When to drop the price, and by how much

Why five small cuts are worse than one real one, what the margin scheme relief means for the true cost of a discount, and the review schedule that stops you cutting the wrong cars.

Updated 1 August 2026 · 5 min read · Written for UK independent dealers

Price is the only lever in the trade that comes straight out of your pocket, and it is the one most reached for. Used well it clears stock and releases capital. Used as a reflex it destroys margin on cars that would have sold anyway.

The difference is entirely about sequence: diagnose, then decide, then move once.

Do not cut before the window

The first rule is to know what "late" means for that car. A car inside its normal selling window is not a problem, and cutting its price is pure donation.

Judge against the median days-to-sell for that specification, stretched for price band and season. A £25,000 car at 50 days is fine. A £4,500 car at 50 days is not.

Diagnose before you decide

If the car genuinely is late, run through the causes before touching the price, because four of the five common ones are not price at all:

1. Over market? Compare to sold prices for the same spec at similar mileage. More than about 5% over is a price problem.
2. At or below market? Then it is not price. Cutting again will not work.
3. Is the advert weak? Photographs, description, blank fields. Free to fix.
4. Wrong season? A timing problem, not a pricing one.
5. Dead locally, or glutted? A channel problem — the car needs a different audience, not a smaller number.

Only after those does price become the answer.

What a cut actually costs you

On a margin-scheme car, a price cut costs less than the sticker difference, because the VAT falls with the margin.

Every pound you come down costs you five sixths of a pound retained. A £600 cut costs £500. A £1,200 cut costs £1,000.

Set that against what holding costs. A car sitting past its window costs roughly 2% to 3% of its value a month once you count capital, depreciation and the deals you cannot do — call it £200 a month on a £9,000 car.

So the real comparison on a £600 cut is not "£600 versus nothing". It is "£500 now, or £200 a month for however long it takes, and probably a bigger cut later anyway".

Framed that way, most dealers cut too late rather than too early.

One real cut, not five small ones

The most damaging pattern available is repeated £100 reductions.

It signals to everyone watching that more cuts are coming, so buyers who would have bought at your current price wait for the next one. You train your own market to hold off. And because each cut is too small to move the car into a new bracket, you pay repeatedly for no change in visibility.

A single decisive move that lands the car clearly below the local market gets it looked at by people who were not looking before. It costs less in total than four token cuts, because the car goes sooner.

How big

Aim to land at a specific position rather than to cut a specific amount.

If you are above market: land just above the sold median, around 3% over. Not at it, not under it. A car slightly above median with good photographs sells; there is no need to give away the rest.

If you are already at market and moving for other reasons: you need to be visibly cheapest in the local set, which usually means clearing the nearest round-number filter. Going from £8,150 to £7,995 does more than going to £8,050, for £55 more.

If you are exiting: price it to go. A car you have decided to be rid of should be priced where it will definitely sell within a fortnight, and then you stop thinking about it.

Always land under a filter threshold. £9,995 rather than £10,050 costs £55 and doubles the audience.

Protect the floor

Before any cut, check what it leaves you. A drop that takes a car below your minimum acceptable profit is not a pricing decision — it is an exit decision, and it should be made deliberately rather than discovered afterwards.

Two legitimate answers at that point: accept the loss and move the car, or stop retailing it and trade it out. What is not legitimate is cutting to a number that does not work and hoping.

Remember the VAT relief works in your favour here too: the net damage is five sixths of what the screen says.

A schedule that works

Day 14 — presentation review. No price change. Are the photographs good? Every field filled? Listed everywhere? Any enquiries at all? Zero enquiries in two weeks is an advert problem, not a price problem.

Day 30 — market review. Compare to sold prices now, not to what you thought at purchase. If over market, move properly. If at or below, go back through the diagnosis.

Day 45 — decision point. Something changes: a real price move, a channel change, or a documented decision to hold with a reason. "Leave it another fortnight" is only acceptable if you can say why.

Day 60+ — exit. Trade, auction, or a discount that will definitely work. Every additional week costs roughly 0.5% to 0.75% of the car's value.

Diarise these when the car is listed. The schedule matters more than the individual judgements, because its real job is to stop you from not noticing.

Raising a price

Occasionally correct and almost never done.

If a car is priced well below the market — mispriced at listing, or the market has moved up — putting the price up is legitimate. Fresh stock in a genuinely tight segment, where days' supply is under 45, can support more than you first thought.

The caution: a price increase resets nothing in the buyer's mind if they saw the old number, and portals sometimes flag price history. Do it early or not at all.

The habit worth building

Write down, for each car, what you would need to see to cut the price, before you list it.

"If no enquiries by day 14, rephotograph. If no viewing by day 30 and I'm over median, move to £X." Decided in advance, in the calm, before the car has become a source of irritation.

The alternative is deciding in the moment, when the car has been annoying you for six weeks and £400 feels like a small price for making the annoyance stop. That is how margin disappears — not in one bad decision, but in forty slightly emotional ones.