MSRP - Why Bother?

[traveldawg]

Just another wandering thought from me on a rainy morning.....

If we keep looking for 20% to 30% discounts off of RVs; and if dealers keep accepting those discounts.....

Why bother making the MSRP so high to begin with?

Clearly economics may not be my my strong point.

[FT4NOW]

I think there are enough non-informed consumers that know price negotiation is an option and just pay what the dealer asks. Not everyone is a well educated consumer.

[Second Chance]

The rain is clearing out here this morning... but I have no idea. It's not just the RV industry, either. Autos, healthcare, and a number of industries do things this way, too. In acute healthcare (inpatient care in hospitals), the cost-to-charge ratio is usually about 0.3 (meaning it costs the hospital about 30% of what it charges to care for the patient). However, Medicare and other insurers pay only 1 - 3% above the actual costs - nowhere near the charges. Whether buying a car or truck, buying an RV, or paying for our healthcare, it's a concept I've never understood. Perhaps a famous economist will come along and help us out...

Rob

[xrated]

I think there are enough non-informed consumers that know price negotiation is an option and just pay what the dealer asks. Not everyone is a well educated consumer.

That's exactly correct FT4NOW. Plus, the MSRP price sheet gives the dealer something that you can see and they can try to make their argument with...."This is the MSRP.....I can't sell it below that price....at least not for more than a couple of percentage points". Plus it all comes down to supply and demand to determine who has the advantage in negotiations. An informed consumer is a well armed consumer in the price war battle.

[trailrydr]

I think there are enough non-informed consumers that know price negotiation is an option and just pay what the dealer asks. Not everyone is a well educated consumer.

...one born every minute.... dealers love those types. Infact, they even like to throw in a few extras!

And as far as listing at MSRP, it always easier to work down than up... Makes the "non-informed" ones think they're getting a deal... Occasionally though, I've come across a few dealers who are more concerned about "return" customers. Those dealers realize the American throw-away/trade-up mentality. They look for the next, or word of mouth, sale by dealing at discount.

In my experience of purchasing vehicles, boats, RVs, etc over the years, the discount dealers are always busy even during the bad times.... with faces I've typically seen before, both customers and sales folks.

[sande005]

I take a bit of an issue with the premise that "we're smarter than the average bear". How many have you ever met that didn't know that cars, boats, rv's, etc could be bought for less than MSRP? Some may not care to play the negotiation game, but they chose to not do it. It seems a bit broad to assume that everyone else is a fool, except you and me.

trailrydr did summarize well- more advantageous for the seller to go down, especially if the actual cost is unknown. And it gets murkier when "dealer incentives" are issued behind the curtain. Everyone (pretty much) wants a "good deal". How much one gets depends on how much work or time one wants to put into it.

[FT4NOW]

I take a bit of an issue with the premise that "we're smarter than the average bear". How many have you ever met that didn't know that cars, boats, rv's, etc could be bought for less than MSRP? Some may not care to play the negotiation game, but they chose to not do it. It seems a bit broad to assume that everyone else is a fool, except you and me.

trailrydr did summarize well- more advantageous for the seller to go down, especially if the actual cost is unknown. And it gets murkier when "dealer incentives" are issued behind the curtain. Everyone (pretty much) wants a "good deal". How much one gets depends on how much work or time one wants to put into it.

You've never met my mother....she's one of those ill-informed consumers who will pay msrp. I know there are others out there.

[NB Canada]

It is a value that we used for the banks. If they lowered the “msrp” to a “true value” then people who have negative equity in their trade would have difficulty

The msrp gave us room to “bury” debt into the new loan. Not advisable but unfortunately very common at least in the auto industry and likely just as bad or worse in the rv industry

[xrated]

I take a bit of an issue with the premise that "we're smarter than the average bear". How many have you ever met that didn't know that cars, boats, rv's, etc could be bought for less than MSRP? Some may not care to play the negotiation game, but they chose to not do it. It seems a bit broad to assume that everyone else is a fool, except you and me.

trailrydr did summarize well- more advantageous for the seller to go down, especially if the actual cost is unknown. And it gets murkier when "dealer incentives" are issued behind the curtain. Everyone (pretty much) wants a "good deal". How much one gets depends on how much work or time one wants to put into it.

I didn't see it mentioned in any of the replies to this thread about "everyone else being a fool". Where is that remark coming from?

[trailrydr]

In a luxury industry you typically have three types of buyers: impulse (want it now), money doesn't matter, and frugal purchasers.

Would agree that the first two types who wish to purchase with the knowledge of negotiation VS MSRP, and the benefits there of, apparently are not concerned about money spent and more about ownership.

But these days with dealers sitting with inventory on the ground, current inflation, and less expendable income, purchasers these days are probably more represented by the frugal more so than the other two. And IMO, if the "frugal types" know about negotiation, don't take advantage of it, or shop accordingly, they are not of the wisest frugal shoppers.