How To Make The Most Of Employee Pricing

If there’s one thing every car dealership has in common, it’s marketing. Each company is vying for your business, using everything from clearance sales to zero down to grab your attention. One of the most well-known approaches is to offer employee pricing on new cars. Now, though it may sound like the buyer is getting the same price as staff at the dealership, it is a bit more nuanced. Understanding how employee pricing works can help you zero in on the best possible deal for your new vehicle. This breakdown details everything you need to know about employee pricing, so you can minimize the cost of your new ride. 

What Is Employee Pricing?

Also called invoice pricing, this is when you get the invoice price sent to the dealership. Unlike the Manufacturer’s Suggested Retail Price, this drops the cost further. Conceptually, it would mean that the dealership is not making a profit on the sale, since you would be paying the baseline cost. However, if that were true and the dealership didn’t profit, the deal wouldn’t be sustainable at all. 

Employee pricing offers are generally time-sensitive deals, differing in specifics depending on the dealership. When used correctly, both the dealership and the buyer can profit. This means understanding what you are really getting into when you jump on an employee pricing deal. 

Invoice Pricing VS MSRP

Though it sounds complicated, the two terms are very straightforward. MSRP is short for the manufacturer’s suggested retail price. When the manufacturer supplies the vehicle to the dealership, it offers a suggested cost to charge end consumers. The dealership can then choose to go over or below that number in order to incline sales and maximize profits. MSRP prices are negotiable, though they are consistently higher than invoice pricing. 

Invoice pricing is different from many other sales incentives. This is when the dealership charges the end customer the price they paid for the vehicle. It includes things like shipping and handling, though it doesn’t have the extra markup of most dealership listings. When you hear employee pricing, think invoice pricing. The company isn’t taking a loss (as that would be non-sensible), rather they are using the incentive to try and move product. 

Find out what OAC means when buying a car.

Advantages And Disadvantages Of Employee Pricing 

Any purchase, particularly when you’ve seized a sale opportunity, comes with its own set of pros and cons. To determine whether you are getting the best rate, at the best possible time, understanding these benefits and pitfalls is critical. 

Advantages

There are a lot of perks to employee pricing, including:

• If you prefer a certain car manufacturing company that is offering the employee-pricing deal, then this type of sale is worth investigating. It can save you big on the cars you prefer. 

• Invoice pricing is a final offer kind of deal. So, if you are not a fan of negotiations on the sales floor, or are worried about the stress of haggling, this can be a much easier way to go. 

• Another benefit is if you are an employee of the company affiliated with the invoice pricing program, it can drastically simplify the purchase process. 

• In many situations, you can use employee pricing in conjunction with another offer. By combining this with low-interest loan rates, you can seriously reduce the amount you pay for the new vehicle.

Disadvantages

Nothing is perfect, and employee pricing is no different. There are a series of downsides to this approach, including:

• It isn’t a universal deal. Employee pricing isn’t available through all car manufacturers; and, when it is an option, it will not be for all makes and models. Basically, if you are gunning for a specific car, there’s no guarantee that it will fall under the scope of the deal. 

• You can only use employee pricing on new cars since it is the manufacturer’s price to the dealership being matched. Assuming you are planning on getting a new car, it’s not an issue. However, if pre-owned was on the table, you are likely to save more by going that route.

• If you are willing and able to look for all the bargains on the table, and if cost is your top priority, you might be able to find something better without the invoice pricing. Everything from Black Friday deals to Boxing Week Clearouts, dealerships often promote impressive sales. Month-end always comes with added incentives. Keep this in mind when you’re looking at the cost of employee pricing models. 

• Unfortunately, you’ll only see employee pricing during the summertime (in most cases). This is in order to clear the way for the newer vehicles released the following year. If you are able to wait to take advantage of these savings, it’s a great way to go. However, it also means that there is a newer version of the vehicle you’re buying waiting to hit the market. 

Which Companies Offer Employee Pricing?

There are several main vehicle manufacturers that offer employee pricing incentives, including the largest names in the industry. Each company takes a different approach to this type of deal. 

• Ford Employee Pricing: The basis of this sale is Ford claiming that customers get the same price as company employees pay. Running since the early 2000s, this deal shows up as an annual event (typically in summertime). For example, if the MSRP is $70,000, and the dealership’s invoice cost was $62,000, the employee pricing would let you buy the car for $62,000. If that’s the car you want, this situation would show savings of $8,000. In some cases, the dealership takes it further by offering an extra two percent discount. 

• GM Preferred Pricing:  General Motors offers this type of deal under the name of Preferred Pricing. It is available for Canadian employees of an affiliated company. It is similar to Ford in that you can get up to two percent off the cost. To qualify, you must prove that you are with a participating company and access the deal at a participating dealership. Since the program is selective, it is not advertised broadly. If you work with a large corporation, check with your employer to see if it is available. 

