In this blog post, we will answer the following question: What is the dealer markup on RVs? We will advise you to negotiate the best price for your motorhome and to get the best possible deal.
What is the dealer markup on RVs?
The dealer markup on RVs is usually between 20% and 40%, depending on whether the RV is brand new or second-hand, but also on your negotiating skills.
Many sellers earn commissions of 20% to 30% of the profit on an RV, although this amount varies by dealership and area. The profit on a new RV is not substantial due to negotiations and a buyer’s ability to review the manufacturer’s suggested retail price and invoice amounts online.
Besides, some car dealerships do not pay commissions on new RV sales but offer a fixed amount for each sale. Instead of earning a percentage of the profit, the seller earns $100 to $ 500 for each new vehicle sold, regardless of profit. Sellers who charge on commission often charge a flat fee if there is no profit.
For example, if a dealer sells a vehicle that does not guarantee enough profit to pay the seller, the seller automatically earns $ 100, despite the dealer’s loss. Sellers who share offers or who have to split their earnings with another seller also split the flat fee.
How does an RV dealership actually make their money?
It all depends on whether it is a new or used vehicle, whether it is a franchise of new RVs like Hymer or Forest River, whether they sell to the government or one of its departments or even at large companies, they can earn as little as $ 10 gross per vehicle, because the dealership will have a sales and service agreement with the factory, to sell a certain target.
Remember, the dealership will receive a fleet allowance/factory discount through the back door, and only the dealership, sales manager, and accountant are aware of it!
As with all other sales, there is MSRP, but other factors come into play: trade, disability, war veterans. But it does not stop there, there is the spare parts market and the finance committee. This is all of the dealership’s revenue, but it is not included in the gross value of the vehicle.
As a result, the dealership can adjust its pricing to correlate. Also, after the sale, the dealer earns money on trading, maintenance, spare parts, aftermarket parts, additions like spoilers, body kits, tires, etc.
How much below MSRP can I pay for an RV?
You should expect a maximum of 25% below MSRP for an RV. This is a happy case, however, as many dealers hesitate to offer too much of a discount, especially for new and luxurious RVs. It will all come to your negotiation abilities.
When you start negotiating, start working from your strengths:
- Your initial offer, based on what the dealer paid for the vehicle or what you’ve seen to be a fair price.
- Competitive offers from other local dealerships or RV-buying websites.
The seller will likely begin the discussion by focusing on the vehicle manufacturer’s suggested retail price or the monthly fee. Don’t go that way. If the seller starts at price, be sure to negotiate from the lowest price and work up from there, not down from the manufacturer’s suggested retail price (called the MSRP).
If you start with the monthly fee, the seller can pile up the entire process, which includes the price for the new vehicle, the trade-in value (of your old car), and financing, if applicable. This gives you plenty of room for confusion.
Instead, insist on negotiating one thing at a time. Your top priority is to agree on the lowest price you can get for the new vehicle. Only after you’ve made sure of that can you start discussing the value of the trade-in or financing, if necessary.
Too many people tend to only consider the selling price of the vehicle or the amount of the monthly payment. They want to be reasonable and buy something small, especially if it’s a first-time RV.
The purchase price is unfortunately not the most important factor. What really matters is the cost of ownership, which is the difference between the amount paid on acquisition and the price obtained on resale, a few years later. This includes the cost of maintaining and/or repairing the RV during the period of use.
Some RVs seem to offer a lot for the price. But be careful, it’s almost always because they are built with inferior materials. For this type of trailer, devaluation is very rapid. And they often have problems, even in the early years: water infiltration, saggy mattresses and cushions, warped walls, cupboards and doors that no longer close, etc. For almost the same cost of ownership, you could enjoy a higher quality, more luxurious and comfortable vehicle.
How to get the lowest cost of ownership possible
- Check the resale value of the model you plan to buy on websites like RV Trader, AutoHebdo, FindTonVR or NADA. Look for the same model, but three to five years older. This will give you a good indication of the average devaluation.
- Make sure the model is rare. If there are hundreds of trailers like yours for sale on these sites, it will take longer to find a buyer and you probably won’t get the best price. Rare pearls, especially if they are of high quality, are always easier to sell.
- Try to take advantage of the exchange rate. Most RVs and almost all equipment/accessories are made in the USA. So if you buy your trailer when the dollar is strong and sell it when it is weak, you could get a price very close to the amount you originally paid because the price of the same model, new, will have climbed since your purchase.
- Devaluation takes on even greater importance when it comes to motorized RVs. In this case, it is absolutely necessary to consider the mileage that one thinks to be done annually because the number entered in the odometer is the main input in the calculation of the value of the vehicle.
- Finally, the bigger, heavier and less aerodynamic the RV, the more fuel it will cost. It’s an expensive item that can make all the difference when gasoline or diesel prices go up.
Next to the cost of ownership, the most important thing to consider when it comes to buying a new RV is the type of trips you want to take.
Some RV dealers seem to offer a lot for the price. But be careful, it’s almost always because the vehicles are built with inferior materials. For this type of trailer, devaluation is very rapid. And they often have problems, even in the early years: water infiltration, saggy mattresses and cushions, warped walls, cupboards and doors that no longer close, etc.
For almost the same cost of ownership, you could enjoy a higher quality, more luxurious and comfortable vehicle.
The purchase price is unfortunately not the most important factor when buying an RV. What really matters is the cost of ownership, which is the difference between the amount paid on acquisition and the price obtained on resale, a few years later. This includes the cost of maintaining and/or repairing the RV during the period of use.
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FAQ on What is the dealer markup on RVs?
How to negotiate a price reduction for an RV?
Here are the basics to negotiate a price reduction for an RV:
- Carry out a preliminary market study.
- Do not give too much information on the first visit.
- Make a reasonable offer on the RV.
- Have another purchase option.
- Be clear if the RV is what you are looking for at a reasonable price.
How to request a price reduction?
Requesting a discount requires three important elements: planning, information and clarity of the objective.
What is the price of a motorhome?
The cost for the motorhome amounts to about US $ 55,000, which can rise to the US $ 70,000 if higher level and quality equipment are added, such as a special refrigerator, electric awnings, digital television, and premium audio equipment.