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Customer's buying their own parts


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Why would any of you feel ashamed or the need to make excuses for making a profit off of parts ?Every business makes money off of the product they sell.  How is it possible that everyone on here understands the shortage of qualified mechanics yet act like theres a surplus? 

What I've told people us that every bay in my shop is like a machine in a factory. It has to make me money. I have bills to pay. Not only am I giving away profit but what happens when the part is wrong? Now that car is trying up a bay (my machine) while I wait for them to get off of work, pick up their wrong part, fix THEIR mistake, bring (hopefully) the correct part back the next day or so, and then we can finish the job. Who's going to pay for the downtime for my machine? Are they willing to pay me for 1 1/2 days of idleness just so they can save $50? No. They only want to use you. After this, theyll be on to the next chump. Dont be that chump. 

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On 12/2/2018 at 8:05 PM, Old and Tired said:

Why would any of you feel ashamed or the need to make excuses for making a profit off of parts ?Every business makes money off of the product they sell.  How is it possible that everyone on here understands the shortage of qualified mechanics yet act like theres a surplus? 

What I've told people us that every bay in my shop is like a machine in a factory. It has to make me money. I have bills to pay. Not only am I giving away profit but what happens when the part is wrong? Now that car is trying up a bay (my machine) while I wait for them to get off of work, pick up their wrong part, fix THEIR mistake, bring (hopefully) the correct part back the next day or so, and then we can finish the job. Who's going to pay for the downtime for my machine? Are they willing to pay me for 1 1/2 days of idleness just so they can save $50? No. They only want to use you. After this, theyll be on to the next chump. Dont be that chump. 

I can't speak for everyone, but I can tell you I am not ashamed to make a profit.  This is business and the way to survive is to adapt.  If you can name one industry that has not adapted to consumer behavior and survived, I would be very happy to hear about it.  Consumers have long treated this industry as if we are all thieves.  Before the internet, they had no recourse.  With the internet, they can put you out of business in 30 days time, if not sooner.

 

The medium here for discussion is how we all thrive in an environment that is turning every industry upside down, not just this one.  Part of that comes with providing a streamline experience where people pay for your experience and not your parts.  If we, as a group, adapted the mentality of my labor is where I make money, and not my parts... there would be less ability for the consumer to create havoc in our environment.  As long as we sell parts for multiples of what we are paying for them, while our consumers can research prices on their own... is as long as we'll have the mentality that's made this industry the last one to transform and shake the horrid reputation we have with the general public.

 

If you buy anything at a national chain, from the groceries in your house, to the device you are likely typing this on... you are a consumer.  Put yourself in their shoes and realize we provide the worst experience known to man.  There are no trades left where parts have such an influence on business, like this trade.  If you work on fleets, ask their owners how their business is going and what challenges they are facing.  Most of the fleets we service, make less than 20% on parts and all of their meaningful revenue is generated by labor.  Why?  Because the consumer can go to Home Depot and buy everything for the same price they can.  The consumer just can't install it, they realized that... adapted to it and are now seeing the benefit of not worrying about how much money to make on parts and focus on labor costs and managing them.

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6 hours ago, CAR_AutoReports said:

I can't speak for everyone, but I can tell you I am not ashamed to make a profit.  This is business and the way to survive is to adapt.  If you can name one industry that has not adapted to consumer behavior and survived, I would be very happy to hear about it.  Consumers have long treated this industry as if we are all thieves.  Before the internet, they had no recourse.  With the internet, they can put you out of business in 30 days time, if not sooner.

 

The medium here for discussion is how we all thrive in an environment that is turning every industry upside down, not just this one.  Part of that comes with providing a streamline experience where people pay for your experience and not your parts.  If we, as a group, adapted the mentality of my labor is where I make money, and not my parts... there would be less ability for the consumer to create havoc in our environment.  As long as we sell parts for multiples of what we are paying for them, while our consumers can research prices on their own... is as long as we'll have the mentality that's made this industry the last one to transform and shake the horrid reputation we have with the general public.

 

If you buy anything at a national chain, from the groceries in your house, to the device you are likely typing this on... you are a consumer.  Put yourself in their shoes and realize we provide the worst experience known to man.  There are no trades left where parts have such an influence on business, like this trade.  If you work on fleets, ask their owners how their business is going and what challenges they are facing.  Most of the fleets we service, make less than 20% on parts and all of their meaningful revenue is generated by labor.  Why?  Because the consumer can go to Home Depot and buy everything for the same price they can.  The consumer just can't install it, they realized that... adapted to it and are now seeing the benefit of not worrying about how much money to make on parts and focus on labor costs and managing them.

CAR,

What are your suggestions? I have long considered just selling parts at my cost and adjusting my labor, or some other fee to compensate. I've suggested it here on AutoShopOwner before. It would reduce work load, eliminate a more and more harmful data point for customers to judge our pricing, and eliminate the need to explain to customer's why we need a margin on parts. As if customers really care about why we charge a markup at all. As shop owners we continually search for the best price on everything. From parts, supplies, tools, rent, insurance, etc.. We shop on Amazon, eBay, AliExpress, etc., but we get frustrated with customers when they do the same thing. If there is anyone here that pays supplier B more money for parts than supplier A because supplier B needs to make a higher margin to pay his bills, I would love to hear from them. 

Having said all that, I have just not been able to get myself to do it. It's a radical change and we would need to make sure we have a labor formula that works.

Scott   

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16 hours ago, ScottSpec said:

CAR,

What are your suggestions? I have long considered just selling parts at my cost and adjusting my labor, or some other fee to compensate. I've suggested it here on AutoShopOwner before. It would reduce work load, eliminate a more and more harmful data point for customers to judge our pricing, and eliminate the need to explain to customer's why we need a margin on parts. As if customers really care about why we charge a markup at all. As shop owners we continually search for the best price on everything. From parts, supplies, tools, rent, insurance, etc.. We shop on Amazon, eBay, AliExpress, etc., but we get frustrated with customers when they do the same thing. If there is anyone here that pays supplier B more money for parts than supplier A because supplier B needs to make a higher margin to pay his bills, I would love to hear from them. 

Having said all that, I have just not been able to get myself to do it. It's a radical change and we would need to make sure we have a labor formula that works.

Scott   

Scott, 

Please call me  Ricardo, as I'm likely the one posting on this account.  I've been giving this some thought for a while now and I think I finally have a solution that I'm going to slowly implement.  So there's one caveat, I use our software to track real time and hold my guys accountable to use the timer system on jobs.  It's been an adjustment period, but all I had to do was show them one job where we would have lost a lot of money without it, and they saw the light.

So our plan is to gradually raise the labor rate, next month we are going up just over 10%.  We plan on adjusting accordingly throughout the year.  So we are picking a baseline to start from based on expenses and projected decline in parts revenue.  Higher labor is an easier sell when you have a good relationship with your customers and you can tell them, your parts are reasonably priced and show them if need be the comparison.  An example would be, my best selling avenue at the shop for tires is showing people... look, here's the price on TireRack, this is what I can do for you today.  When we do that, their defenses are usually immediately disarmed, because we showed them they are getting a fair deal.

