What does tire pricing have to do with a football?
A football provides a helpful way to look at three basic tire pricing segments, according to Modern Tire Dealer columnist Wayne Williams.
Relying on price alone to drive sales is a vicious downward cycle Williams terms a knife fight: “It’s messy, it’s bloody and everybody gets cut.”
Williams says customers don’t understand a tire’s value until a dealer puts it in context. Looking at tire pricing like a football, an approach an industry veteran shared with Williams, is a way to help customers understand value.
The basic tire pricing segments in Williams' football are:
Opening price point (10-15% of total sales). OPP is the Opening Price Point, and it’s a knife fight. In this first category, it is price, price and price with three types of customers: cheap, cheaper and more cheaper.
The sweet spot (70-80% of total sales). The second category is what Williams calls the “sweet spot.” This category is where your pricing strategy has to be most effective. This is where the suggestions from Williams’ last two articles on pricing, such as “differentiation” and “anchor” pricing (see the July and August issues) come into play.
The exotic portion (10-15% of total sales). Category three is the “exotic portion” of the tire sales mix. Not that these tires only fit on exotic cars, but they are items that carry a higher purchase price and more care when quoting.
To view a PDF of the Williams’ pricing football, click here.