Window Sticker Company Pricing Considerations
Monthly Administration/Maintenance Fees
If you are new to the automotive window labeling industry, you might not know this; Almost all companies charge the dealer a monthly maintenance/administrative fee in addition to the per-vehicle/sticker fee that they charge for processing each vehicle. The fee is generally used to cover the technology expenses involved in providing backend and aggregation services, such as with a product like WebLot.
The fee varies from market to market and depend on what level of service the company is providing for the dealer. Therefore, we can't really say what to charge. However, we can say that the monthly fees generally vary from around $119 to $189 per month for processing used vehicles, and sometimes more.
The long and the short is, these fees are to cover your recurring monthly expenses involved in storing and providing access to the vehicle data that you collect, as well as the continual distribution and displaying of it. Why is this so important to your company that we made a point of writing an article about it? It's simple. Consider the following:
- A single vehicle stays in the dealers inventory, for let's say, 3 months.
- You made $12 for processing the vehicle. Let's, for example only, subtract $2 for expenses (window labels, equipment, toner, gasoline, etc). You've got $10 profit left.
- Let's say that it's a small dealer and you are using our à la carte pricing and paying .75 cents each month for that 9 photo vehicle to live in your WebLot account. That's $2.25 (for 3 months) for a vehicle with only 9 photos. You now have $7.75 profit left.
- Now let's say that they want 18 photos per vehicle. Subtract another .68 cents each month for extra à la carte photos. That is $2.04 (for 3 months) more from your profit. Now you have $5.71 left.
- Furthermore, let's say the dealer ha 4 outbound feeds to various 3rd parties such as AutoTrader®, Cars.com®, etc. With à la carte pricing those are $15 each per month for a total monthly feeds fee of $60/month. You'd have to process and spend all of your remaining profit for 10.5 vehicles each month just to offset the recurring monthly feed fees.
Or, we could consider a monthly package price example. As an easy example, let's say you have the dealer on a WebLot $100/month package and it includes up to 100 vehicles and 5 outbound feeds. You'll have to process 10 vehicles each month just to break even with the recurring monthly fees.
...and what happens if you hit a slow month where the dealers lot doesn't turn near as many vehicles as they usually do? Not only do you process fewer vehicles, but the ones you already processed and got paid for live in your backend for even longer, and you're paying each month for them to live there.
Now it's hard to come up with simple math examples of all of the variants of how this can effect your sticker company, but the main point is, the per-vehicle fees you charge the dealer, that is your profit for work performed, and it shouldn't be tapped into month after month to pay monthly backend fees, otherwise, it can cease to be profitable.
This is the main reason why companies charge monthly maintenance or administration fees. Even the mega corporate owned and franchise window sticker companies who have their own internal technology charge monthly fees. After all, they have to pay their programmers, office workers, web designers, database administrators, and support personnel salaries, as well as the expenses for their servers, networks, and office space.
How Much Should You Charge
When it comes down to how much you should charge per vehicle, it really comes down to two things; What is the competition charging in your market and for what level of service.
The per-vehicle amounts varies from city to city depending on that particular market. They also vary depending on what you're doing for the dealer. Taking 27 photos per vehicle should cost more than taking 9. Taking photos in line on the lot should cost less than staging the vehicles.
The competition may be charging less, but pay attention to other issues such as; How are the quality of their photos? Are they staging the vehicles (i.e. moving each vehicle to a place such as in front of the sign, wall, or showroom before taking the photos), or are they just shooting them in line on the lot? How many photos per vehicle are they taking? How are the quality of their stickers, both in print quality and in the quality of the forms themselves? All of these things can effect the per-vehicle price because it effects how long it takes or how expensive it is to process each vehicle. It can also effect how much your paying in backend fees for a vehicle, especially if you use à la carte pricing.
You might charge slightly less for the same level of service, but do an equal or better job. You might charge considerably more but do much more for that money such as staging vehicles, printing on higher quality labels, or taking more consistent photos, such as Photo 1 is ALWAYS the front left corner, photo 2 is ALWAYS...
When it comes down to how much to charge for a monthly maintenance/administration fee, many of the same things apply; How much is the competition charging in your market and for what level of service?
