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How to Lift Parts Gross Without an Increase in Sales

Article Highlights:

  • Change one setting to net $0.40 extra per part sold.
  • "For a medium-sized store ... that’s an extra $2,000 in profit per month."

Recently, we made an update to our ERA® Parts software that can help you quickly boost gross profit for your parts sales, with no extra work by you or your employees.

Earn More Gross by Rounding All Prices to $.99

When configured, the new enhancement—Parts Retail Markup—will take the price of any part and round it up so that it ends in $.99.

Why would you choose to do this?

Because it works. Several studies have shown that customers are more likely to purchase a product with a $.99 ending—called “odd pricing” in the research literature—instead of an even dollar amount.1

It’s also a pricing structure customers are used to. In almost any retail store you visit, many of the prices use the $.99 ending for most of their products.

$2,000: The Financial Impact of Parts Retail Markup

What financial impact might you see from rounding your parts prices up to the nearest $.99?

With Parts Retail Markup enabled, most dealerships will probably see an average lift in profit of about $0.40 per part sold, depending on your base pricing setup.

You can do the math for your own dealership, but for a medium-sized store selling 5,000 parts per month, that’s an extra $2,000 in profit per month, with no changes to your work processes or customer volume.

How It Works

Parts Retail Markup can be set up for every price level code by source. This allows you to apply the new pricing structure to retail customers while excluding wholesale customers and specific sources.

Here’s how to set it up:

  1. Go into 2565.
  2. Enter the price level you want to setup.
  3. Enter the line of the source you want to add retail markup.
  4. Press Enter until the cursor is in the RMO column and enter ‘Y’.
  5. Under the RMO AMT column, enter the amount you want parts to round up to.

Note: Anything over this amount will not be rounded. If you set to 0, prices will round to the next whole dollar.

  1. Repeat for each source.
  2. Enter an ‘E’ to save.

For help with retail pricing, please call the Technical Assistance Center at 800.767.0080.

 

Marketing Bulletin. “The Widespread Use of Odd Pricing in the Retail Sector.” Holdershaw, Gendall, and Garland.

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