Transparency in vendor pricing

[PaulS]

[My 1st post after long time lurking. Quick thank you to the Dealer Refresh admins for putting together this great resource - best automotive dealer+vendor forum on the web!]



The vast majority of automotive solutions providers that I've seen do not publish their prices on their websites. They usually just say "Call us for a quote" or something similar.


I can understand this approach for certain products where the final price is genuinely highly variable for each customer (e.g. due to potentially complex deployment services or custom web design requirements). However, this is becoming the exceptional case, especially with modern hosted products with minimal add-on services required. This happens in other B2B industries, it's not unique to automotive but I still don't totally understand it.


Obviously every product/vendor is unique, but I feel the benefits of transparent pricing outweigh the disadvantages, both for the vendor and the customer (the dealer). For example:

• It removes a barrier to entry for initial contact with new customers who are evaluating their options but are not yet quite ready to get into a sales discussion by calling for a quote
• It demonstrates openness and transparency
• It shows confidence in the value the product will offer the customer
• Published prices are becoming the standard for B2C software, and this expectation of readily accessible pricing will move to B2B

I would love to hear from other vendors around reasons for not publishing prices.
Do you think the customer (the dealership) will be put off by a high price before your sales guys have had a chance to talk to them to explain the full value?
Is there a fear of being undercut by a competitor?
Can your product not be sufficiently demo'd within your website such that customers will be able to determine it's value, and showing pricing up front will just scare them off?


Also, I would love to hear dealers' opinions on this. Would seeing a price (or a tiered pricing plan) up front make you more likely to trust/buy from that vendor? Many dealers are moving towards an upfront "no haggle" price with their inventory, so should vendors be doing the same?

 

[yagoparamo]

Paul,

Depends on the product... if you sell a straight forward thing like for example videos, you can probably say: $99/month for our basic system.

But websites... define that for me. Do you need a CMS, email, flash, custom credit apps, custom price mapping, multiple source video integration, build content, integrated chat, etc. The sky is the limit with a website (didn't Obama recently spend $600M on a website?).

So when people call me and ask "how much is a website?"

I feel like asking "how much is for an automobile?"

 

[PaulS]

Thanks for the response Yago.
I'm talking more about "off-the-shelf" products here rather than bespoke solutions such as websites. Think CRM (e.g. Salesforce), inventory management or Live Chat systems where the product already exists and installation effort is minimal.

 

[PaulS]

Thanks for the response Yago.
I'm talking more about "off-the-shelf" products here rather than bespoke solutions such as websites. Think CRM (e.g. Salesforce), inventory management or Live Chat systems where the product already exists and installation effort is minimal.

 

[yagoparamo]

As you know salesforce cost more or less depending on modules, custom development, users, etc. How do you price that? The entry price on their website is a fake... you never, ever, pay that to them.

As for live chat; you mean from India, true 24/7, trainable, etc.

A dealer told me once that "how hard could it be to do websites; you build those things once and pat $8/month for hosting to Godaddy". I told him "how hard is to run a dealership; you go to the auction, buy a car, wax it, and sell it for more than you bought it".

Every business has its kinks.

If you are having a hard time finding a vendor you can work with and trust maybe you need to keep looking but also you need to look at yourself as of what you say/hide from them.

I have a dealer that I personally go visit almost every month, my top consultant also goes. We consult for free on everything there is. He buys photos and a $900/month website plus a special finance website. He claimed last week that he cancelled something and we found the email so I told him he will get a $700/month X 3 month credit = $2,100. There was something else he claims he cancelled but he couldn't produce any evidence. I told him that I would love to visit later on with him about that and see if we could come up with a resolution. He just paid the bill for his stores and deducted on his own accord $2,800 (when we agreed to $2,100) and $3,000 for the other one we never agreed (and I can't come up with any scenario that ads up to $3,000). So the bill for one of the guys we work above and beyond our contracted duties are got cut $5,800. Called accounting and they said call the owner. Call the owner and he doesn't answer...

This is just one dealer, I'm just once vendor, it doesn't showcase the industry. But what people charge is often skewed because what we do and what we get paid for and how we are treated.

 

[rick803and]

I think the price has so many variables that it is hard for a vendor to display price. For instance, when I sold products for many years with Dealer Specialties almost every single product had prices based on dealership variables.(size of inventory, frequency of service,etc.) Due to this, a simple meeting to collect what a customer is looking for and tailor the price to their needs is a must. I don't want to publish a price starting at $100 a month and based on your inventory and needs you have to have a $300 a month package. It creates problems, hurdles and objections for no reason.

 

[ewalraven]

Pretty what the guys said above, but it's the same reason that car dealers post "call us" pricing .. to get the lead.

Once you get the person on the phone you have the ability to negotiate .. based off of current setup, number of dealers, what products and services they want, additional fees that you may charge, sales persons commission, etc. Not to mention it's just the nature of the business. Decision makers usually need that warm and fuzzy feeling inside before they give a penny to anybody.

Most of the stuff out there you need to make sure you get somebody on the phone anyway so that you have the correct contact people, necessary software that may need to be installed, and proper training.

Anyway, back to my original statement .. nature of the business.

