# Dealers and Profit



## grumpyman (Sep 24, 2006)

Interesting incident with a friend of mine and how Dealers make a tidy sum.
friend never owned a Caravan or Motorhome goes and pays £18000 for a used Van no Gas Bottle or cable or anything with it and so has to buy all the bits and pieces. Uses it for two nights and realises he is never going to take to it. Two weeks later back to Dealer who offers him £13000 for the van which he accepts. :roll: 
Today another friend contacts me asking if the Van is OK as he has just put £500 deposit on it for the asking price of £18000. They could only offer him £4000 for his VW Camper Van as they quote had little money in the other.


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## EJB (Aug 25, 2007)

That's what they do  ....It's called business :roll:


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## peejay (May 10, 2005)

As an aside, I would love to know what the difference is between what the dealer pays for a van and what "we (mug punter)" pay which I believe is called the "mark up".

There and again, perhaps I'm better off not knowing :? 

pete


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## Rapide561 (Oct 1, 2005)

*Mark up*

Hi

My guess is the dealers buy in for 25 - 30% less than list price, based on the amounf of haggling discount available.

Russell


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## grumpyman (Sep 24, 2006)

Sorry forgot to mention the Dealer had originally given £13000 for it from the original owner who purchased a new caravan from them.


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## DJP (May 9, 2005)

We put our old van in part ex for the current van. They offered us £27k for it. After playing them off against another dealer they matched their offer of £30k. We did the deal. 
Now I have seen our old van for sale in a different dealer for £27995. 
So how much did they make on our new van? 
Loads of money!!!!!!!!!!!!!!


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## Motorhomersimpson (May 9, 2005)

Hi,

It would be hard to use Grumps example to decide on mark up IMHO, anyone that sells any vehicle, car, motorbike or motorhome etc to a dealer without purchasing another will loose heavily, as is the case exampled.

I’m sure dealers margins are healthy, just a shame some do not set aside some of the profit for customer care/goodwill, those that do survive and prosper, those that do not, suffer the consequences in the long term in my opinion.

MHS…Rob


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## Rapide561 (Oct 1, 2005)

*Mark up*

Hi

On the other hand - does it matter what a dealer makes on the deal if we are happy bunnies.

Also, of the £5000 in the example - a lot of that is not profit - eg rent, wages, cost of cleaning the van etc etc

Russell


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## krull (Jul 22, 2006)

I bought a caravan from Glossop Caravans for £1700. 3 Years later they gave me £1500 back px against my camper.The Glass's guide price was about £700.

All well and good. 

It then went up for sale in their compound for £3000. Don't what they got for it but it went. 

Bear in mind I paid £1700 for it 3 years earlier. 8O


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## andyangyh (May 1, 2005)

1st rule of commerce - a thing is worth whatever someone is willing to pay for it. Of course dealers make a profit. If you think what they are asking is excessive don't pay. Have a look at the adverts - not exactly a shortage of vans is there? So - the price is what it is because that is what the market will bear.

I would go to Germany to buy a Hymer for example, if I was in the market for a 5 or 6 year old van. But - and here's the rub - I'd sell my old van in this country first because, if the forecourt price is lower then so is the part-exchange value.

If you think the mark up is high you have two courses of action available. 

1) Vote with your feet and buy elsewhere. It is called the law of supply and demand. Some new cars now are being sold at next to no profit (the profit comes from the finance - but that's another story). A lot of this is due to the market opening up.

2) Find some premises and make your fortune selling motorhomes. If it's that easy how come plenty of dealers have gone bust in the last few years?

Now imagine you have taken option 2. Imagine you are now a dealer. A customer is willing to part exchange his old van for £20,000. You know plenty of people will be willing to buy it from you (with a warranty and legal comeback if it goes wrong) for £25,000. What would you do? Offer £25,000? Sell it at £20,000? Oh, and you have to carry that £20,000 outlay until someone comes and buys the van (could be 3 months). In the meantime you have business rates, staff salaries, advertising etc to pay for.