With parts, the same logic is going to be applied.  The second I am questioned on a price, I can show them what it costs online and say... "It's just a bit more, and we get it locally and it's fully warrantied by us now." Going on the tested theory that no one will cry at 30% mark up & value your service by showing them, you're getting a really fair deal.  After all, this is all about perception.  If you charge $200 for a service and $100 is parts and $100 is labor, and the guy down the street charges $200 and $150 for parts and $50 for labor... the price isn't different.  How it's billed is.  But the perception that you provide when people pay for the quality you provide, is what turns customer defense off.  Because now they go home and check the part and they see, ok, he didn't really gouge me.  They can't go verify labor, because the guy on the other side of town might have a cheaper labor rate, but who knows if his quality is any good.

It's really a delicate balance that we are testing and figuring out as we go along.

In addition, we are still exploring how to implement a "Membership" like strategy, where we become a member service that looks out for it's members with a pledge like, parts plus 25% and a set labor rate.  Although this will have to be more thought out and will have to go through some trial runs with current customers.  I'm thinking membership would be something along the lines of a fee that includes 2 basic services for your vehicle for a year and because you signed on, you now get the perks of fair parts pricing and stable labor pricing.

But please don't hesitate to share your thoughts on this plan or your own thoughts.

Ricardo

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4 hours ago, CAR_AutoReports said:

Scott, 

Please call me  Ricardo, as I'm likely the one posting on this account.  I've been giving this some thought for a while now and I think I finally have a solution that I'm going to slowly implement.  So there's one caveat, I use our software to track real time and hold my guys accountable to use the timer system on jobs.  It's been an adjustment period, but all I had to do was show them one job where we would have lost a lot of money without it, and they saw the light.

So our plan is to gradually raise the labor rate, next month we are going up just over 10%.  We plan on adjusting accordingly throughout the year.  So we are picking a baseline to start from based on expenses and projected decline in parts revenue.  Higher labor is an easier sell when you have a good relationship with your customers and you can tell them, your parts are reasonably priced and show them if need be the comparison.  An example would be, my best selling avenue at the shop for tires is showing people... look, here's the price on TireRack, this is what I can do for you today.  When we do that, their defenses are usually immediately disarmed, because we showed them they are getting a fair deal.

With parts, the same logic is going to be applied.  The second I am questioned on a price, I can show them what it costs online and say... "It's just a bit more, and we get it locally and it's fully warrantied by us now." Going on the tested theory that no one will cry at 30% mark up & value your service by showing them, you're getting a really fair deal.  After all, this is all about perception.  If you charge $200 for a service and $100 is parts and $100 is labor, and the guy down the street charges $200 and $150 for parts and $50 for labor... the price isn't different.  How it's billed is.  But the perception that you provide when people pay for the quality you provide, is what turns customer defense off.  Because now they go home and check the part and they see, ok, he didn't really gouge me.  They can't go verify labor, because the guy on the other side of town might have a cheaper labor rate, but who knows if his quality is any good.

It's really a delicate balance that we are testing and figuring out as we go along.

In addition, we are still exploring how to implement a "Membership" like strategy, where we become a member service that looks out for it's members with a pledge like, parts plus 25% and a set labor rate.  Although this will have to be more thought out and will have to go through some trial runs with current customers.  I'm thinking membership would be something along the lines of a fee that includes 2 basic services for your vehicle for a year and because you signed on, you now get the perks of fair parts pricing and stable labor pricing.

But please don't hesitate to share your thoughts on this plan or your own thoughts.

Ricardo

Ricardo,

If we stopped worrying about parts margins, this business would be much easier to evaluate, predict, and make a profit. The current model, which most of us are still using, me included really leaves a lot to chance in this business. I could sit down in a few minutes and calculate how much each bay cost me, how much each tech cost me, and how many hours at what rate I need to charge to make sure I am profitable. While we use a standard markup, it is very difficult to know what dollar amount I am going to sell in parts. Think about this for a moment. You have an A tech that spends 6 hours removing a dash to replace a $80 blend door motor which also requires calibration with a scan tool that cost him a few thousand dollars, or as I like to say $200 a month. Next to him, you have a B tech who spends 6 hours replacing 6 sets of brake pads. The B tech generated the same amount of labor, but ~$400 more in parts, and probably makes half of what you paid the A tech. Is your business really doing better because you made sure you made your $40 on the blend door motor. If you sold the parts at cost, assuming you had a 50% margin, you would only need to raise your labor rate $20 to come out ahead. I just ran some numbers from last out of curiosity. If I raised my labor rate $55 and stopped marking up parts, I would be ahead of the game.   

We all talk about how important it is to charge for diagnostic time, and it is. However, it's the most cost intensive work we do, and since there are no parts sales to go along with it, it's also the lowest sales generator per hour.

Scott

 

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15 minutes ago, ScottSpec said:

Ricardo,

If we stopped worrying about parts margins, this business would be much easier to evaluate, predict, and make a profit. The current model, which most of us are still using, me included really leaves a lot to chance in this business. I could sit down in a few minutes and calculate how much each bay cost me, how much each tech cost me, and how many hours at what rate I need to charge to make sure I am profitable. While we use a standard markup, it is very difficult to know what dollar amount I am going to sell in parts. Think about this for a moment. You have an A tech that spends 6 hours removing a dash to replace a $80 blend door motor which also requires calibration with a scan tool that cost him a few thousand dollars, or as I like to say $200 a month. Next to him, you have a B tech who spends 6 hours replacing 6 sets of brake pads. The B tech generated the same amount of labor, but ~$400 more in parts, and probably makes half of what you paid the A tech. Is your business really doing better because you made sure you made your $40 on the blend door motor. If you sold the parts at cost, assuming you had a 50% margin, you would only need to raise your labor rate $20 to come out ahead. I just ran some numbers from last out of curiosity. If I raised my labor rate $55 and stopped marking up parts, I would be ahead of the game.   

We all talk about how important it is to charge for diagnostic time, and it is. However, it's the most cost intensive work we do, and since there are no parts sales to go along with it, it's also the lowest sales generator per hour.

Scott

 

Scott, 

 

You just said it all right there.  You can sell parts at cost and raise your labor rate $55 an hour to make the same money you do, with 0 headaches of worrying about part margin.  Now imagine when you translate that to the consumer who will never have to look up a parts price and is paying you a fair rate for your work.  The customer has a good feeling about you and how he's been treated. 

Personally, that's priceless.

Thank you for doing the calculations and bringing that exact number to the table.  That helps show that it's not that hard and arguably, can be a much easier sell when you tell customers... I don't mark up parts.  You pay for the service we provide and the quality / care with which we treat your vehicle.

Appreciate the conversation!

 

Ricardo

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1 hour ago, CAR_AutoReports said:

Scott, 

 

You just said it all right there.  You can sell parts at cost and raise your labor rate $55 an hour to make the same money you do, with 0 headaches of worrying about part margin.  Now imagine when you translate that to the consumer who will never have to look up a parts price and is paying you a fair rate for your work.  The customer has a good feeling about you and how he's been treated. 

Personally, that's priceless.

Thank you for doing the calculations and bringing that exact number to the table.  That helps show that it's not that hard and arguably, can be a much easier sell when you tell customers... I don't mark up parts.  You pay for the service we provide and the quality / care with which we treat your vehicle.

Appreciate the conversation!

 

Ricardo

Ricardo,

I feel a little unpatriotic when I say this, but that number would actually increase our profit by about $13,000 because that amount would no longer be going to sales tax. I could even just start paying sales tax on everything I buy and stop having to collect and report it myself. Interesting conversation. 

