Price Objections after the sale (Car done and gone for a week)

[BrianJeffrey]

I recently did a drivabilty repair on a 1999 Bonneville, a week after all was done the customer called to share his concern about the price of the MAF we replaced. I told him there we many out there and the only ones we have positive results with were the AC Delco new ones. He stated he could buy the same thing for less of course. The sensor cost me over $250 and my margin is 39%. Am I out of line charging this?

And how do you handle price objections similar to this?

[carolinahigear]

First, let me say that I have very few price objections, but I had one last week on a Throttle Position Sensor for an older Chevy Truck. I quoted the job to the father (who is successful and is a great client,) and his ne'er do well twenty-something son was with him. The son googled the part and told me he could get it for $15.00, and questioned why I was selling it for $90.00. I replied that I was paying well over $50 for the part, I could repair the truck within an hour, that our business model was set up to profit on parts and labor like all successful auto shops are, and finished my reply with "If you and your dad want to order the part and bring it in when you receive it, then we will take your truck to the back storage lot and re-schedule the job when the part comes." Dad said to go ahead and do the job.

 

A couple of things to note: I have been dealing with folks across the counter since I was six years old, so I've had lots of experience with it, yet I still cannot come up with the right reply all the time. Another thing is that my shop gives great service, have picked up and delivered the dad's vehicles from home several times, and he's been a client of mine for 12 years.

 

Each of us is going to have objections like this, so I suggest you role play to get accustomed to replying. Have your significant other, a friend, and/or other family members to work with you on this.

 

I sincerely believe that if we use the term "Business Model" it somewhat disarms them and actually makes our shop seem more sophisticated and bigger than it actually may be. That's true if it is a one-tech or multiple-tech operation.

[5 Star Auto Spa]

I tend to explain to price shopping customers that we warranty the parts with a labor guarantee and that parts purchased online do not come with that guarantee......

[ewelchtx]

I always told them the discount part houses made money when a customer returned with a bad part. A cheaper part guaranteed them a second trip.

How many times would you like to fix the problem?

[SPG356]

My guess Is that if most of us did a spreadsheet with our monthly labor sales as a starting point and subtracted ALL of our costs, at best we would be at break even and in most cases we would be in the negative.

 

I explain this to customers to point out that the parts markup is our profit if you look at the numbers this way and when you want to bring in a part for us to install we lose money. When they tell me the part can be bought cheaper online I fully acknowledge that fact but tell them that buying parts online is for do-It-Yourselfers. If explained in a friendly but confident tone I have found that most people will understand.

[JustTheBest]

Always a difficult situation - but the problem I have with the 'our business model' response is two fold. First, you take anything 'personal' out of it. Like, it's business (which it is), but I don't think the customer wants to hear that.

 

Secondly, doing that you automatically make the issue about YOU. It's YOUR business model. Do you think the customer cares about YOUR business model?

 

Not trying to pick an argument here - just trying to show you a different viewpoint.

 

You can always ask them if they bring their own burgers when they go to McDonalds and have them cook them - but that won't help.

 

My way of handling it was relative to warranty. We install your part and it fails; you pay to test, reinstall and fix the first problem Which way do you want to do the job?

 

The other part is - I always made a point to not install customer supplied parts - but really, just for those reasons. Nobody pays you to do it again when it fails.

 

Hope this helps!

Matthew Lee

"The Car Count Fixer"

[JustTheBest]

Sorry... reposted by accident!

Edited November 21, 2016 by JustTheBest

[JustTheBest]

Sorry.. reposted by accident

Edited November 21, 2016 by JustTheBest

[Hands On]

After the fact is difficult, I will tell people that I will beat the dealer price by 5%, but the dealer is the only one I will price match. This usually ends the conversation and they can understand that. They understand it because big box stores say they will only price match each other, and not glamazon.

 

Before the sale I tell them I will price match anyone that offers the same 3 year, 36,000 mile parts and labor warranty. This also ends it, because I am the only one in town that offers such a long warranty.

 

Anyone that calls or walks in asking me to install their part I simply say I am sorry but we do not do that here. I do not want that customer. If you want or need that customer you may need to take a look at your marketing.

[FNGJWS]

Many years ago, long before the internet, a wise man told me that I'd be dealing with two types of individuals in this business--customers and people with broken cars. 'Nuff said.

[mspecperformance]

paradigm shift in the way you approach situations like this. Instead of TELLING and explaining your business model immediately try this...

 

Ask yourself why are they questioning the price after the fact? What compelled them to be so emboldened to call you or ask you about charges after the fact?

 

The obvious answer is that person at some point became skeptical of whether or not he was charged fairly. He then went and price compared which validated his fears. There was probably a little of anger and the feeling of injustice for him to contact you.

 

The first thing I would do is to ACKNOWLEDGE their assumptions. Nothing in the world will get you to listen to them better than getting on their side. "Mr. Customer, I understand that you have found X part for a different price and that you feel you may have improperly charged."

 

Next follow up with questions like,

 

"Would you happen to know what type of warranty that part comes with?"

 

"What happens when the part fails? Do they tow your vehicle and pay for the repair? Do they get you in a vehicle in the meantime? Do you know how long that whole process takes?"

 

 

any time you get a objection, try an acknowledge what they are saying and ask questions questions questions. Let them think it out and understand your POV rather than you dictating it to them. People can be illogical and stubborn especially when there is a loss of trust.

[TheTrustedMechanic]

paradigm shift in the way you approach situations like this. Instead of TELLING and explaining your business model immediately try this...

