Negotiating is probably the most challenging part of a box sale. How do we avoid losing our margin? Toolbox salesmanship is much like car salesmanship. You need to juggle the price and trade-in to create a deal your customer wants to buy. With the over allowance system, you assign a greater...
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Negotiating is probably the most challenging part of a box sale. How do we avoid losing our margin?
Toolbox salesmanship is much like car salesmanship. You need to juggle the price and trade-in to create a deal your customer wants to buy.
With the over allowance system, you assign a greater value to the trade-in than it is actually worth. So if the toolbox is worth $10,000, you assign it a value of $12,000. Then you offer to sell the new toolbox for the higher asking price.
Why bother with the over allowance system? Because it works. You're likely competing against three or four other dealers. The one using the over allowance system will often win. Here's why: Imagine you're a customer. One dealer comes to you with a straight deal giving you a price on the box and $1,000 for your trade. The other dealer uses over allowance and offers you $2,000 for your trade-in. Who would you buy from?
"You should always start off with full-blown everyday list price," explains Scott Mata, formerly of Cornwell Tools. "Now, if you've got a thousand dollars worth of discounts ... you've got something to put extra into his trade. So, his trade-in that might be worth $1,000 now could be worth as much as $2,000 on paper."
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