Scott

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4 minutes ago, ScottSpec said:

Ricardo,

I feel a little unpatriotic when I say this, but that number would actually increase our profit by about $13,000 because that amount would no longer be going to sales tax. I could even just start paying sales tax on everything I buy and stop having to collect and report it myself. Interesting conversation. 

Scott

I'm curious about how long you guys have been in business?

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14 minutes ago, ScottSpec said:

Since 1989. It will be 30 years in May. Why do you ask?

Scott

14 minutes ago, ScottSpec said:

Since 1989. It will be 30 years in May. Why do you ask?

Scott

I was just curious. I didn't mean it to sound like I thought you were naive. It's been 30 years for me too and I cant see such a dramatic change at this point but that doesnt mean you dont have a genius idea. 

1 hour ago, ScottSpec said:

Ricardo,

I feel a little unpatriotic when I say this, but that number would actually increase our profit by about $13,000 because that amount would no longer be going to sales tax. I could even just start paying sales tax on everything I buy and stop having to collect and report it myself. Interesting conversation. 

Scott

I'm curious about how long you guys have been in business?

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1 minute ago, Old and Tired said:

I was just curious. I didn't mean it to sound like I thought you were naive. It's been 30 years for me too and I cant see such a dramatic change at this point but that doesnt mean you dont have a genius idea. 

I'm curious about how long you guys have been in business?

I've thought about making the change many times. It sounds good on paper, but obviously I have not been able to convince myself to try it yet. It would be a radical change, but I am thinking more and more seriously about it. While it would eliminate some of the discussion with the customers about parts costs/markups, the more beneficial part to me is to be able to predict my costs and charge accordingly. I would not have to hope to sell a lot of parts.

Scott

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7 minutes ago, Old and Tired said:

I was just curious. I didn't mean it to sound like I thought you were naive. It's been 30 years for me too and I cant see such a dramatic change at this point but that doesnt mean you dont have a genius idea. 

I'm curious about how long you guys have been in business?

This must be the 30 year club. 

 

Family started the business in April 1989, I took over alone in April 2008. 

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10 hours ago, ScottSpec said:

Ricardo,

I feel a little unpatriotic when I say this, but that number would actually increase our profit by about $13,000 because that amount would no longer be going to sales tax. I could even just start paying sales tax on everything I buy and stop having to collect and report it myself. Interesting conversation. 

Scott

There's nothing unpatriotic about making things better at your business and not having to hire a fancy accountant to help you keep more of your money.

 

I'd say this has been a great conversation with good insight for us to really think about the direction of our businesses.

8 hours ago, Old and Tired said:

I was just curious. I didn't mean it to sound like I thought you were naive. It's been 30 years for me too and I cant see such a dramatic change at this point but that doesnt mean you dont have a genius idea. 

I'm curious about how long you guys have been in business?

I have 20 years left of this, 10 if I'm lucky.  Change, is my only way to survive. 

I have been trying to think of how to separate myself from the pack since about year 3 on my own. By year 6 I started the software company to compliment my ideas about customer engagement and transparency, by year 7 I started to adapt my selling to advising.  By year 8, I questioned everything....  But now, I see things pretty clearly and I think I left most of the rocky road behind me.  Or I hope so anyway.

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I too appreciate the conversation. My numbers are a little different for how much I would have to increase my effective labor rate to achieve the same gross profit dollars from the work performed year to date. I suspect most shops will have some degree of variance based on sales mix and focus. I used the following formula
 
Parts gross profit dollars generated for the year/ divided by/labor hours billed for the same time period. I would then add that number to my current effective labor rate to find my new effective labor rate goal, if i was going to use this straight up approach. My numbers would require a $70 increase in effective labor rate, give or take. This would involve doubling my "door rate". I would likely have to split my three profit centers (oil, tires and service) and come with something different for each. Still not all that hard. 
 
I used before tax numbers, so the tax savings to the consumer would be $22,000 ($3.14 per work order on average) in my case and we would still owe $24,000 on parts at cost. We are a "tax on parts"only state. 
 
I suspect the more likely formula for us is more like the fleet discussion earlier is this thread, where we would have a low flat parts margin of 15% or so. This would reduce our required effective labor rate increase to closer to $60. Still pretty easy to manage and 15% margin can easily be applied to everything we sell including tires and dealer parts. How simple would that be, 1 matrix table for all. 
 
The modern consumer is more and more like a fleet manager. They have easy access to lower cost parts and supplies(of the same quality, if they chose), just like fleet managers have had for years. 
 
There will still be challenges for early adopters. Some current jobs with low parts gross profit dollars associated will increase significantly. National fleet and extended warranty companies will require some education. We will be need to be very good "educators" for sure.
 
We will have been in business 38 years May 1
 
Thanks for the conversation.
 
Randy Lucyk
Midas Kalkaska
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38 minutes ago, CAR_AutoReports said:

There's nothing unpatriotic about making things better at your business and not having to hire a fancy accountant to help you keep more of your money.

 

I'd say this has been a great conversation with good insight for us to really think about the direction of our businesses.

I have 20 years left of this, 10 if I'm lucky.  Change, is my only way to survive. 

I have been trying to think of how to separate myself from the pack since about year 3 on my own. By year 6 I started the software company to compliment my ideas about customer engagement and transparency, by year 7 I started to adapt my selling to advising.  By year 8, I questioned everything....  But now, I see things pretty clearly and I think I left most of the rocky road behind me.  Or I hope so anyway.

Ricardo,

Looking for ways to get out of this business, I created some shop management software about 5 years ago. It was the first web based system created. It never really caught on, so I closed it off to new users. There are still about 50 of us using it. I've put my business up for sale a few times with the plan of getting into IT. I've done some consulting, and I can make more money at home with a computer than I can with my shop, probably twice as much; without all the headaches. The shop does allow me more freedom though. I was committed to selling it at the end of last year, then I invented a new consumer product that has the potential to make me more money than my shop ever has. So I'm now using the business structure and assets to develop and market the product. If you are interested in see the product, you can check it out at https://www.tubeanew.com    

I hate sounding pessimistic, but the truth is that the automotive repair business is dying. It has been for many years. More reliable cars, longer service intervals, and cars by subscription. Most of the "gravy" work is going away, being replaced with more advanced diagnostic work, and repairs that require us to purchase subscriptions to download software every time a module is replaced. Quite often you have to update your own computer with the manufacture's latest software to do those downloads adding another hour or so to the job. You keep your fingers crossed that the download doesn't fail leaving you with a bricked module, and when their system doesn't work correctly, tech support is quite often lacking. I did a X3 a couple weeks ago using a pass through. After 5 days it was at 50% complete. Once I switched to the BMW ICOM, it was much faster, about 4 hours. However, even after that the system wanted a release code for the new rack that was installed. Even though it was BMW's system asking for the code, BMW support had no idea how to provide one, and said the system should have done it automatically. So it ended up having to go to the dealer for the code.  

We've had a couple of Tesla's in the shop recently. More and more cars will be EV's and HV's. In 2 years all Volvo's will be, and they are 60% of our business. EV's and HV's will never need brakes. The steering racks will never leak. EV's will never need oil changes, transmission flushes, power steering flushes, air filters, spark plugs etc. There will be no more engine, transmission, differential or fuel system repairs.       

What is your software product?   

