Manufactured Home Pricing Can Be Confusing to Potential Buyers
“Manufactured housing industry, we’ve got a pricing problem!” (I say “we” as I’m sorta in the industry). No, our prices are not too high. The problem is the pricing is inconsistent. Purchasers have no idea what price a manufactured home should sell for. Therefore, they tend to go from one dealer to the next trying to get a low price on the size home that are desiring to purchase. As a result they often purchase a particular size of home at a much lower price than another of the same size, sometimes not realizing that all same sized manufactured homes are not equal.
After reviewing various consumer agencies, including Consumer Union, It would appear that the #1 complaint of manufactured home purchasers is that pricing is often confusing and inconsistent. Sometimes, the customer is quoted different prices on the same home each time he or she visits the same sales center!! Frequently, the price quoted is a base price that does not include all the factory options they are seeing in a particular display model. Often, delivery and installation is not included in the price quotation. The rationale, well-founded, albeit deceptive, is that a customer will shop a total price and get a lower price, with options not included, at another dealership, and the original price quoting retailer will lose the chance at making the sale.
Buyers will always shop for the best price on any large purchase item. However, when pricing is similar, a customer will usually choose the retailer that he/she feels most comfortable with. A professional who negotiates a sale and treats customers in a professional manner is likely to sell more homes at a higher price than those who sell price only. Pricing is an integral element in “value”, but it should not be the only consideration when a customer is making perhaps the biggest decision he or she will ever make.
So, how do you solve this problem that is a blemish on this great industry?
First thing, you, (meaning retailer) should do is review an article entitled, PROFESSIONALISM = PROFITS, posted in the archives of this web-site.
The next step would be to rethink your pricing strategy, that would be clear and unconfusing to your customers and your sales staff. For instance, post a professional, “suggested retail price sign” in each of your display models that lists the retail base price, the sales price for the factory options, and the total price for the home as displayed. The base price should be high enough to allow for customer negotiations. The sign should also indicate the make, model, and size of the manufactured home. The sign should also state clearly that the price includes “normal” delivery and setup. ( “Normal” would typically mean within a 100 mile radius of the factory or dealership, with the setup being a typical non foundation installation — not requiring any additional equipment or expenses beyond what would be required for a placement in a rental community).
It is suggested that you mark up all of the factory options and provide all sales staff a copy of the entire factory option list with your retail mark-up. Unfortunately most sales people quote prices directly from the factory wholesale price list. My philosophy has always been, “You are entitled to a profit on everything you sell.”
Your sales people should understand your pricing philosophy and readily advise shoppers that the posted base price may be negotiable. However, the negotiating of a lower price should only be based upon the likelihood that the customer is really a “buyer” now or in the near term.
Negotiating a lower price with a buyer can be a “deal breaker” if not handled properly. Here are some tips that may be helpful:
Establish a “down to price” for every home. This is the absolute lowest price you will take on any home. Make sure everyone who negotiates pricing knows exactly what this bottom price is. Never “dive” to that price.
Price reductions should be in $100s, not in $1000s. Customers will be wary of a dealer who is willing to quickly drop a sales price several thousands of dollars. Customers have no idea what your profit margins are on manufactured homes. If you drop prices in large chunks, he or she assumes you must have a large markup to begin with and will not be happy until you drop the price again.
Quite often a customer wants the self satisfaction of knowing he or she has done a good job of getting you to lower the price, not necessarily the amount you agreed to accept. That being the case, you should never quickly lower a price. It should appear that price lowering is painful to you and that you are having a difficult time making the decision to reduce. After all, your sales commission is reduced $20 to $25 every time the price is reduced by $100. The customer must feel he or she has won the negotiating battle. You should commend the customer on his negotiating skills.
Customers like “freebies.” Sometimes it is better to “throw in” something with pre-conceived higher value to the customer than a price reduction, such as upgrade carpeting, or a side-by-side refrigerator, maybe a utility shed, etc.
The bottom line is this, “The price should be fair to both, the buyer and the seller.”
Photo via: Custom Manufactured Homes