You need to know what the dealers projected usage will be and put limits on what the package that you sell the dealer includes. How bad would it be if you signed them up for a $149/mo. package ASSUMING that you were only going to house their USED car inventory and take 18 photos per vehicle, but then came to find out that they expected you to also poll their DMS for new car inventory and house 400 new vehicles, wanted you to take 9 photos of each new vehicle, and 27 photos for each used vehicle? Then you're upside down big-time on your WebLot monthly fees. What if you didn't really know how many outbound data feeds they have to 3rd party classified sites, and you quote them a $129/mo. package, only to find out they tend to want their inventory sent to an ever increasing number of sites and now you're sending feeds to 12 sites?... with much of that expense on your dime.
For these reasons, we suggest that you come up with your own tier level packages to offer your dealers. For example, you might offer:
- Package 1 (example only): Up to 100 used vehicles only with 18 photos per vehicle and up to 5 outbound data feeds for $149/mo.
- Package 2 (example only): Up to 100 used vehicles only with 27 photos per vehicle and up to 10 outbound data feeds for $189/mo.
- Package 3 (example only): New vehicle polling, 1 photo for each new vehicle, Up to 100 used vehicles with 18 photos per vehicle and up to 5 outbound data feeds for $249/mo.
The objective here is to have caps to cover your monthly expenses and have the dealer sign off both on the package they selected as well as an acknowledgement that there are other packages available should their requirements change. Then, when they need more, you just say "Great, let's get you upgraded to the XYZ package."
Reprocessing the Lot
One thing new companies often are not prepared for is re-processing the lot.
Understand that when you take a dealer from one of your competitors, the competition is not going to just hand over the dealers inventory and photos. In many cases, the competitors agreement with the dealer dictates that they the competitor have the copyright on the photos that they took. In most cases, you're going to have to re-process the lot, which means entering (or importing) the vehicle data for each and every vehicle, and re-taking each and every photo. The only thing you probably won't have to do is reprint all of the stickers.
How you work out this price with the dealer is more of an business art than a science. Many companies will offer to re-process the lot for around $5 per vehicle. Others, depending on the size of the account, may just do it for no charge in order to gain the dealers business. While yet others might do it for free as long as they have an agreement with the dealer that the dealer will stick with them for a certain term.
OMG! I Lost a Dealer
Yes, we hear that from our clients from time to time. And it can be quite scary and a bit of a slap in the face. After all, you work hard to get and service a dealer with excellence. Then some smooth talking commissioned sales person comes along and either beats your price, makes all kinds of promises that they can't keep, criticizes your work, or just fills the dealers ears with B.S.
The bad news is, it happens. The good news is, since the vast majority of the time our clients provide outstanding service, photo quality, integrity, personal service, a lack of corporate red-tape, and an exceptional backend, the dealer winds up back with the client in a relatively short period of time. And guess what? When they're back, they don't give you nearly as many problems as they might have before, because, now they have been able to compare your company to the status quo and they often have a new found respect for the quality of service that you provide.
A great sales pitch is, well, great. It makes the dealer feel all warm and fuzzy. It can breed discontent (by design), and sometimes anger them toward you. However, the fact is simple, most large companies just under perform. It can be the (lack of) quality of photos, (lack of) quality of the stickers, missing days without makeup days, not visiting the lot enough days out of the week, missing vehicles, not addressing technical issues, or just a lack of heart and an overall impersonal relationship with the dealer.
Another thing is, often dealers just like to change. The B.B.D. (bigger better deal). And if they're not prone to this, low and behold, they'll change a manager, who then is going to make his mark and change everything, even if it's not broken.
For some of our clients, they have found that they basically have to go to each dealer and re-sell the dealer on their service around the first of each year... because the new year breads "this is a new year, let's make some changes", and often, the sales people start beating down the dealers door trying to get their charts and graphs up for the new year.
The thing is, taking pride in a job well done and doing all that you can to maintain a good relationship with the dealer almost always trumps sales rhetoric. It won't always keep you from getting axed, but more times than not, it will get the dealer running right back to you for the exception service that you provide.