Scott

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9 minutes ago, ScottSpec said:

Ricardo,

Looking for ways to get out of this business, I created some shop management software about 5 years ago. It was the first web based system created. It never really caught on, so I closed it off to new users. There are still about 50 of us using it. I've put my business up for sale a few times with the plan of getting into IT. I've done some consulting, and I can make more money at home with a computer than I can with my shop, probably twice as much; without all the headaches. The shop does allow me more freedom though. I was committed to selling it at the end of last year, then I invented a new consumer product that has the potential to make me more money than my shop ever has. So I'm now using the business structure and assets to develop and market the product. If you are interested in see the product, you can check it out at https://www.tubeanew.com    

I hate sounding pessimistic, but the truth is that the automotive repair business is dying. It has been for many years. More reliable cars, longer service intervals, and cars by subscription. Most of the "gravy" work is going away, being replaced with more advanced diagnostic work, and repairs that require us to purchase subscriptions to download software every time a module is replaced. Quite often you have to update your own computer with the manufacture's latest software to do those downloads adding another hour or so to the job. You keep your fingers crossed that the download doesn't fail leaving you with a bricked module, and when their system doesn't work correctly, tech support is quite often lacking. I did a X3 a couple weeks ago using a pass through. After 5 days it was at 50% complete. Once I switched to the BMW ICOM, it was much faster, about 4 hours. However, even after that the system wanted a release code for the new rack that was installed. Even though it was BMW's system asking for the code, BMW support had no idea how to provide one, and said the system should have done it automatically. So it ended up having to go to the dealer for the code.  

We've had a couple of Tesla's in the shop recently. More and more cars will be EV's and HV's. In 2 years all Volvo's will be, and they are 60% of our business. EV's and HV's will never need brakes. The steering racks will never leak. EV's will never need oil changes, transmission flushes, power steering flushes, air filters, spark plugs etc. There will be no more engine, transmission, differential or fuel system repairs.       

What is your software product?   

Scott

Hey Scott,

Have sent you a message for us to have a conversation offline.  

Would love to hear more about what you have done in the past.

Our product is www.completeautoreports.com

I don't think we as an industry can go away that fast, there's simply too many cars to be serviced.  What I see happening is that the tech shortage will have to lead to a price increase and the technology gap will push many people to get educated or look for a new job.

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2 minutes ago, CAR_AutoReports said:

Hey Scott,

Have sent you a message for us to have a conversation offline.  

Would love to hear more about what you have done in the past.

Our product is www.completeautoreports.com

I don't think we as an industry can go away that fast, there's simply too many cars to be serviced.  What I see happening is that the tech shortage will have to lead to a price increase and the technology gap will push many people to get educated or look for a new job.

Ricardo,

I don't think the industry will go away overnight. but if your sales drop a few % every year, which is what I am hearing from most of the shop owners I talk with, how long will it be before you are no longer profitable? 

I also replied to your private message.

Scott

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8 minutes ago, ScottSpec said:

Ricardo,

I don't think the industry will go away overnight. but if your sales drop a few % every year, which is what I am hearing from most of the shop owners I talk with, how long will it be before you are no longer profitable? 

I also replied to your private message.

Scott

Sent you an email Scott, in an effort to keep this thread on topic.

Sales are dropping because we don't have the marketing teams that larger facilities have to keep getting customers in the door.  Dealers and larger facilities (think 10 employees plus), have a much larger machine that can absorb an employee for marketing, community outreach and advertising.  With that, they've been able to take business away from the smaller players, creating a vacuum that forces a dangerous cycle where smaller players are forced to adapt or close.

 

In order to keep getting business in the door, EVERY business must have the following:

  1. Strong web presence
  2. Strong social presence
  3. Community support
  4. Advertising

That's just not in the cards for a lot of the smaller guys who work on cars themselves. The guys in between are working 80 hours a week trying to crack these codes to keep business moving... or they are paying $1,000+ a month for companies that do it for them.  I opt for the 80 hour weeks, but the lessons I've learned are slowly starting to pay off.

The next generation of auto technicians, will be computer technicians... that work on computers with wheels.  I've actually noticed manufacturers are now making parts with predictable time frames for failure, this isn't an accident.  They want to make sure they can survive as well.

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12 minutes ago, ScottSpec said:

Ricardo,

I don't think the industry will go away overnight. but if your sales drop a few % every year, which is what I am hearing from most of the shop owners I talk with, how long will it be before you are no longer profitable? 

I also replied to your private message.

Scott

I hate to sound optimistic haha but they've been predicting the end of the independent shop since the invention of H.E.I. Every step of the way shops have figured out a way to repair things and adapt. I dont miss the unprofessional mechanics and I dont miss grease up to my shoulders at the end if the day. Maybe there will be less volume but maybe the average ticket will make up for it. I've noticed alot more respect from people as time goes by and with respect comes the willingness to pay for what we do. 

 

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1 minute ago, Old and Tired said:

I hate to sound optimistic haha but they've been predicting the end of the independent shop since the invention of H.E.I. Every step of the way shops have figured out a way to repair things and adapt. I dont miss the unprofessional mechanics and I dont miss grease up to my shoulders at the end if the day. Maybe there will be less volume but maybe the average ticket will make up for it. I've noticed alot more respect from people as time goes by and with respect comes the willingness to pay for what we do. 

 

A lot of that comes with how we treat people... if you have that happening... you're doing something right.

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1 hour ago, CAR_AutoReports said:

Sent you an email Scott, in an effort to keep this thread on topic.

Sales are dropping because we don't have the marketing teams that larger facilities have to keep getting customers in the door.  Dealers and larger facilities (think 10 employees plus), have a much larger machine that can absorb an employee for marketing, community outreach and advertising.  With that, they've been able to take business away from the smaller players, creating a vacuum that forces a dangerous cycle where smaller players are forced to adapt or close.

 

In order to keep getting business in the door, EVERY business must have the following:

  1. Strong web presence
  2. Strong social presence
  3. Community support
  4. Advertising

That's just not in the cards for a lot of the smaller guys who work on cars themselves. The guys in between are working 80 hours a week trying to crack these codes to keep business moving... or they are paying $1,000+ a month for companies that do it for them.  I opt for the 80 hour weeks, but the lessons I've learned are slowly starting to pay off.

The next generation of auto technicians, will be computer technicians... that work on computers with wheels.  I've actually noticed manufacturers are now making parts with predictable time frames for failure, this isn't an accident.  They want to make sure they can survive as well.

Ricardo,

I'm experiencing something a little different. Maybe it is because of my location or our size. We are just outside of Washington DC which is a fairly affluent area, and our sales were $830,000 last year. So newer cars may be populating our area at a earlier and faster rate. We have a strong web presence. Other shops are always calling me to find out how we are ranking so well. You wont find a single bad review of our shop. We have 6 showing reviews, and 26 hidden on Yelp, and they are all 5 star. We have 32 reviews on Google, 30 of them are 5 star. the other 2 are for another shop. We purchased their customer base, and Google merged the reviews. We have 33 reviews on RepairPal. 28 are 5 star. The other 5, are 4 or 4.5 star, and those were because we weren't in a convenient location for them, or we were not able to reproduce a problem, and were only able to offer them a possible solution.  We spend $30-35,000 a year on direct mail, and for those to be effective, we have to offer an incentive that really hurts profitability the first time they come in. We email service reminders, follow up for reviews, and text with customers. The county I am in is the 4th richest in the country, with a population of over 1,000,000. I have a program where I will donate 10% of the invoice to a PTA when they directed a customer to us. I sent out emails for several years to all the PTA's I could find the addresses for. That yielded me 2 customers. A few years ago we spent $10,500 on a large billboard on a major road near our shop. It brought in 1 customer. We are RepairPal certified which sends us a few cars a month. We tried all the usual suspects like Groupon, Living Social, and a few I'm sure I'm forgetting. We even had a customer reward program for a few years. That was an expensive lesson.

