a U.S. congressional committee at which a legislative bill is put into final form.
4.Others:
1. The collection of detailed stylistic instructions written on a manuscript that is to be typeset.
2. Computer Science. The collection of tags that describe the specifications of an electronic document, as for formatting.
Which means that 'markup,' when expressed as a percentage, is a percentage of the sales price which can never exceed 100%, unless you get the item from your supplier for free.
'Margin' - also from Dictionary.com:
Economics.
1. The minimum return that an enterprise may earn and still pay for itself.
2. The difference between the cost and the selling price of securities or commodities.
3. The difference between the market value of collateral and the face value of a loan.
6. An amount in money, or represented by securities, deposited by a customer with a broker as a provision against loss on transactions made on account.
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Which means that 'markup,' when expressed as a percentage, is a percentage of the sales price which can never exceed 100%, unless you get the item from your supplier for free.
Huh?
So if I buy something from a supplier at $20 an item and sell it for $150 (mind you, I've done that before), my "markup" isn't $150-$20=$130/$20=650%?
From Marketing, an Introduction (http://vig.prenhall.com/catalog/academic/product/0,4096,0130351334,00.html) by Gary Armstrong (UNC) and Philip Kottler (Northwestern):
Markup (http://www.prenhall.com/divisions/bp/app/armstrong/cw/glossary.html) = The percentage of the cost or price of a product added to cost in order to arrive at a selling price.
Really, I'm NOT trying to stir anything here, I'm just a little confused...
Drewski
8)
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Once again, I beleive Chas was refferring to profit margin. It is impossible to have a profit margin higher than 100%.
It is possible to have a markup that is higher than 100%
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so I would guess you try to make 30% mark up? on a spa.....with average overhead
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Once again, I beleive Chas was refferring to profit margin. It is impossible to have a profit margin higher than 100%.
It is possible to have a markup that is higher than 100%
Yes, but is it possible to give 110% effort?
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Yes, but is it possible to give 110% effort?
It is if you just came from a Tony Robbins seminar, but it wont last long...
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yes, because if non of us gave 110%+ in this business we'd be out of business.
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yes, because if non of us gave 110%+ in this business we'd be out of business.
good answer!
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So no one has answered the question----when a spa dealer purchases a spa, on average how much do they mark it up?
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So no one has answered the question----when a spa dealer purchases a spa, on average how much do they mark it up?
It'll vary from dealer to dealer. However, the chances that someone will tell you are about equal to your chances of getting info by e-mailing the Yankees and asking them what they "signs" are from the 3rd/1st base coaching boxes.
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You might just as well ask where Hoffa is. You'll have a greater chance of getting that one answered before you get the answer to your original question.
Not that I blame those in the business for not answering the question. What a can-o-worms that would be.
It's really nobodies business, and it's a lot like asking someone how much they make, or what their house costs, etc...
Brewman
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You might just as well ask where Hoffa is.
They found Jimmy - did you hear?
He was at a local hospital, in the delivery room.
Organizing labor.
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So no one has answered the question----when a spa dealer purchases a spa, on average how much do they mark it up?
(A.) + (B.) = selling price of the spa.
Answers to A & B only make sense when one has perfectly lined up the proper ducks in a row and entered the arena of hot tub store owner. :)
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They found Jimmy - did you hear?
He was at a local hospital, in the delivery room.
Organizing labor.
You really must find a way for a rim shot and cymbal crash to play when you do this. It would really complete the Chas experience.
Brewman
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You really must find a way for a rim shot and cymbal crash to play when you do this. It would really complete the Chas experience.
Brewman
This tickled me beyond "ROFLMBO" or other derivations - thanks for the laugh, the kind thought, and have a blessed Christmas.
;D ;D ;D
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No Charge. Same to you and yours!
Merry Christmas, and Happy New Years!
Brewman
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They found Jimmy - did you hear?
He was at a local hospital, in the delivery room.
Organizing labor.
They thought they found him several year ago but it turned out.....
it was Tammy Fae Baker without her makeup!! ;)
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So no one has answered the question----
now that wouldn't be fair now would it?