I'm not a dealer. I manage a campsite - but I occasionally get the odd person complaining that we sell cans of drink in our little shop for 50p when they can buy it at Tescos for 30p. My thought (which I keep to myself) is, "Well drive the six miles, pay the parking, pay the petrol and buy it in Tescos then!" Is my mark-up on a can of Coke excessive? Not, I would suggest, when the burger van down the road is selling them at £1. Please re-read sentence one of this reply again to see how it works.


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## sweetie (Nov 28, 2005)

If you look at the amount of money most dealers have tied up in stock then there overheads if they where not marking up by this amount they would not be in business, and then where would be? You only have to look at some adverts and you see the same vans advertised month after month.


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## Zebedee (Oct 3, 2007)

andyangyh said:


> My thought (which I keep to myself) is, "Well drive the six miles, pay the parking, pay the petrol and buy it in Tescos then!" .


Hi Andy

The only thing I can find to criticise in your post is the selection above. Why keep it to yourself??

I'm not entirely joking either. No need for you to be offensive of course, but some people just need to be made aware of the realities of life. Many of them would probably agree with you if you explained, but are too **** (_fill this in yourself_) to work it out for themselves.

Cheers


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## grumpyman (Sep 24, 2006)

In the case I have quoted the Dealers overheads have been kept to a minimum in both instances they have not paid out for the vehicle. They put the van on their frontage and if it sells they then pay the customer what they have valued the van at. Sounds a good way to make a lot of money if they sell.


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## 107012 (Sep 14, 2007)

We did well then as our dealer called us after the deal had been done and the paperwork signed, to ask us out of the goodness of our hearts, to pay the extra £1000 we should of been paying! apparently, the salesman made a mistake?
Needless to say we declined, so they then asked us if we wanted to pull out of the deal as a favour to us????? :roll: 
The outcome was, that we have the van, at the price first agreed.


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## asprn (Feb 10, 2006)

Zebedee said:


> .... too **** (_fill this in yourself_) to work it out for themselves


Can't be bothered.

Dougie.


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## Zebedee (Oct 3, 2007)

Deleted . . . distracting from what might become quite a serious topic.


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## asprn (Feb 10, 2006)

grumpyman said:


> Two weeks later back to Dealer who offers him £13000 for the van which he accepts


There's the keyword - "accepts". It's always going to be a choice, and I've never understood why anyone complains about it. It's good ol' capitalism at its best - Supply and Demand.

I'd do that all day long if I could sell at £18k and buy at £13k.

Dougie.


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## 107925 (Oct 27, 2007)

Sorry, Dougie, but the majority can't agreed with you, otherwise we wouldn't have the expression 'rip off Britain'. You could argue that almost every item bought and sold is an open market transaction, with a willing buyer and seller. However, that seemingly 'healthy' capitalism masks all manner of inequities. The reason Apple charge more to Brits than to other European countries, for their music downloads - and a lot less than to their own US customers - is because they charge what they feel they can get away with. However, it creates a lot of bitterness amongst British consumers who, once again, feel they've been taken for a ride. If we don't buy, we have to do without, whilst the rest of the world laughs at us.

That's just one example from a foreign supplier. When it comes nearer to home, there are government bodies whose aim is to prevent unfair business practices and profiteering. This tells us that capitalism can't be allowed to run rampant with no controls. Yes, it's underpinned by the simple laws of supply and demand, but there are those who will take undue advantage of that and some buyers will suffer. The motorhome market is relatively small and so, at present, falls under the radar of the Government. As a result, there are some decidedly dubious practices. For example, there aren't many markets where the dealer will brazenly display prices for new vehicles which are above the well-publicised retail prices, presumably so gullible buyers feel they've got a great deal if they manage to negotiate a discount.

For a car, it's easy enough to find second hand values for trade-in, retail and private sales and competition is fierce. With motorhomes, we regularly see dealers charging tens of thousands of pounds for vehicles approaching a decade old. Of course, some people will buy them and it could be argued 'more fool them'. But, this is hardly capitalism at is best, is it? For a free market to work properly, there has to be sufficient competition. Those who are prepared to charge less for goods and their labour, with due emphasis on good customer service, will drive out those who can't or won't compete. This creates a downward push on prices, to the benefit of consumers. The British motorhome market doesn't have such competition, so standards are often poor and prices far too high. 

