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One-Price Selling Breeds Better Negotiators

Many would say that the "One-Price" sales strategy has revolutionized our industry

and that in the future all dealerships will employ this system. Many salespeople approach their sales management team encouraging them to convert their dealership to this system and many sales managers wish they could. Let�s take a hard look at the traditional pricing strategy first and determine how and why we would implement such a system. In both our traditional system and our one-price system, a salesperson greets a customer, has an interview, has a fact-finding and qualifying discussion with the customer. A vehicle is selected, a walk-around presentation is performed, and this leads to the demonstration drive. In both processes, a closing question is asked upon returning from the demo drive, and a service walk and dealership tour follow before the salesperson and the customer sit down to "work out a deal." Up to this point, both strategies are identical. So really, the difference in the two processes begins with the negotiation step.

In a one-price dealership, the customer�s mind set is probably less intimidated up to this point than in a traditional dealership. However, isn't it our job as salespeople in either system to develop a trusting relationship with the customer? Let�s take a closer look at the negotiation step, as this is where the differences begin. Many dealerships employ a four-square worksheet, or something very similar. The reason being there are really only four areas of potential negotiation in any deal; the price of the vehicle, the trade-in value, the monthly payment and the down payment. The objective of the four-square negotiation or any negotiation is to create a situation in which the customer is only negotiating on one of the four pricing areas. Most, if not all, salespeople and sales managers attempt to convince the customer to negotiate the monthly payment rather than jump all around, and most customers, when this is properly explained, agree to do just that. After all, wouldn't you buy a Lexus if it were $300/month?

The difference between a traditional negotiation and a one-price negotiation, and yes, there is negotiation, is that the typical four-square has been reduced to a three-square. The trade-in value is still negotiable, the monthly payment is still negotiable and the down payment is still negotiable. Only the price of the vehicle "square" is out of the picture in the one-price dealership. It really is a stroke of genius to have eliminated that one area for a customer to negotiate, the perception that the "dickering or haggling" is no more is brilliant, considering there are still three out of four areas left to negotiate. In fact, the one-price process simply has made it easier for salespeople and management to convince the customer to negotiate on the payment because there are fewer options from which to choose. I guess the next evolution of our industry's pricing strategy would be to standardize trade values. Many dealerships already have done this. They utilize black book values or Kelly blue book values, which are typically higher; but, when setting the vehicle prices, they can be set against the same structure Ultimately this reduces the four squares down to two.

Look around your own market. There are one-price dealerships and as you look, ask yourself, "Is that 'one-price' dealership the most successful dealership in this market?" When you realize that it isn't, your own perception of whether or not to employ that strategy should be clear. Realize that both have their pros and cons, but the one thing one-price dealerships do have is a properly trained sales force that knows how to overcome most objections. Shouldn't all salespeople, one-price or not, know how to do this? The reality is the one-price strategy is an excellent marketing tool to build traffic to your dealership. The bonus of course, is that the customer�s perception is non-confrontational when they arrive. Regardless of which marketing system you choose in your dealership, the most important thing to remember is that the way in which we treat the customer during the entire process will determine whether or not they choose to do business with us, not necessarily what our price is.