 

[Alex Snyder]

A dealer told me once that "how hard could it be to do websites; you build those things once and pat $8/month for hosting to Godaddy". I told him "how hard is to run a dealership; you go to the auction, buy a car, wax it, and sell it for more than you bought it".

that's great.

PaulS - my eyes were opened in a whole new way (and then some) when I took a job at Dealer.com, after cutting my teeth in the dealership (literally...it is a family business). I used to think building software was easy. Trust me, it isn't. Selling cars is faaaaaar easier.

I came to Dealer.com to get a CRM off the ground. A full CRM is absolutely the most complicated piece of technology that can be built for a car dealer today. I won't bore you with those details, but I can tell you about one thing I didn't consider before taking this job nearly 4 years ago: Relationships.

Software, for the car business, is pretty specialized. That cuts a lot of the rules that apply to consumer-facing softwares such as Excel or Photoshop. It is also supremely relationship focused. Most dealership softwares come with account managers and/or a strong support system. You don't get that with consumer technologies. I pay Adobe $50 a month for their suite of software, but there isn't a phone number to call to ask how I should post-process the photo I just took.

Relationships aren't just dealer to vendor. Adobe will update their products when Microsoft or Apple rolls out a new flavor of their operating system. Adobe is fortunate to be given developer versions of new platforms months before those go to consumer. In automotive, this does not exist. When an OEM makes a change it is nice to see vendors who have those relationships seamlessly transition the software on the dealer's behalf. Same goes with Google, advertising networks, vehicle data companies, DMS systems, etc. The vendors pay for these relationships with money, support, development, contracts, and staying progressive.

To this day I am still blown away by the sheer number of changes we have to make daily in order to stay ahead of *most* things. Relationships aren't features you buy, so you can't put a dollar value on them. Relationships take years to grow and are probably the most expensive commitment to make.

I know this doesn't answer your question about price transparency, but I hope I've at least given you a perspective I didn't used to think about when I was the customer of these vendors.

 

[PaulS]

Lots of helpful replies so far guys, thanks for that. Reading back my original post, I hope it didn't come across as accusatory, that certainly wasn't my intention. The general consensus so far seems to be that the reason for not publishing prices is that there are too many variable factors between dealers to make this viable.


Alex, this may surprise you but my background is in architecting bespoke software solutions (for 12 years) for customers across several industries so I know exactly what you mean about software not being easy to build!!


I totally get what you're saying about relationships and the high level of support required by dealers which is not the case in the consumer world. Relationships are vital to selling B2B software and as Eric said, a "warm and fuzzy" personal contact from the vendor to the dealer is undoubtedly necessary for most vendor sales.


However, I'm still not convinced that we can't do better with pricing transparency at the pre-sales stage.
Talking generally here, as a vendor of a packaged product (not a bespoke solution), you have a set of steps you go through in order to provide a quote for a customer. I would imagine this usually involves the following factors:
1) a base license/subscription fee for the software itself (or for individual modules for more complex products) based off the core value the solution delivers to the dealer
2) a multiplier based on the size of the dealer or the amount of usage the product will get (e.g. inventory size for Inventory Management software, or number of customers for CRM)
3) Support/consulting agreement - usually with well known rates per level of support required (email only, 24hr phone, account manager, etc).
4) Discretionary discounts (a genuine customer-specific variable)


Is it that difficult to provide a pricing table on your website detailing your core product (or module) pricing and the consulting/support rate that you charge?

 

[yagoparamo]

Lots of helpful replies so far guys, thanks for that. Reading back my original post, I hope it didn't come across as accusatory, that certainly wasn't my intention. The general consensus so far seems to be that the reason for not publishing prices is that there are too many variable factors between dealers to make this viable.


Alex, this may surprise you but my background is in architecting bespoke software solutions (for 12 years) for customers across several industries so I know exactly what you mean about software not being easy to build!!


I totally get what you're saying about relationships and the high level of support required by dealers which is not the case in the consumer world. Relationships are vital to selling B2B software and as Eric said, a "warm and fuzzy" personal contact from the vendor to the dealer is undoubtedly necessary for most vendor sales.


However, I'm still not convinced that we can't do better with pricing transparency at the pre-sales stage.
Talking generally here, as a vendor of a packaged product (not a bespoke solution), you have a set of steps you go through in order to provide a quote for a customer. I would imagine this usually involves the following factors:
1) a base license/subscription fee for the software itself (or for individual modules for more complex products) based off the core value the solution delivers to the dealer
2) a multiplier based on the size of the dealer or the amount of usage the product will get (e.g. inventory size for Inventory Management software, or number of customers for CRM)
3) Support/consulting agreement - usually with well known rates per level of support required (email only, 24hr phone, account manager, etc).
4) Discretionary discounts (a genuine customer-specific variable)


Is it that difficult to provide a pricing table on your website detailing your core product (or module) pricing and the consulting/support rate that you charge?

There is something weird about the car biz when it comes to pricing... Any other industry with B2B solutions you can quote a price and work with the client on adjusting that based on needs once implementation starts, needs are discovered, etc.

In the car industry whatever price you whisper once will be, unless the next one is less than that.