Shaun


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## grumpyman (Sep 24, 2006)

Good post, hope yer gtyer spalling and granmar right.Last week I accepted a operation at the Hospital but I did not want to have it, no option.


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## eddievanbitz (May 1, 2005)

Hi Shark, excellent post, well reasoned with relevant examples.

Strangely though, I don't see private sellers massively undercutting the dealers, in fact people who sell privately tend to be "just a bit cheaper" than the dealers.

These will be the same dealers that get slagged off every day on this and other forums because "The van was dirty/needed cleaning/needed an MOT/didn't pay my £22.00 bus fair home/didn't offer me a courtesy car/no staff around/ didn't offer me a cup of coffee/didn't do the PDI right "etc

Don't get me wrong. I am not suggesting that these things should not be expected, however, they do cost money. So if the dealers are ripping people off, private sellers are REALLY ripping people off.

A similar analogy is found in local village. The residents are complaining that house prices are so high, young people are not moving into the area. They fail to see, that it is themselves that are creating the problems, by grabbing every penny they can for their houses. No one yet, to my knowledge is saying £750,000 is far too much. I will sell for £500,00 if the buyer is a younger couple with a family from the area! (the figures are just made up and could just as easily be more or less)

I agree with Dougie, to buy low and sell high! However, the caveat must be: Give decent customer service, carry out your promises and treat your customers with respect. 

Most people, if they are told up front how much the van will cost, are more concerned with back up and excellent after sales than the amount of profit the dealer makes.


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## Zebedee (Oct 3, 2007)

eddievanbitz said:


> Most people, if they are told up front how much the van will cost, are more concerned with back up and excellent after sales than the amount of profit the dealer makes.


Spot on Eddie. That's the bit which matters most.

Cheers


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## grumpyman (Sep 24, 2006)

Let me clarify where I stand. I would rather pay over the odds for something if the reason was that I am going to receive quality service and backup. The problem is there are a minority out there who charge top price with poor service and that is where I consider we are rubished.


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## asprn (Feb 10, 2006)

Shark said:


> Sorry, Dougie, but the majority can't agreed with you, otherwise we wouldn't have the expression 'rip off Britain'


Shaun,

I also think your post is reasoned and well put, and there's not much in fact that I disagree with. The only point I homed in on, was the use of the word "most". Ironically, the only point I disagree with you on is the one quoted above. This may appear off-topic but it's not; I strongly believe that our perceptions are in the main, formed by what we swallow from media output, whether TV, radio or newspapers. Your belief is that the majority of people in the UK regard the country as "rip-off Britain". I believe however that it is populous headline-swallowing, and if you took a true and reasoned poll amongst the entire population, it simply would not be the case that over 30 million of us truly believe we were being ripped-off most of the time.

As an example of this, the Brownhills threads contained lots of angst, emotion and anger (understandly so, for those who were affected). However, if you took a poll of every Brownhills customer over the past year, the vast majority would undoubtedly say they were satisfied.

The squeakiest hinge gets the oil.

Dougie.


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## bigfoot (May 16, 2005)

Many years ago I sold my VW Devon Eurovette(lovely van),the prospective buyer had an RAC inspection done. The engineer told me the price of the van alone,£500 and then told me what value the conversion £2000 put on the final price£2500,I was asking for £2750. 
This must lead to someone working out a formula for pricing s/h vehicles.
i.e. basic van price for age,condition & mileage plus cost of conversion,depreciation of same minus % for wear and tear=selling price.
Or is this too complicated or am I being naive?


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## Zebedee (Oct 3, 2007)

bigfoot said:


> This must lead to someone working out a formula for pricing s/h vehicles.
> i.e. basic van price for age,condition & mileage plus cost of conversion,depreciation of same minus % for wear and tear=selling price.
> Or is this too complicated or am I being naive?


If my experience is anything to go by, I'd say you are being naive Bigfoot.  I think the quote depends far more on whether the blokes piles are giving him stick at the time!!! 8O 8O 8O

That is not to say a "rule of thumb" valuation is necessarily inaccurate or unfair, but I don't think it's very scientific!

(Nice opportunity for some schoolboy rhyming humour above, which I resisted . . . just!)

Cheers


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## grumpyman (Sep 24, 2006)

it simply would not be the case that over 30 million of us truly believe we were being ripped-off most of the time. 

