by Jim Hinshaw


Had a conversation with Jon, my older son.  He is General Sales Manager at a high-end motor sports place in Colorado, they sell motorcycles that have a $30-40,000 price tag, side-by-sides that can get up to $30,000 and snowmobiles that are in the $22,000 range.  Fun toys.


Back a couple of months ago he was in the store and watched a customer give one of his sales reps grief about the price of a snowmobile.  It was on the floor with a $22,516 price tag.  Customer said he would never pay full price; he had his checkbook would give them $15,000.  The sales rep called Jon over, said he wants to buy the snowmobile today, but will pay only $15,000.


Jon turned to the customer; conversation went like this:


Jon: are you the customer who wants to buy this snowmobile?


Jon: did you bring your checkbook.


Get it out, write $22,516 on the check, it is yours.

Customer: No way!  I won’t go more than $15,000.  Maybe $16,000.

Jon: then you won’t buy this machine.  Period.

Customer: come on, business can’t be that good, with the Covid you probably have lower sales than in the past.  (A big mistake, in fact Jon has been setting records in sales all year, Covid has been a HUGE help to their business, they sell motorcycles, watercraft, as well as snowmobiles and side-by-sides).

Jon: actually this machine is the only one we put out here, since we had no room in the back shop, we are getting ready to prep it for the winter selling season (this was in August).  So you are early looking at it, but the price is firm, if it doesn’t fit, we are OK.  If you don’t buy it, someone else will.


Reader’s Digest version, Jon not only sold him the rig at $22,000, he also got another $4500 for a trailer and clothing.  Close to $30K with tax.


Here is the lesson: keep control of the sale.  Don’t let the customer tell you how to run your business, price your goods, or what to install.  Tell the truth, Jon was exactly correct, the sled was out in front where they could add some details to get it ready to sell when Oct came around.  As an example, Jon sold a lot of watercraft, starting price of $7000.  But he added the “watercraft package”, a trailer, life vests, fire extinguisher, first aid kit, radio, all the things that you should have when you are on the water.  So this pushed the average sale over $10k.  Some customers pushed back, saying they would get those items later, save some money.  Jon would say, if you want this watercraft, it is part of the package, if not, someone else will buy it.


Jon was comparing notes with another motorcycle dealer recently, asked about financing.  Jon said he had to work hard to get the financing company to add in all the other items so the customer could walk out with the complete package, no money down.  The competitor said that his financing company would always go 160% loan to value, to allow the customer to buy the accessories, trailer, safety gear, whatever they wanted in addition to the bike.  Jon had to sell the finance company on looking at the package instead of just the machine.  To be clear, sometimes it just cannot be done, but it sure is sweet when you can bundle an extra $4500 into a loan, give them everything they want in one package.


On another conversation yesterday with a technician (Curtis, with FROG Air Conditioning) who got bumped by a customer over a capacitor that was $300, in that range.  The customer looked online, found the same rated capacitor at Lowes for $13.87.  Boom.  They howled, said that he was ripping them off.  He calmly said, that is correct, the price of the item is less than $20, but that is not what you are paying for.  The total price includes our company backing up our work, it includes my education, so that I can look at the entire system to be sure that there are not other problems that could cause the system to malfunction, it includes my being able to understand exactly how to wire in the capacitor and all the related items.  In other words, it is a LOT more than just the part.  Does that make sense?  What made this even more interesting, was they had a home warranty, he sold the capacitor anyway!  It was a test.  Curtis passed it well, he kept control of the sale, made something happen.


So, are there some things you can bundle into your price, some items that have real value, and give real benefits?  Not sure if you are in the heat/air business or plumbing, or whatever.  I am sure that if you give it some thought you will come up with other items and services that can make up a package for the customer.  The end result is that by combining several items the customer can get everything they need and a bonus: it makes it harder to compare prices!


Thanks for listening, we’ll talk later.