Dealer margins, what to expect
Dealer margin is the gap between what you pay the manufacturer and the price you are allowed to advertise. It decides whether a product is worth listing at all.
How it is calculated
Margin is the dealer discount applied to the minimum advertised price, before shipping. Shipping and returns come out of what is left, so the headline number is not what you keep.
Why margins are shown as bands
Every brand negotiates differently and margins move with volume, so a single figure would be misleading. Bands are used instead: low sits at the bottom of the range, medium in the middle, high at the top. The band tells you whether the category can carry your advertising cost.
What raises your effective margin
- High ticket products, where one sale covers the acquisition cost of several
- Categories with few online dealers, so you are not bidding against a crowd
- Brands with real search demand, so part of your traffic is free
- Freight included or subsidized by the manufacturer
What eats it
Paid traffic in a crowded category, freight on bulky items, and returns on products that need installation. Check all three before committing advertising budget.