I agree Dougie but the other 50% might not.  


The population of Britain is at present nearing 60 million people, a figure which shows a substantial increase from the 1991 census statistic of approximately 55 million.


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## eddievanbitz (May 1, 2005)

Who is they "THEY?

I get ripped off by plumbers, carpet companies, skip hire companies, delivery companies, roofers, builders, garages, Comet, Curry's, supermarkets In short, whatever I do, I have to be careful not to deal with toerags.

If it is rip off Britain, De Facto we must all be ripping each other off!


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## Rapide561 (Oct 1, 2005)

*Profit*

Hi

In context - Tesco and the like are working on a margin of about 6%. This means that for every pound that goes through their doors, 6p is profit. This info is available via the net for all PLC's - look at their annual report and accounts.

I suspect the margin at clothing retailers is higher.

As I said earlier though, if you are happy with the product etc....

Russell


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## 107925 (Oct 27, 2007)

Dougie, I feel the perception of 'rip-off Britain' has gained momentum because many people travel abroad and use the internet. Nowadays, it's much easier to compare the cost of goods and services and, yes, the media does its best to highlight the most obvious inequities. But, one doesn't have to be a media puppet to appreciate that when you travel abroad or check out prices on the web, there are often stark differences. Personally, I've only ever heard someone spout the 'rip-off Britain' mantra when he/she has made a direct comparison for the same goods or services.

Shaun


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## asprn (Feb 10, 2006)

eddievanbitz said:


> Who is they "THEY? ... If it is rip off Britain, De Facto we must all be ripping each other off!


A very astute conclusion, Eddie, and worthy of any Vulcan on Star Trek. Similarly, I simply do not recall any parent whose wayward yoof I have taken home for some anti-social (proably drink-related) prank, saying, "Thank you very much indeed officer - I'm ashamed that you've had to bring him/her home. We'll deal with it from here." It's invariably, "I'VE TOLD YOU NOT TO GET IN WITH THAT CROWD. He/She's easily led, officer." So as you've said, who are "the crowd"? Never my child, always someone else's.

Who are "they"? You've said, "plumbers, carpet companies, skip hire companies, delivery companies, roofers, builders, garages, Comet, Curry's, supermarkets." So in fact anyone can potentially rip you off - agreed. You also said, "In short, whatever I do, I have to be careful not to deal with toerags." That's good advice, but I still maintain the majority of businesses you've mentioned are not rip-off merchants, and the majority of the UK population are reasonably happy (or better) with their lot.

Seeing things for sale in Spain - or China - cheaper than the UK does not necessarily mean we're being ripped off (although of course it happens). It also means there are inequalities, but that applies to income as well as expenditure.

Would YOU accept lower wages to bring the prices down? Neither would I.

Dougie.


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## 107925 (Oct 27, 2007)

Bringing this back to a motorhome perspective, there's a big difference between what local people pay for local products, because of their different infrastructure. I don't think anyone would complain about the cost of Britain's eggs, or whatever, simply because they were cheaper in Spain. We're comparing goods which are made for export as well as for the home country. When it comes to exports, there are two main factors which dictate the price to the end user. The first is what the exporting company charges the British importer and the second is the price the British wholesaler or retailer then charges. The end user can be hit by either or both, if the price is inflated beyond that which is charged to other comparable countries. So, not China, but France, Germany, Italy, Spain, etc. If the exporter feels he can get more out of Britain than, say, France then we're perceived as being a soft touch, hence 'rip-off Britain'. If the UK dealer charges an inflated price, then the perception is also of being ripped off.

I've seen quotes from certain German motorhome manufacturers who claim that an identical vehicle will cost the same whether it goes to Sweden or Britain, France or Spain. Yet, even where a UK dealer imports a new left hand drive vehicle, you can bet that he will charge more than his European counterpart (after taking account of import costs). Waters are muddied somewhat by RHD vehicles, as there are associated build costs to change from left to right. But, do we see just that additional conversion cost as an add on to the LHD cost? Of course not - the final cost is a lot higher.