We have made a lot of changes to adapt to the changing landscape. We were a Volvo Specialist for the first 20 years. In 2010 it was clear that was no longer going to work. We started adding more and more makes. Now we will service any 4 wheel passenger vehicle. We added State Inspections, Tag and Title Service, and I even got my Notary. We added 6 Free Loaner cars. We started manufacturing some special tools, and through eBay we are selling them all over the world. We do software downloads for many of shops in the area, as well as diagnostic work when they are stuck. We provide a rebuilding service for the READ units on the Volvo, Jaguar, and Land Rovers. I did one for a guy in Africa a few weeks ago.      

In April of 2017 we bought the customer base of a European Specialist when he went bankrupt after years of declining sales. He was doing well over a million dollars a year for many years just a decade earlier. It increased our revenue about 15% for 2017, but we have been flat this year so far. It scares me to think about if we had not gotten that customer base. 

I'm pretty convinced that more, and or better advertising is not going to grow or even save my business.

More and more I am experiencing the opposite of what Old and Tired is, and that probably has more to do with my dissatisfaction of this business than anything else. Customer's used to respect and value what we do. Now it is a commodity. I have labeled it the Amazon effect. They want immediate service, the best price, and if they are not happy with what they got, they want a refund. 

You are correct, the next generation of technicians will have to have computer and IT skills. Fortunately for me I have them, and it's why I will probably be out of here, and in the IT field in the next few years if my new product does not work out as I hope. The question will be, will individuals with those skills, go to work in the Auto Repair industry, or go to a Tech firm with guaranteed salaries, no requirement to invest thousands of dollars a year in tools, vacations, sick leave, 401k's, stock options, and room for growth. 

Maybe it's me. Maybe I am just old, tired, and after 30 years of this, ready for a change.

Scott      

 

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There's  A LOT to take in there.  I'm going to leave you with some food for thought.  I opened a new private window and searched for "auto repair rockville maryland"... the results don't list you on the front page.  See attached file 2018-12-06_12-04-03.png

I then did a search for "auto repair linden nj" which is where I am located.  Our shop is the 3 listing.  See attached file 2018-12-06_12-04-54.png

Personally speaking, you're doing amazing things at your shop with the way you handle the technology, don't stop.  You're spending all of your marketing and advertising budget on the wrong form of advertising.  I've never done a mailer in my life, I've built this business on SEO and word of mouth.  I bet we can turn your business into a machine diverting your budget.

2018-12-06_12-04-03.png

2018-12-06_12-04-54.png

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31 minutes ago, CAR_AutoReports said:

There's  A LOT to take in there.  I'm going to leave you with some food for thought.  I opened a new private window and searched for "auto repair rockville maryland"... the results don't list you on the front page.  See attached file 2018-12-06_12-04-03.png

I then did a search for "auto repair linden nj" which is where I am located.  Our shop is the 3 listing.  See attached file 2018-12-06_12-04-54.png

Personally speaking, you're doing amazing things at your shop with the way you handle the technology, don't stop.  You're spending all of your marketing and advertising budget on the wrong form of advertising.  I've never done a mailer in my life, I've built this business on SEO and word of mouth.  I bet we can turn your business into a machine diverting your budget.

2018-12-06_12-04-03.png

2018-12-06_12-04-54.png

Ricardo,

Try Volvo Repair Rockville, BMW Repair Rockville, Audi Repair Rockville, MINI Repair Rockville, or VW Repair Rockville. We'll come up on the first page for all of them. These are the vehicles we want in our shop. Having said that, I stopped chasing SEO a year ago. I found no measurable benefit to our business being on the first page. The direct mail has been most effective advertising for us, which is why I have committed such a large portion of our advertising budget to it. Before we started 3 years ago, I thought direct mail was dead. In the those 3 years, direct mail has generated $250,000 in sales. I guess it shows what works for some doesn't necessarily work for others,

Scott    

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3 minutes ago, ScottSpec said:

Ricardo,

Try Volvo Repair Rockville, BMW Repair Rockville, Audi Repair Rockville, MINI Repair Rockville, or VW Repair Rockville. We'll come up on the first page for all of them. These are the vehicles we want in our shop. Having said that, I stopped chasing SEO a year ago. I found no measurable benefit to our business being on the first page. The direct mail has been most effective advertising for us, which is why I have committed such a large portion of our advertising budget to it. Before we started 3 years ago, I thought direct mail was dead. In the those 3 years, direct mail has generated $250,000 in sales. I guess it shows what works for some doesn't necessarily work for others,

Scott    

Ok that makes a lot more sense.  Direct mailers definitely work, but it's chasing the wrong customer personally speaking anyway.  You're getting a customer that comes in because you are offering a price point they want.  I'm sure I can get mailers here and they would be effective, but the $1,000 a month are better off spent trying to build a brand through online portals and advertising.  I don't even look at mail at home unless it's from an attorney, utilities or an insurance provider.

If you want to reach me, I have to be able to search for you.

Speaking of search... you do rank up for those keywords you mentioned... problem is... not many people are using them but you.  At least according to this.

 

2018-12-06_13-12-02.png

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What a great series of insightful posts. SO forward looking!

Maybe a bit off topic … but …

Can you please elaborate on: “by year 7 I started to adapt my selling to advising.” I never liked the idea of “selling” the customer (on value and safety) re a recommended repair or maintenance item. It either needs it or it doesn’t. I take the “advising” one step further. I TELL them what they need – what they need now, what they need in the future and “advise” them on things they could do now or in a month or 2 or more.

Nobody likes to be sold.  And they don’t want to make more decisions in their lives.  If you give them 2 or 3 reasons to encourage them to say yes to 5 items, that’s 10 to 15 things to think about. I believe the trusted service advisor/friend practically makes that decision for them.

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Newport5, 

I know your question was meant for someone else, but I thought I would throw in my comments. I think selling and advising are 2 very subjective terms. We are all always selling customers on ideas and beliefs. We sell customers everyday on why they should chose our shop over others, why they should trust us, the value of quality parts, and maybe why are prices are higher than the shop next door. We sell these ideas by the appearance of our shops, the certificates on our walls, our websites, our online presence, and our words. 

I think quite often when we think of "selling" automotive service and repairs, we think about the shop or dealership that is selling work needed or not to maintain their numbers. Quite often using "scare tactics" or bait and switch. In my shop we do thorough evaluations on just about every car that comes in. We report the findings, the recommendations, and the cost for those. We answer any questions the customer may have, take them into the shop so they can see what we are talking about if needed, then we ask them what they would like to do. I tell them our job is to give them the best assessment of their vehicle, and there job is to decide what they would like to do. 

