TALLMADGE, Ohio -- Electric car company Myers Motors has started taking $250 deposits from customers who want to pre-order two-passenger vehicles due out late next year.
The Tallmadge company has a clever marketing strategy to get customers to persuade their friends and neighbors to put down deposits as well: The more pre-orders Myers gets, the less the vehicle will cost.
The starting price for the as-yet-unnamed car is $29,995. But for every 200 pre-orders, the price falls by $1,000, up to as much as $5,000 off.
The company wants 1,000 pre-orders, lowering the vehicle's price to $24,995. After a $2,500 federal tax rebate for buying an electric car, the vehicle would cost customers $22,495.
"It's part of our strategy to make electric vehicles affordable as soon as we can," Myers spokeswoman Kammy Willis said. She said company owner Dana Myers thought "people are smart enough to understand that volume drives down costs."
It's a novel approach, said Rakesh Niraj, a marketing professor at Case Western Reserve University. Companies often get discounts from suppliers for ordering parts in bulk. Using those economies of scale as a marketing tool is unique, Niraj said.
"They're possibly hoping that once people get into this, they'll talk to other people," Niraj said. "If it helps them create some buzz, that's quite valuable."
Myers has been trying to generate Internet buzz for the new vehicle for months. In September, it unveiled artist renderings of the two-seat vehicle and started an Internet-based contest to name it, bringing in 1,101 suggestions. The winning name is to be announced before the end of the month.
Myers will set the final price for the new model in June and start production soon after. The $250 deposit is refundable if the final price isn't low enough for customers. Willis said the company told potential buyers earlier this week that they could place orders. So far, Myers has received about 10 deposits.
Niraj said another surprising thing about Myers' pricing strategy is how large the price drops are for each pre-order. Dropping the bill by 3 percent off the starting price for each 200 orders sounds like a big decline, he said. But he speculated that Myers is probably getting that big of a discount on its parts.
"A smaller company has to really establish its viability with suppliers," Niraj said. He added that as Myers is able to show its suppliers that it has deposits for hundreds or even thousands of vehicles, those companies will be more willing to give the car maker price breaks.
source: cleveland