• FCA Employee Pricing Plus: Short for Fiat Chrysler Automobiles, this namesake covers everything from Jeeps to Dodges. Its program is most similar to General Motor’s model. The employee pricing is for those with affiliated workplaces, though employee pricing plus offers the plan to all consumers. Unlike other offers, there is a bit more flexibility and can dip lower than five percent of the dealer invoice. 

• Hyundai Invoice Pricing: Making the offer available to all consumers, you are likely to encounter an advertisement for invoice pricing through Hyundai. Effectively the same as employee pricing, it is meant to give you the identical price paid by the dealership.

Additional Reading

Are Car Dealerships Charging Canadian Consumers Hidden Fees?

Should You Buy Your Next Car Online Or At A Dealership?

Can You Reduce Vehicle Depreciation?

Is Employee Pricing A Good Deal?

The first thing to keep in mind is that businesses, to survive, must turn a profit. When the dealership employee gets the invoice price, it is the value of the asset owned by the dealership. However, true employee pricing involves the manufacturer offering an incentive that detracts from the original invoice price. 

When everyday consumers get employee pricing, they get the invoice price paid by the dealership, without the incentive offered by the manufacturer. In these situations, you can use the information to negotiate a better price on the vehicle. You can also use those same facts to follow up with another dealership and reap the most savings. 

As with any discount, there is always a catch. For the dealership infrastructure to remain intact, they must mark items up. However, the business model is far more than individual sales, it is a matter of remaining current with market standards. Employee pricing is one of many approaches that car manufacturers and dealerships use to draw consumers. If the time, the price, and the car are right, jump on the opportunity. 

If not, don’t let fear of loss control your reaction — employee pricing is an awesome buzzword, but it’s only the right way to go in some situations. There are plenty of opportunities to find a car at a good price, and often patiently waiting out the best deal is the most reliable way to get great prices on up-to-date rides. 

Tips On How To Get A Lower Car Price

Know Your Stuff

If you walk into a dealership ill-equipped, it puts a bullseye on your back, informing sales staff that you are a suitable mark. Instead, research the vehicles thoroughly. Identify what you need, whether that be space, mileage, durability, or fashion. Knowing exactly what you want ensures that you won’t get steamrolled when you get to the dealership.   

Use The Car History Report

Buying a pre-owned ride? On their own, these cars will cost less than new models, but there are ways to shave even more off the sticker amount. Look up the car history report to ensure that the ride is reliable, ensuring that it has been inspected. You can also use small issues (particularly aesthetic), to drop the price further. 

Get Pre-Approved

The fastest way to get a lower price on an automobile is to get pre-approved for a loan. Be wary of your credit score. Each time you apply for approval, there is a credit check and a resulting penalty on your score. If you hit five dealerships and get pre-approved by each, by the end, your score will take a serious hit. If you are getting pre-approval, consider using a bank. They can offer the loan, and cover the expense of the vehicle through any dealership. This way, your score needn’t suffer in your pursuit of information.

Choose The Right Day

Car sales are time-sensitive, meaning that getting the best deal relies on your picking the perfect moment to buy. Employee pricing is usually in mid or late summer since it is meant to clear the floor of older models. There are other key times to buy, including: 

• Year-end: At the end of the calendar year, the dealership is in a mad scramble to make as many sales as possible. The same is true of the salespeople. Use this to your advantage to get a better rate. 
• Month-end: In the world of sales, quotas are a high-stakes matter. If you can catch a dealership or representative who has not yet made their sales for the month, you can apply pressure to get a better rate. 
• Slow business days: Not every day is a major car sales day in the auto industry; but, if you aim for days with less foot traffic, and therefore fewer sales, you can haggle for a better deal. 
• In the off-season: No one goes to buy a convertible in the middle of winter; but, if you do, then you will likely pay far less for it than during summer. Consider the season that’s appropriate for the type of car you are planning to buy. Aim for the clear opposite time of year to make your purchase. 

Employee Pricing FAQs

Final Notes On Employee Pricing 

Vehicle purchases are a major decision for any driver, and finding the best possible price is the easiest and fastest way to pay off the loan financing the car. While employee pricing isn’t necessarily the right approach for everyone, it does offer substantial savings for many. Manufacturing a vehicle is expensive on its own, and when you tack on the markup from a dealership, the cost increases further. Employee pricing lets you shave off that extra amount, enabling you to pay the lowest possible rate on a specific vehicle. 

When making the purchase, first check that the sale is on a car you want and that there is no better deal available. With employee pricing, it’s a matter of waiting for the sale to come around. If you determine that the savings justify the wait, then it is a great option. Conversely, you can pursue competitive rates year-round by doing your research and acting when the time is right.