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A nice theory, but has it been tested? It assumes rational behavior on the part of the salesperson, not to mention assumes that the writer understands the motiv

A nice theory, but has it been tested? It assumes rational behavior on the part of the salesperson, not to mention assumes that the writer understands the motivations of the salesperson. I once found a car salesman who was asking way too much for a used car on his lot. He refused to budge on price. I couldn't believe both that it was priced so high above market rates or that he wouldn't come down on the price at all. I kept asking, don't you need to go talk to your manager? I decided that eventually he would come around and called him every day for two weeks with a low ball offer. Eventually the car sold to someone else for $100 above my offer. If rational behavior is to maximize the sale price, then this was not rational behavior. A simple counter offer would have closed the deal with me and netted an additional $500 for the dealer. After that experience I've often wondered if there are other incentives for car salespeople beyond money. Maybe there's an opportunity cost of selling to a good negotiator when a bad (i.e. normal) negotiator might walk into the dealership. Maybe car salespeople just don't like being on the wrong side of a deal. Maybe they get harassed by coworkers when they strike a bad deal. If the method works, I'd still be suspicious of the reasons. Maybe calling for 20 prices is a good idea just because one of them, independent of the others, really wants to get rid of the car.

edw519 17y ago
A nice theory, but has it been tested? Yes, for 30 years. It's simple supply and demand. I doubt if this would work well for a 2010 Camaro, but there are probably lots of models it work work well for.
- tonystubblebine 17y ago
  No, the article claims that this is some special game theory and that there are only 21 actors (you and the twenty salespeople). Modeling this in terms of S&D would take into account all potential purchasers. My point, though, was that the article has presented a hypothesis without any data to back it up. In a way, it's worse than an anecdote, because I'm not sure even the author has tried this method.
ShabbyDoo 17y ago
I've bought our last two vehicles using a similar method. Most dealers have "internet sales managers" who are salespeople trusted enough by management to quote prices without first asking their bosses. It's not that hard. What was interesting was that one dealer's price was so low that competing salespeople said, "You should go buy that!" Something must have been different about that dealer's incentives -- perhaps they were under pressure from their lender to reduce inventories or something. I'll never know, but the vehicle was about $1K less than anyone else's offer.
jsz0 17y ago
I worked at a dealership for a while so I got to see how things work from the inside. There are tons of different factors. On new cars the auto makers offer various incentives or specials to dealers that might allow the sales person to go lower on Thursday than they would on Monday. It also helps if you're flexible. If you don't mind waiting a week to pickup the car or can take it in a different color you're making the sales person's life easier and they'll usually give you a break. If you're really picky and demanding they really don't care if you go to another dealership so they won't offer you much of a deal. For used cars the dealers are making money on trade-ins even if they let it go far below the posted price. Any used car they sell off the lot is going to be a bigger profit than cars going to auction. A lot of times you can simply look at the dealer's lot and see how crowded it is. If it's packed with lots of used cars there's a great chance you can walk in and say I will pay $X and get the car. They just want to get it off the lot to make room for better inventory. My advice, if you're looking for a used car, is to find a dealer that doesn't deal with a huge volume of used cars. They're often selling their trade-ins at a good value because they don't have the volume to make the auction process work in their favor. They'd much rather just sell them off the lot.

edw519 17y ago

A nice theory, but has it been tested? Yes, for 30 years. It's simple supply and demand. I doubt if this would work well for a 2010 Camaro, but there are probably lots of models it work work well for.

tonystubblebine 17y ago
No, the article claims that this is some special game theory and that there are only 21 actors (you and the twenty salespeople). Modeling this in terms of S&D would take into account all potential purchasers. My point, though, was that the article has presented a hypothesis without any data to back it up. In a way, it's worse than an anecdote, because I'm not sure even the author has tried this method.

ShabbyDoo 17y ago

I've bought our last two vehicles using a similar method. Most dealers have "internet sales managers" who are salespeople trusted enough by management to quote prices without first asking their bosses. It's not that hard. What was interesting was that one dealer's price was so low that competing salespeople said, "You should go buy that!" Something must have been different about that dealer's incentives -- perhaps they were under pressure from their lender to reduce inventories or something. I'll never know, but the vehicle was about $1K less than anyone else's offer.

jsz0 17y ago

I worked at a dealership for a while so I got to see how things work from the inside. There are tons of different factors. On new cars the auto makers offer various incentives or specials to dealers that might allow the sales person to go lower on Thursday than they would on Monday. It also helps if you're flexible. If you don't mind waiting a week to pickup the car or can take it in a different color you're making the sales person's life easier and they'll usually give you a break. If you're really picky and demanding they really don't care if you go to another dealership so they won't offer you much of a deal. For used cars the dealers are making money on trade-ins even if they let it go far below the posted price. Any used car they sell off the lot is going to be a bigger profit than cars going to auction. A lot of times you can simply look at the dealer's lot and see how crowded it is. If it's packed with lots of used cars there's a great chance you can walk in and say I will pay $X and get the car. They just want to get it off the lot to make room for better inventory. My advice, if you're looking for a used car, is to find a dealer that doesn't deal with a huge volume of used cars. They're often selling their trade-ins at a good value because they don't have the volume to make the auction process work in their favor. They'd much rather just sell them off the lot.