I think this would be labeled "advising", but make no mistake about it, this is still selling. I'm not evaluating, estimating, educating, and advising so they can take the car somewhere else to have it serviced. I think the word "selling" has 2 very different meanings. When you sell a customer a service or repair that benefits them by extending the life of their vehicle, gets them back on the road, or corrects a safety issue, "selling" is a good thing. When you sell 10 fluid flushes everyday to meet a quota, brake rotors when only pads are needed to boost your average RO, or tell someone the car is unsafe to drive so they have to have work done at your shop, "selling" becomes ugly.

Scott    

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14 hours ago, newport5 said:

What a great series of insightful posts. SO forward looking!

 

Maybe a bit off topic … but …

 

Can you please elaborate on: “by year 7 I started to adapt my selling to advising.” I never liked the idea of “selling” the customer (on value and safety) re a recommended repair or maintenance item. It either needs it or it doesn’t. I take the “advising” one step further. I TELL them what they need – what they need now, what they need in the future and “advise” them on things they could do now or in a month or 2 or more.

 

Nobody likes to be sold.  And they don’t want to make more decisions in their lives.  If you give them 2 or 3 reasons to encourage them to say yes to 5 items, that’s 10 to 15 things to think about. I believe the trusted service advisor/friend practically makes that decision for them.

 

So advising is a lot like being a friend, or at least how we've adopted the principle.

I sit down with people and ask them really hard questions. 

How long are you planning on keeping the car?

How much money have you spent on this car since you've owned it? If it hasn't been serviced with us.

Are you looking for short term solutions or long term solutions?

Based on the answers I get from each customer, I will then put together a package for the services they need that fits their budget.  This has lead to some insanely creative estimate building.  Each customer budget and their plan for their vehicle will help determine that quality of parts I use and where I order them from.  What we've noticed is that this approach completely disarms every single person that we sit with.  Their approach is no longer, "Why is this so expensive?" it flips to "Thank you so much for taking the time out to help me see this clearly.".

We have a running joke at the shop, roughly 1 out of 3 times we tell a customer to not fix a car... they actually will.  We also find that when taking that approach most customers will develop a plan to come in every few months and get each line item addressed, exactly as we discussed it.

Just some food for thought, we are encountering all of the same problems as a shop as have been outlined all over this thread about "fighting" to get customers in the door and keeping them in the door.  But using this approach, we have more of them returning and with positive attitudes about how we handle things here.  Which in turn has positive effects when it comes to referrals.

In short, we don't sell anything.  People pay us for a service and we take it seriously.  Using our auto software we educate and inform our customers, using our people skills we teach them how to make better decisions.  The combination has lead to a great shop attitude overall, better customer relationships and a reputation that starts to break the mold that society has given this industry for generations.

 

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I neglected to mention my most hated term, upselling. That should be banned from ANY auto repair use – ever!  It sounds as if all the shop cares about is a better ARO, not a better repair or better customer relationship

You said:

“We have a running joke at the shop, roughly 1 out of 3 times we tell a customer to not fix a car... they actually will.”

I’ve seen the same thing! I believe it’s because we/you are so darn honest. And you are looking after their budget, while still making a profit for you

You said:

“But using this approach, we have more of them returning and with positive attitudes about how we handle things here.  Which in turn has positive effects when it comes to referrals.”

And positive effects for the shop because there is no fear of calling the customer about their additional work, because you are taking care of them, not selling them. And they’re your “friends.”

What you said here is beautiful !!!

“In short, we don't sell anything.  People pay us for a service and we take it seriously.  Using our software we educate and inform our customers, using our people skills we teach them how to make better decisions.  The combination has lead to a great shop attitude overall, better customer relationships and a reputation that starts to break the mold that society has given this industry for generations.”

Re relationships, you are now dealing with friends, not customers. And they know you have to make a profit – they have to make a profit for the company they work for.

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  • 3 weeks later...
On 12/5/2018 at 8:05 PM, ScottSpec said:

I've thought about making the change many times. It sounds good on paper, but obviously I have not been able to convince myself to try it yet. It would be a radical change, but I am thinking more and more seriously about it. While it would eliminate some of the discussion with the customers about parts costs/markups, the more beneficial part to me is to be able to predict my costs and charge accordingly. I would not have to hope to sell a lot of parts.

Scott

Wouldn't the customer just complain then about your labor rate?  Compare it to the dealer per say?

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24 minutes ago, Love The Biz said:

Wouldn't the customer just complain then about your labor rate?  Compare it to the dealer per say?

Yes, customers will always find something to complain about, and the approach I am thinking about is not without its risks. In fact, what you just asked was the first thing my service manager said to me when we discussed it. We have been moving away from having a posted "labor rate" for a while. We have a "labor rate" that we use to calculate the labor for a given job, but we always present the the total labor for each job to the customer. This makes it a bit more difficult to make an easy comparison. I also find it much easier to address higher labor, then trying to get a customer to understand that my business model requires me to double the price of a part. Labor charges are very subjective, while parts prices are objective. Each of our shops is unique, no one else can offer exactly the same service, and the customer has no idea what it cost to produce the labor. You can easily differentiate yourself, and therefore justify a different labor rate.  When a customer tells you he/she found the same OEM part online, for 1/2 the cost, there is nothing you can do to differentiate the part you are selling, from the part found online. You are now in a position where all you can do is try to get them to understand that you have to mark parts up to stay in business. A lot of customers do understand this, but each one has a different idea about what constitutes a reasonable markup, and what is excessive, leaving them feeling ripped off.

Whenever I discuss this idea, I feel the need to add my disclaimer. While I do continue to like the possibilities of conducting my business this way, I still have not tried it in my shop. So, I do also have some serious reservations about it.

Scott

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2 minutes ago, ScottSpec said:

Yes, customers will always find something to complain about, and the approach I am thinking about is not without its risks. In fact, what you just asked was the first thing my service manager said to me when we discussed it. We have been moving away from having a posted "labor rate" for a while. We have a "labor rate" that we use to calculate the labor for a given job, but we always present the the total labor for each job to the customer. This makes it a bit more difficult to make an easy comparison. I also find it much easier to address higher labor, then trying to get a customer to understand that my business model requires me to double the price of a part. Labor charges are very subjective, while parts prices are objective. Each of our shops is unique, no one else can offer exactly the same service, and the customer has no idea what it cost to produce the labor. You can easily differentiate yourself, and therefore justify a different labor rate.  When a customer tells you he/she found the same OEM part online, for 1/2 the cost, there is nothing you can do to differentiate the part you are selling, from the part found online. You are now in a position where all you can do is try to get them to understand that you have to mark parts up to stay in business. A lot of customers do understand this, but each one has a different idea about what constitutes a reasonable markup, and what is excessive, leaving them feeling ripped off.

Whenever I discuss this idea, I feel the need to add my disclaimer. While I do continue to like the possibilities of conducting my business this way, I still have not tried it in my shop. So, I do also have some serious reservations about it.

Scott

Just had this discussion yesterday at the shop, the exact same retaliation was given on all sides.  It's pretty funny actually.

 

In short, we're still contemplating it, but maybe altering it.  Maybe have a more reasonable tier of markup.  Like 100% for $25 and under, 75% for up to $50, 50% up to 75% and 20-25% from $100 and up.  With a rate drop at let's say $500+ to 18.5%.

 

And instead of full frontal with the larger labor rate, a more modest bump to make the change less noticeable.  So if we were at $95, maybe $115 (domestic) to $125 (foreign), which is still cheaper than local Toyota dealer in this area.   But I'm also talking about billing actual time or book time, whichever is greater as often as humanly possible.  Precision labor billing is the key we think, with some room for the nightmares we all encounter from time to time.

