Your DMS provider may be using these 3 tactics to charge more fees
Remember how amazing camouflage was when you were a kid? There was something so cool about wearing clothes that made it impossible to know where the forest ended and where your cargo pants began. As adults and business owners, we often see camouflage in the workplace too, but unfortunately, the things being hidden are rarely as cool as those cargo pants.
Take, for example, your dealership’s latest invoice from your Dealer Management System. While it wasn’t printed on splotchy green paper, it probably included plenty of camouflage in the form of complex line items that cleverly conceal extra fees.
The complicated invoices of legacy DMS providers can cover a host of hidden fees and unpopular upcharges. By loading their invoices with confusing detail, it’s virtually impossible to determine where the legitimate charges end and the frivolous fees begin.
Anyone who pays a cell phone bill knows that this trend is not unique to the automotive industry. Cell phone providers have long been criticized for hiding extra fees and silly surcharges in lengthy, confusing customer bills. Because of this, one major brand launched a campaign calling out the importance of transparent billing in their industry. Does this little girl sound like your current DMS provider?
Phone companies and DMS providers may be hiding different types of fees, but they are using the same sneaky tactics. An analysis of actual DMS invoices from major providers reveals several popular tricks for covering up those upcharges:
1. Long Lists that Leave You Feeling Tired
Just like the girl rattling off all the extra fees included in the price of her lemonade (ahem…‘Standing-on-my-lawn’ fee…) you probably wonder each month why your DMS invoice runs across multiple pages. Dive in and you’ll find long lists of single-line billing descriptions. Those long lists serve two purposes. First, they overwhelm the reader, effectively discouraging any detailed review of the charges. Second, long lists lend a false sense of legitimacy—a tactic known sarcastically as “bulk validity”. The faulty logic behind the long lists suggests that the DMS company must have provided many services and, therefore, must deserve to be paid the fees being requested.
2. Jargon that Leaves You Feeling Frustrated
If you can’t understand something, you can’t effectively challenge it. That’s why your DMS invoice is filled with confusing jargon and cryptic abbreviations. Some of the terms found on actual invoices from major providers include, “MAINT WS-C2960C-12PC-L MO SVC”, “UPS PSA500MT3-120 – MAINTENANCE”, and “ASP VPN TO LOC-INTERNET 1.5MB”.
Each of these puzzling descriptions, of course, is connected to a dollar amount, some small and some very large. The more you read the invoices, the more it becomes clear that these line items are not meant to clarify charges for dealerships. Instead, they are designed to shield fees from the probing eyes of inquisitive dealers.
3. Elusive “Other” Categories that Leave You Feeling Angry
While confusing descriptions may be frustrating for dealers, they are downright maddening when grouped under a broad category, labeled simply as “Other Charges and Purchases”. These categories provide a catchall for DMS providers to charge dealerships for almost anything they want. One recent invoice included over $4,000 in “Other Charges and Purchases”.
These categories frustrate dealers because of their broad, general nature and because they represent the tendency of DMS providers to “nickel and dime” their customers, charging them for everything they possibly can. A non-transparent bill usually has a lot of variability in costs month to month which makes forecasting difficult. With a more consistent or bundled bill you have the ability to better forecast your Operating costs.
Stop the Camouflage
While most of the major DMS providers try to hide their fees and upcharges, customer-centric companies are working hard to increase billing transparency. A simple review of one transparent invoice reveals only five line items, each with a simple, clearly worded description. These efforts to clearly display pricing help companies stand out among their camouflaged competitors.
Simple invoicing allows the dealership to know exactly how their dollar is being spent.
Start Demanding Transparent Billing
Complexity is the key to good camouflage. Unfortunately, your DMS provider is using this trick to hide the true cost of purchasing its products. Take a look at your latest invoice and you’ll probably find long lists of charges, confusing descriptions, and a hefty collection of “other charges and purchases”. In response to these unclear billing practices, dealers need to start demanding transparent billing from their technology providers. While traditional providers continue to blend in with their camouflage, transparent providers will intentionally stand out from the competition to help you stand out from yours.
So, how much are you actually paying?
Knowledge is the key to unlocking your dealership from restricting and unfair billing practices. Start here and plug in the numbers to see how much you’re actually paying for the technology running your business. Calculate your fees.
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