Shaun


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## asprn (Feb 10, 2006)

Shaun,

Again, fair points. So, if the basis of our economy is supply and demand, that must ultimately mean the customer is king (or queen... 8O). I fully accept a lot of large-value goods are available cheaper from outside the country, but I also know I could - with some additional trouble - circumvent the system and order them direct. It's my choice whether I can be ar-bothered to do so, although I accept that many people won't have the know-how to do so.

Isn't a bit like politics in this respect? We all moan about how useless the Government is, but we (the majority) put them there in the first place, and we (the majority) can get rid of them, if we want to get off our ar-botherers and do so. Similarly - and in fact more easily - if enough of us want to be bothered to circumvent what we perceive as being a rip-off economy, we could order direct from (presumably-grateful) German (e.g.) suppliers for our motorhomes. What do you think would be the effect on the British motorhome industry if a significant amount of their market was trickling away? I can't say for sure, but given the general laws of market forces, I'm up for a bet that there would be a trigger-point which would make them consider their competitiveness.

Dougie.


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## grumpyman (Sep 24, 2006)

Well this Van is certainly making this Dealer a tidy sum. The new prospective buyer paid his £500 deposit having checked with his Son regarding the dimensions of his drive where he was to store it. Whoops got it wrong by 2.5 feet and van will not fit. Went back to dealer to explain problem bet you can guess what the reply was regarding asking for his deposit back.


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## Guest (Nov 17, 2007)

Just another thing that sometimes happens. Some years ago, (about 16-17) We were looking to sell our trailer caravan as we were taking up boating. 

Our local dealer agreed to sell it on brokerage for us. In order to aid the sale and because we were packing caravanning, we left a lot of kit with the van. We told the dealer the sum we wanted (£4.5K) and left him to it. 

A couple of weeks later, a bloke round the corner from us bought it. After another couple of weeks I called on the guy and asked how he was getting on. He was happy, I was happy , Dealer was happy especially when I found out that ALL the kit had been removed from the van, Wheel clamp, hitchlock, levelling ramps, hook up cable etc etc. Even the gas bottles! So the dealer picked up his commission (£1k) plus he had the kit to sell on second hand. 

No skin off my nose really but it did smart a bit.

Tony


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## WingPete (Jan 29, 2006)

*Dealers "Wanted "Ads*

Have a deal for PX, which has been accepted. If I can sell privately in the wating time for delivery in '08, the dealer will allow an additional £2,500 off the agreed price, as there will be no PX for him to concern himself over. The PX deal is guaranteed, as per contract signed at NEC.
Since then, called a few dealers advertising in usual magazines, who are looking to buy used motorhomes. You know the style "call me first" & "collect from anywhere" & best prices gauranteed" etc.
None of them are interested in meeting a price fractionlaly below the PX deal offered. Their stance is, as said above, they need to make at least £5000 profit, as there is storage, servicing, warranty, to be accounted for.
So, I await the private purchaser or until the dealer says my new one is ready to collect.


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## 106916 (Sep 8, 2007)

Regarding rip off perceptions:

My wife and I own and run a small design and print business, 6.5 staff only.
Some cutomers probably think we rip them off but most customers are genuinely satisifed with the service, product and price. It all depends on who the customer is and to some extent what they order. A business customer usually understands what's involved in running a company and trying to make some bottom line profit and have a realistic view of costs and charges. Private customers often don't have a clue and compare our bespoke design and print service with a simple transaction like buying a mars bar! The same is probably true for motorhome dealers and they are mostly dealing with private customers, unlike us. It is the overhead that kills it so the business has to make as much gross profit as it can.

So here is the basic financial breakdown:

from say a £1000 job, average direct cost to produce it (paper, printing plates, inks etc) is 25%
So gross profit is 75%

Customers applying simple business understanding would probably think this is a rip-off.

Then you have to take the overhead off:

Salaries
Employers National Insurance contributions
Sick pay
Holiday pay
Rent
Rates
Lighting, heating and power
Service and maintenance of equipment
Insurance
Finance charges on equipment purchase
Advertising 
Telephone and internet
Office consumables
etc etc

This takes another 60% of the sales revenue (in a good year) leaving us with 15% net profit.
But it doesn't stop there because that is just the statement of the trading profit and loss. From this net profit, depreciation has to be deducted which is the cost of ownership of capital equipment, and in printing there is a lot of capital equipment and it is very expensive.

