Editor's note: Farm Equipment editors received this note from a reader regarding the February 2024 issue of Farm Equipment and its coverage of the 2023 Cost of Doing Business study from the North American Equipment Dealers Assn. (NAEDA). 

I just finished reading the Cost of Doing Business article in the February 2024 issue of Farm Equipment, and I would like to share a persistent thought as it relates to that subject matter.

The paragraphs on pg. 70 under the "Expenses and Profit" heading are what catch my attention. The major manufacturers all tend to profess how much more efficient and profitable the large volume, multi-store operations are. By looking at the data provided, the smaller operations do perform rather close to the larger entities on a percentage basis. What truth doesn’t ever seem to be shared is how much more profitable the smaller operations are if the volume discounts and bonuses were to be backed out of the equation. What makes the big operations show better percentages is the magnitude and effect of the volume discounts they receive. This is the bait that the majors have put out there to drive this behavior. Should the day come when these bonuses would be decreased (which some manufacturers have started to do) or more so eliminated, it would quickly become apparent how inefficient the large operations are with all things being equalized.

I would love to see someone in your line of work note this fact at some point in time. I don’t expect it to cause any sort or trend reversal or operational revolution. What I have noticed though, in my time as a dealer principal, is that once the operation that is paying the bonuses or incentives hits a tipping point where they believe they are handing out more money than they feel they should, they start to find ways to trim that payout back. It may happen in this case with manufacturers and their dealers or in other sales organizations with a salesperson that is doing extremely well when they decide to split the territory or add another salesperson.