That's okay, use it, that's why we send them. At least he wasn't the guy who paid to have his fuel pump installed only to find out the problem was not the fuel pump but the fuel pump regulator. I understand that there is no recourse, I am just trying to understand the comment about the warranty. Discount, it won't work, you can't command the kinds of prices on supplies that the chain stores get. If your profit is below 35%, there are adjustments you can make to get there. Although some are understanding and compassionate enough to say that makes sense. Salespeople live for that moment.
Better parts, better staff, more time and effort put into each repair—it all adds up. So, be proactive when it comes to paying for labor and keep more of your money in your pocket. Retail Matrix Source 1 List from List to Mark 0. Evaluate the matrix based on workload. Whenever you utilize matrix pricing, you control the markup. Further, it means you have to hire sales staff that can wildly fluctuate in their decision-making, and your profit will be completely unpredictable and possibly non-existent, based on how much arguing and embellishing they are willing to do.
The cost of a technician. Use the table below as a guide in converting profit to markup. You are absolutely correct as to how the customer often has the wrong part. I think Jeff has a good point. I had my Mustang in the shop to have some emissions part replaced, I forget what it was, but it was about 6 or 7 inches in length and mounted vertically in the engine, anyway it was pain to get to so I decided to have the Ford place handle it. In other words, if the part is bad, they must pay for the labor again. According to David Clark, business analyst for Karmak, dealers use one of two basic concepts when pricing parts that will be sold through the service department.
You can make more money on the same amount of work by simply pricing accurately, he says. But if you want to know specifics, I'm more than happy to give you. Just remember, for every dollar of labor sold, usually equals a dollar of parts sold. A friend will think I am going to bring my business to you and you charge me a fair price because I want you to succeed. Charging for Labor Bullard sees many, many shops determining their labor rates based on other shops in their respective areas.
But changing the price says something else about you that is bad in the automotive business - it says your pricing is all kind of randomly based on something other than parts and labor, it's based on the negotiating skill of the person in front of you. Once a part matrix is created and implemented, look at the historical gross-profit percentage for the parts department before and after matrix pricing. You make a good point. The lower the cost of the part, the higher the multiplier. Heavy truck shop parts pricing should be automated like this due to the shear volume of parts coming through the shop. The reason you want to do it is simple, he says: In most states, the law stipulates that manufacturers must reimburse at retail rates. The gasket on the other hand would have a considerably higher selling price compared to the normal list price.
Changing the price is bad for business. Bubba down the road quoted you something cheaper? In most instances, when the customer calls another dealer to shop the price, they're going to shop the major item, not the lower cost additional parts. A parts matrix is a simple document that gives a basic multiplier to calculate the markup on a given part. I never hear my plumber, oil burner service man or carpenter complain about people wanting to install their own parts. Be Reasonable: Charge a higher markup for lower-priced parts Now you have an idea of what your markup percentage should be. You do not want your profit margin on labor falling below 60 percent, so if productivity is less than 100 percent, you will need to adjust.
Creating a Parts-Pricing Matrix All of the major dealer-management systems have the ability to create a parts pricing matrix. Service providers also must invest in education and training for their existing employees to keep retention rates high and reduce the number of open positions they need to fill. Figure this out now, today, and you won't believe how much easier your days will be. I gave them all super discounts because I thought they were like family. Is 50-60% mark-up the industry standard so to speak? There are many things I fix on my car myself, many that I pay the shop to do.
Find the best techs; find ways to increase shop production and provide the best service you possibly can. When I sell a job I sell value and benefits and sell the entire job. But when I was tied up all day long to the day to day operations, I did not grow. When the consumer goes into AutoZone on a weekday evening or weekend they do not realize that the manager isn't there or any commercial sales account people. In the example, the water pump could be left at list price or a small percentage above list price.
The general public also doesn't get the fact that our shops buy parts at a discount to what they pay. That way, you can see where you are or are not getting your profits from and can then adjust your matrix accordingly. My mark up is a reasonable markup at 50% on parts and 70% on labor. In the water-pump example, some of the incidental costs may include gaskets, seals, hose clamps, bolts and coolant. Now that would be hilarious. One of those expenses is I have to pay someone to order the parts, pay the invoices from my parts suppliers they prefer for me to pay what I owe them and keep track of my accounts receivables. Many of my customers are parts cost savey.
Those were the good ole days that are now gone but that experience helps me not to be afraid to charge a fair price. If a car isn't worth fixing we will also advise them of that. If you want your shop to survive and thrive, you must make a healthy profit on your parts. We were very competitive and while we made some money we never got rich. They know we keep track of their history, they know that even if they only came in for tires I'm going to have someone check and top off their fluids, they know at each tire rotation we are noting the wear on their brake pads and giving them a chance to plan for their next service, they know even if they are just getting a coolant flush we'll give them a printout of any maintenance we note might be due.