Whether a company is then left with any real bottom line profit depends on its trunover and its efficiency. For ourselves at the moment in the middle of a heavy investment phase, the depreciation of the capital equipment takes at least all of the net profit. We are in a growth phase fueled by our investment 2.5 years ago and so hopefully as turnover increases and production capacity is more fully utilised we should move into a proftable (= sustainable) financial position. If this doesn't happen we would have to trim costs (probably staff numbers & our own salaries) or go bust. Although we have a reasonable reserve to allow us time to adjust things.

So the truth is for many small to medium enterprises it can be very hard to be sucessfull. Of course there are the cowboys out there who will take your money and do a crap job at low cost to them, make a bundle, won't pay suppliers, go bust, do the dirty on staff, and start again under a new name.

I don't think the big enterprises can really claim the same arduous conditions. Their senior management and directors remuneration packages certainly don't seem to be meagre and their bottom line profits usually very healthy giving a good return to shareholders (unearned income which I don't really agree with - I think most of the value should be returned to staff and customers - ie I believe in cooperatives ideally).

Vidura


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## grumpyman (Sep 24, 2006)

Vidura

I recognise that most companies provide a quality service and I have no hesitation in paying for it. My Broadband contract ended today and I know I could get a better rate from a number of other companies but I have remained with my provider due to the service they have provided me with over the years.
I next year want a Tracker and reversing Camera fitted to my Motorhome will I shop around to get the cheapest price.? No I will be booking it in with Van Bitz why because they have shown through dealings with numerous customers that we are not the cheapest but we are the best and I have no doubt that is how you try to run your company. Now the negative but you and the others are fast becoming a minority, rip of UK is not far from the truth.


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## 106916 (Sep 8, 2007)

grumpyman said:


> Vidura
> 
> I recognise that most companies provide a quality service and I have no hesitation in paying for it. My Broadband contract ended today and I know I could get a better rate from a number of other companies but I have remained with my provider due to the service they have provided me with over the years.
> I next year want a Tracker and reversing Camera fitted to my Motorhome will I shop around to get the cheapest price.? No I will be booking it in with Van Bitz why because they have shown through dealings with numerous customers that we are not the cheapest but we are the best and I have no doubt that is how you try to run your company. Now the negative but you and the others are fast becoming a minority, rip of UK is not far from the truth.


Your'e right Grumpy, the best customers are those who appreciate the whole package - quality, service and cost. Not those who go only for cost and then whine when they don't get the service or quality!
A company can give very good prices and good service but they have to be efficient and have a large turnover to generate enough profit on small margins to fund the operation. This is what our company tries to do as we always price very competitively to win custom and then try to keep cutomers with us by giving great service and quality. We do turn away work if the customer needs/wants a very cheap price that is unsustainable for us (or put it out to the trade if it doesn't suit ours but would suit someone elses set-up).

The worst sort of rip off are those companies who charge a lot and then give very poor service and after-care. I mention no names.

Vidura


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## 104705 (May 24, 2007)

Everyone is complaining about 'rip-off' Britain and up to a certain point I agree. If there are monopoly suppliers, then of course, control of prices cannot be controlled by supply and demand and must be regulated. Hence the laws concerning cartels etc. as in BA and Virgin Air recently. But for individual dealers this cannot be the case. If a customer is overcharged or under paid, then it is the customers fault. Fact of life - a business is there to make money from the customer. If you don't like it, walk away, but don't accept it and then complain of being ripped off, you agreed to it. Unfortunately, there are many examples of complaint where it is the fault of the customer. Deals going wrong because a clear contract wasn't completed, add-ons being verbally agreed but excluded from the contract, pre-delivery work not being completed, faulty fittings or completely missing. How often do we hear, I fell in love with a MH and everything else went out the window when I completed the purchase. Whose fault, the customer who hands over the money or the dealer who sings on his way to the bank. It is time that all of us, and I include myself here, took more responsibility for our actions, stop blaming others and looked after our own welfare. It is only then that poor dealers would be forced to change their ways or out of business.


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## grumpyman (Sep 24, 2006)

Some good points there.


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