Tuesday, March 31, 2009

I will not do suppliers' market research for them

XXX, I appreciate your help and concern.

I have never bought a new car before, and I am finding this process a little frustrating. It is my intention to trade over my salary packaged car every few years, and so a relationship is important.

However, I tend to find that a lot of dealers of cars and of high cost items, such as TVs etc expect me to do their work for them. If you really believe that you can offer me the best price, then please do so.

Imagine my situation. Let's say the best price I could get in buying an item is $500, but its retail price is $900. However, I do not know the true value of the item, and so the only way I can get a better deal is to do research by checking out other dealers. Every dealer wants the chance of being allowed to have a second go at bidding. Why? Because, then they don't have to give me best price first up.

So, in this example, a dealer might offer me a price of $700. If I then spend time and energy getting a better price (and I don't want to pay extra for a car in the form of wasting days doing research), then I might find another dealer offering me a price of $600. Why then should I come back to the first dealer? Why should I give him the benefit of my research, finding out that the rest of the market is willing to take $600, so he can offer me $590 at a second go rather than $500 at a first go. If he knows that he can have a second go, then there is no way he will give me a good price first up. So I get a bad quote, and end up doign market research for the dealer. If you want me to do your market research, then we can organise a separate consultancy agreement.

When I buy, I buy like this. I go to a supplier, and I give them one chance to bid. I tell them that they will not have a second chance, so they must give me their best price. I then move on to the next supplier. If prices get lower, then I stop when each new dealer cannot offer me much more. After about 3 close quotes, I come back to the supplier offering me the best quote. If the quotes are close, then I choose the guy I think helped me the most.

This is the way I buy electronic equipment, home renovation materials, etc. It is also the way I apply for jobs; basically, for anything over $1000. I never give someone a second chance. I always get the best price.

My basic rules:
1) never give anyone a second go at bidding, because then their first bid will not be their best price, and so I will be wasting my time.
2) never tell anyone whether they are first or second or whatever in line. Every supplier must think they are the first, they must not know whether I am informed or naive. If they think I am naive, they will give me a bad price. And, as part of this process, they will also suffer, because they lose my business (see rule 1).

I'm sorry, but many years ago I got sick of doing pricing work for suppliers. if you want my business, then you give me your best price.

Sorry for sounding so frustrated, but most other suppliers seem quite able to understand my approach. For some reason, auto dealers seem not able to. Moreover, they then try adding "delivery charges". I mean, what are those? Noone else does that (except for QANTAS). A price is a price is a price.

I want a XXX.
So, give me your best price.

Best wishes,

Hi Robert,

Thank you for your email, It has been great pleasure to deal with you since beginning of the month because of that I would really like to earn your business and build a relationship as your local dealer, however as I was trying to explain on the phone.

If pricing what it takes to earn your business I can tell you that quite confidently I would be able to provide you a better pricing than any other dealer. There are two reason which allows me to that, we are the largest XXX Dealer in NSW, on top of that all the vehicles in our possession paid cash by XXX these two reasons gave us greater advantage than our competitors.

It would be much appreciated If you could let me know your thoughts.

Kind Regards,