How to Navigate the Online Pricing Tightrope
It’s not surprising that car buyers increasingly rely on the Internet when purchasing a vehicle. Among buyers who go online, about 60% of their overall shopping time is spent doing research there, according to Car Buyer Journey.
The most common online activity performed by shoppers is researching car prices, noted the report. This makes it critical to devise an effective online pricing strategy for your dealership.
Walk the pricing tightrope
However, online vehicle pricing is like walking a tightrope. If you price too low, you’ll sacrifice margin. But if you price too high, customers won’t bother to call or visit. So, you need to set the right online price right out of the gate.
Here are a few strategies to help you accomplish this goal:
Set your price based on market data, not sales gimmicks. Some dealers try to lure online buyers by showing only the manufacturer’s suggested retail price (MSRP) online and having them submit their contact information to get an e-price. But many online shoppers won’t invest the time, and will just move on to another dealership.
Instead, develop your online pricing strategy based on objective market data. Set vehicle prices within typical market ranges and display them clearly on your website. According to one auto dealer-owner, whose business offers dealership e-commerce solutions and online buying tools, listing market-based pricing online can increase gross profit by $785 per vehicle.
Be realistic with your online prices. Another common tactic is displaying unrealistically low prices online using conditional discounts and rebates that don’t broadly apply. Finding out that the actual price will be higher because the listed discounts and rebates don’t apply can leave a bad taste in car buyers’ mouths.
A better strategy is to prominently display universal selling prices that will apply to most customers. You also can display secondary discounted prices that include clearly labeled conditional discounts and rebates.
Ensure consistency between online prices and showroom prices. Most car buyers today expect consistency between their online and in-store experiences. If your dealership’s salespeople are undermining your website prices, many customers will assume they can’t trust either price.
A focus on price transparency
For many car buyers today, getting the absolute lowest price is less important than getting a fair price and having a positive overall shopping experience. This makes price transparency, rather than the actual price itself, a key differentiator between dealerships. So, take a close look at your online pricing strategy with this in mind.