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That seems somewhat like how the parts matrix should be, or pretty close to how I already do it, but off a bit.  So if you bill actual time, versus book time, how then can you give an Estimate before the repair?  If you have a Mechanic who don't routinely make book time, or perhaps run into a snag, removing a part, you already quoted the job?   Nothing worse than calling those folks back for more money.   And even worse, if they arrive and your bill is higher than your estimate.   I have never really had an issue , explaining mark up on parts.   I tell them I could never get parts that inexpensive as they are online.    I know that Repair Pal, is not our friend.  Folks are looking that up, immediately after sending them the DVI.    Also now with Napa's Estimator as well.  But folks understand I am covering that part, for whatever amount of time, I advertise.   

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6 minutes ago, Love The Biz said:

That seems somewhat like how the parts matrix should be, or pretty close to how I already do it, but off a bit.  So if you bill actual time, versus book time, how then can you give an Estimate before the repair?  If you have a Mechanic who don't routinely make book time, or perhaps run into a snag, removing a part, you already quoted the job?   Nothing worse than calling those folks back for more money.   And even worse, if they arrive and your bill is higher than your estimate.   I have never really had an issue , explaining mark up on parts.   I tell them I could never get parts that inexpensive as they are online.    I know that Repair Pal, is not our friend.  Folks are looking that up, immediately after sending them the DVI.    Also now with Napa's Estimator as well.  But folks understand I am covering that part, for whatever amount of time, I advertise.   

Overbid and explain the overbid and how experience shows we will encounter hardships that are not our fault and will still need to be addressed.  We are in the business of doing it once, not twice.  With that comes someone who doesn't rush through your job to "just get it done".  That takes time and a team.

 

When I see something major is about to happen to cause a drastic change in price, everything stops and I call the customer immediately. 

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I am contemplating something more along these lines for price standardization.

In conjunction with that, a modest increase in labor price and an adjustment to our advertising campaigns.

All in an effort to completely eliminate the focus on parts pricing and focus on containing labor and getting paid to reflect the labor needed to do the job in an industry short on staff and high on demand.

 

2018-12-28_15-07-15.jpg

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It's also worth noting that dealers in my area are @ $125 for Japanese $155+ for German and $100+ for domestic.

 

In most circumstances we are at least 25% cheaper than the dealer.  That gap needs to be closer to 10% if you offer dealer like amenities such as a clean waiting room, loaner cars and pick up/drop off service.  Which we do. To maintain those services and grow (hopefully), we need a stable labor rate to allow the flexibility to hire without regret. Standardizing the parts prices is a two fold incentive. 

It eliminates a point of contention at the counter and it provides a selling point. 

"Our promise to you is to always be fair in pricing of our parts in the age of Amazon.  Our parts margins are constrained to help ensure that you receive value with each service here at XXXXXXXX."  We are also working on a larger initiative with the entire model, a combination of a membership model with baked in prices for regular service, no frills pricing with dealer level service on maintenance.

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I got around this problem by opening a parts store. I found I was misssing a segment of my local market of the DIY guys. So now they buy parts from my store and occasionally come to my shop to have them installed. Some people understand it is the same business others think they are saving a buck. What I do is tell them I will take 10% off the labor if they buy the part from my store and have my shop install it. The store drives traffic to the shop.

I did this because I am located in a rural city so it works for me. I am not sure this would work in a larger city.

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  • 2 weeks later...

What about oil changes? Do you guys allow customers to bring their own oil & filter and just charge labor?

 

We have noticed a demand in this, however, most customers are bringing the incorrect weight of oil (calls for 020 , supplies 530). How would you handle this? Document, decline service...? 

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1 hour ago, CAautogroup said:

What about oil changes? Do you guys allow customers to bring their own oil & filter and just charge labor?

 

We have noticed a demand in this, however, most customers are bringing the incorrect weight of oil (calls for 020 , supplies 530). How would you handle this? Document, decline service...? 

I would let them bring oil and a filter as long as its correct. I had a problem once where a customer asked for something cheap. We did what he wanted trying to please him. When it all went bad the lawyers said it doesnt matter that the customer asked for it. We are the professionals and should have saved him from himself. 

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  • 3 weeks later...

We allow customers to bring their own oil, as long as it meets spec. If it doesn’t,  we tell them and offer the right oil or send them on their way. 

 

The legal way around customers buying their own parts is limiting your warranty and liability. Nothing in the law states that your warranty has to be the same for each and every service. So our adoption is, sure you can bring your own parts. But here are the parts you MUST buy the parts we indicate and your warranty is limited and your labor rate is inflated. 

 

That will help you weed through the shitty customers and convert the good ones from distrustful customers of the industry to good customers for you. 

 

I have a very recent example of a customer that I did this with and I occasionally give parts to at cost and make up for it on labor. He’s spent an enormous amount of money with us in the last 4 months and couldn’t be happier with the service we provide. 

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2 hours ago, CAR_AutoReports said:

We allow customers to bring their own oil, as long as it meets spec. If it doesn’t,  we tell them and offer the right oil or send them on their way. 

 

The legal way around customers buying their own parts is limiting your warranty and liability. Nothing in the law states that your warranty has to be the same for each and every service. So our adoption is, sure you can bring your own parts. But here are the parts you MUST buy the parts we indicate and your warranty is limited and your labor rate is inflated. 

 

That will help you weed through the shitty customers and convert the good ones from distrustful customers of the industry to good customers for you. 

 

I have a very recent example of a customer that I did this with and I occasionally give parts to at cost and make up for it on labor. He’s spent an enormous amount of money with us in the last 4 months and couldn’t be happier with the service we provide. 

I recommend you talk to you insurance company, and your lawyer. There is nothing you can do to limit your liability. You are just as liable for a customer's part, as you are for a part you purchased and installed. I think you might also find it difficult to offer different warranties for the same part. These are not just my opinions, they have been tested in court.  

Scott

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12 hours ago, ScottSpec said:

I recommend you talk to you insurance company, and your lawyer. There is nothing you can do to limit your liability. You are just as liable for a customer's part, as you are for a part you purchased and installed. I think you might also find it difficult to offer different warranties for the same part. These are not just my opinions, they have been tested in court.  

Scott

I have spoken to my insurance company, they have 0 rules and regulations about customers bringing in their own parts.  They did have plenty of regulations regarding me selling parts to the general public and not just my customers.

 

As for the attorney, I have not spoken to them yet but I have read some of the court documents surrounding the cases.  No one can force you to offer any type of warranty for anything.  No one can also force you to abide by one warranty for everything you do or sell.  There are plenty of companies that sell products that offer 30 days warranties and some that offer 2 year warranties.  Computer manufacturers and the companies that sell their parts come to mind.

 

The law states and has been tested in me taking responsibility for the work I did.  It does not and can not tell me how long I have to warranty anything. 

 

Do you install and warranty a used engine from the junk yard with the same warranty you sell and install and OEM engine in the crate from the dealer?  Different circumstances call for different rules.  This arena, is no different.  I also can refuse the right to touch anyone's vehicle, but I am using the approach to turn customers from parts buyers with little trust, to life long customers who trust they are getting a fair deal.

 

In short, it's not a habit to allow customers to bring their own parts.  But if someone who is showing a good attitude is trying to find a way to work with us... we will try to work with them and get them to stop buying their own parts.  We've seen this happen in the last year already.  But we never do this for first time customers.

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 We have been trying to give our customers the best local price on parts possible. We changed stuff up the first of the year a little bit but here is our basic price matrix; 200% on $0 - $5, 150% $5 - $10, 140% $10 - $100, 130% $100 - $750, 125% $750 to $2,500, and 120% on anything over $2,500. Our shops labor rate is $94.78 an hour.

 If someone is paying with cash thay get a 7.5% cash discount, and a 2.5% discount for paying with a check, the discounts are applied on both parts and labor.

 This has allowed us to stay competitive on pricing with the parts stores and all of our OEM parts are cheaper than they can go to the dealership and buy them for.

I will also note here that we are a small diesel repair and performance shop, primarily working on light and medium duty diesel pickups, we also have tax on parts and labor here in Wisconsin.

 We are currently trying to find the best shop software to meet our needs and are having a hard time finding software that does this. It seems like everyone either has great invoicing options and not very good parts ordering options or vice versa. We would also like a Time clock and vehicle inspections Incorporated in the software we decide on.

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  • 8 months later...

We recently had a customer ask us about installing his hood release cable that he already bought online. I was still a bit irritated by a customer that bought tires online to save $23 from our price and then ask for us to install them, which we did. I almost told the hood release cable guy no. Turns out the reason he found out about the problem with the hood release cable was because his check engine light came on. Between the catalytic Convertor and the timing chain tensioners and other issues we found on the vehicle that he had us repair, the invoice was just over $3,500. Changed my attitude about customer supplied parts for now anyways.

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@dfrisby You can always find a reason to install customer supplied parts and examples of how it works out.  But in the end, it is nothing but a problem. 

What if this customer, after you installed the hood release cable and then quoted the other work, he asked to buy those parts and have you install them too?  Where does it end?  When I first opened I thought I would win customers by agreeing to install their parts the first time.  I can't remember the only customer who converted from parts supplied to parts buyer. 

With that said, I will install certain parts for certain customers, such as the one who wanted a back-up camera and monitor that was a gift from a family member or the fellow with the 1960 Thunderbird that needs a wiper switch that he has already purchased.  But the person who calls up and asks, "How much to install tie rod ends?  I already bought the parts." is a BIG no!

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On 2/4/2019 at 7:55 AM, CAR_AutoReports said:

I have spoken to my insurance company, they have 0 rules and regulations about customers bringing in their own parts.  They did have plenty of regulations regarding me selling parts to the general public and not just my customers.

 

As for the attorney, I have not spoken to them yet but I have read some of the court documents surrounding the cases.  No one can force you to offer any type of warranty for anything.  No one can also force you to abide by one warranty for everything you do or sell.  There are plenty of companies that sell products that offer 30 days warranties and some that offer 2 year warranties.  Computer manufacturers and the companies that sell their parts come to mind.

 

The law states and has been tested in me taking responsibility for the work I did.  It does not and can not tell me how long I have to warranty anything. 

 

Do you install and warranty a used engine from the junk yard with the same warranty you sell and install and OEM engine in the crate from the dealer?  Different circumstances call for different rules.  This arena, is no different.  I also can refuse the right to touch anyone's vehicle, but I am using the approach to turn customers from parts buyers with little trust, to life long customers who trust they are getting a fair deal.

 

In short, it's not a habit to allow customers to bring their own parts.  But if someone who is showing a good attitude is trying to find a way to work with us... we will try to work with them and get them to stop buying their own parts.  We've seen this happen in the last year already.  But we never do this for first time customers.

Car,

You are correct that you can refuse service to anyone you choose, and warranty different types of parts for different periods of time, but you are incorrect about the law not being able to dictate how long you warranty something. See https://www.montgomerycountymd.gov/OCP/Resources/Files/Licensing_Forms/Auto_Repair_Shop Introductory Letter.pdf It specifically states "Maryland law does not allow implied warranties to be disclaimed or limited in any sale of goods or service to a consumer, so an invoice you give to a consumer should not contain language like “seller disclaims all warranties.”

Another example of the law dictating warranties, is the lemon law. https://www.peoples-law.org/marylands-lemon-law The law forces a manufacturer or dealer to purchase back a vehicle. In Maryland, they get one chance to fix a safety related problem before you are entitled to a refund, or replacement vehicle.  

We all take risks every day. It's part of being in business. The main point I want to get across is that every shop owner should make sure they fully understand the risks of installing a customer supplied part. I think a lot are under mistaken, or misunderstood beliefs. Just like you with regards to the law and warranties. Some believe their insurance will cover them. Mine will cover up to $2500 in liability. Some believe a disclaimer, or release of liability will protect them. This has been proven over and over to provide little to no protection. I actually just lost a court case earlier this year despite the customer signing a disclaimer. We didn't install their part, but we did replace a Cam Position sensor at their request. We stated on the invoice that we were unable to reproduce her symptoms, and that we replaced the sensor based on her request. Then when it didn't fix her problem, she decided we did an unnecessary repair. The judge sided with her as we are the professionals. Some believe that a customer will appreciate your installing their part, and would never try to hold you responsible. People's attitudes and approaches can change pretty quickly when things don't work out as expected.  

Scott

 

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@TheTrustedMechanic I agree. This was a customer that I've done work on stuff before. In this case, I supplied all the rest of the parts. If he would have suggested buying his own after we did the diagnostics, it would have been a big NO. In this particular case, I think he was going to attempt his own repair but couldn't figure out how to open the hood. It's a case by case basis, and for a customer we've never done work for before, it would be a NO.  Also I see very little liability in a hood release cable. Especially since his was actually an OEM part. 

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  • Have you checked out Joe's Latest Blog?

         5 comments
      I recently spoke with a friend of mine who owns a large general repair shop in the Midwest. His father founded the business in 1975. He was telling me that although he’s busy, he’s also very frustrated. When I probed him more about his frustrations, he said that it’s hard to find qualified technicians. My friend employs four technicians and is looking to hire two more. I then asked him, “How long does a technician last working for you.” He looked puzzled and replied, “I never really thought about that, but I can tell that except for one tech, most technicians don’t last working for me longer than a few years.”
      Judging from personal experience as a shop owner and from what I know about the auto repair industry, I can tell you that other than a few exceptions, the turnover rate for technicians in our industry is too high. This makes me think, do we have a technician shortage or a retention problem? Have we done the best we can over the decades to provide great pay plans, benefits packages, great work environments, and the right culture to ensure that the techs we have stay with us?
      Finding and hiring qualified automotive technicians is not a new phenomenon. This problem has been around for as long as I can remember. While we do need to attract people to our industry and provide the necessary training and mentorship, we also need to focus on retention. Having a revolving door and needing to hire techs every few years or so costs your company money. Big money! And that revolving door may be a sign of an even bigger issue: poor leadership, and poor employee management skills.
      Here’s one more thing to consider, for the most part, technicians don’t leave one job to start a new career, they leave one shop as a technician to become a technician at another shop. The reasons why they leave can be debated, but there is one fact that we cannot deny, people don’t quit the company they work for, they usually leave because of the boss or manager they work for.
      Put yourselves in the shoes of your employees. Do you have a workplace that communicates, “We appreciate you and want you to stay!”
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