 

Ask yourself why are they questioning the price after the fact? What compelled them to be so emboldened to call you or ask you about charges after the fact?

 

The obvious answer is that person at some point became skeptical of whether or not he was charged fairly. He then went and price compared which validated his fears. There was probably a little of anger and the feeling of injustice for him to contact you.

 

The first thing I would do is to ACKNOWLEDGE their assumptions. Nothing in the world will get you to listen to them better than getting on their side. "Mr. Customer, I understand that you have found X part for a different price and that you feel you may have improperly charged."

 

Next follow up with questions like,

 

"Would you happen to know what type of warranty that part comes with?"

 

"What happens when the part fails? Do they tow your vehicle and pay for the repair? Do they get you in a vehicle in the meantime? Do you know how long that whole process takes?"

 

 

any time you get a objection, try an acknowledge what they are saying and ask questions questions questions. Let them think it out and understand your POV rather than you dictating it to them. People can be illogical and stubborn especially when there is a loss of trust.

I love your answer. That's great. I will try to remember that next time I get a price objection. And we all know it will happen.

 

I think your scenario and tact will work with some people but I don't think it will work with most people who are objecting to what we charge for that part. Their distrust, lack of respect and value of what we do is what drove them to doubt us and check the price of the cheapest part they could find. No amount of rational explanation will convert that consumer. The ones I think your attitude and approach will work with are the ones who aren't objecting to the price of a specific part but to the cost overall. And that may be caused by tight finances or an outdated idea of the cost. Such as a starter and dad's old truck only cost $80 installed and today we can't buy a starter for $80 wholesale. So when we quote them $205 for the starter and $187 to install (have to pull the axle shaft and disconnect the stabilizer bar comes to mind) they immediately question why it costs so much. They aren't really questioning why you're charging $205 for the starter when they checked and they can buy it for $120, they aren't distrustful of us or lack a sense of value in what we do, they are simply surprised by the cost. Or say their other car (hypothetically a GM 3.1) needed a water pump and it was $350 with a flush (purely fictional numbers) and this one is Quad 4 variant where you have to pull the exhaust manifold and timing chain and it's gonna cost $875. "My Grand Am was so much cheaper, why does my Cavalier cost so much more?"

 

I have found that trying different approaches, explaining the warranty, the knowledge of what parts will ultimately provide the best value (reliable long-term service) and that I am not selling parts, I am providing a long-term solution to an automotive problem, etc. doesn't work for the consumer who doesn't trust and is only looking for the CHEAP. I have never won one of these arguments. I have tried the steak to the restaurant and that didn't even get an acknowledgement, "Well I have 5 kids so we don't go out to eat." You just can't win with the customer who already has so little regard for you and your profession that they see no value in the intangible value that you provide in a job done right instead of a job done.

 

But as I said, I like your approach and will certainly try to keep it in mind the next time I have an objection. Maybe I can turn my losing streak into a winner.

[TheTrustedMechanic]

My guess Is that if most of us did a spreadsheet with our monthly labor sales as a starting point and subtracted ALL of our costs, at best we would be at break even and in most cases we would be in the negative.

 

I explain this to customers to point out that the parts markup is our profit if you look at the numbers this way and when you want to bring in a part for us to install we lose money. When they tell me the part can be bought cheaper online I fully acknowledge that fact but tell them that buying parts online is for do-It-Yourselfers. If explained in a friendly but confident tone I have found that most people will understand.

Not meaning to be mean or argumentative, but do you really think that most customers like the ones being discussed care about you making a profit? As Matthew has told me many times, customers care about one thing, What's In It For Me? They don't care about your business. Sure some do, but most only care about their need and how much it will cost. Of course they all know that all businesses charge a profit but they don't want to think about it. When you explain your company's finances with them, they care but you are making them think about something they don't want to think about.

[Hands On]

I had a customer lask week sent me a very mean e-mail because I kept her car all day and I did not finish her rear shock absorbers, the item she dropped it off for.

 

What I did do was a complete inspection on the vehicle during which I found a leaking transmission cooler. I sent her an estimate stating this to which I got the nasty response.

 

When she came t pick it up, I showed her and her husband the leak, they said "oh". The vehicle came back in today, we are fixing the leak, they are putting off the rear shocks as they are not as important as the leak, imagine that.

 

My point is that no matter what you are going to have some problem or trouble customers that just don't "get it" Just keep doing the right thing and do not let the jerks get the better of you.

[mspecperformance]

I love your answer. That's great. I will try to remember that next time I get a price objection. And we all know it will happen.

 

I think your scenario and tact will work with some people but I don't think it will work with most people who are objecting to what we charge for that part. Their distrust, lack of respect and value of what we do is what drove them to doubt us and check the price of the cheapest part they could find. No amount of rational explanation will convert that consumer. The ones I think your attitude and approach will work with are the ones who aren't objecting to the price of a specific part but to the cost overall. And that may be caused by tight finances or an outdated idea of the cost. Such as a starter and dad's old truck only cost $80 installed and today we can't buy a starter for $80 wholesale. So when we quote them $205 for the starter and $187 to install (have to pull the axle shaft and disconnect the stabilizer bar comes to mind) they immediately question why it costs so much. They aren't really questioning why you're charging $205 for the starter when they checked and they can buy it for $120, they aren't distrustful of us or lack a sense of value in what we do, they are simply surprised by the cost. Or say their other car (hypothetically a GM 3.1) needed a water pump and it was $350 with a flush (purely fictional numbers) and this one is Quad 4 variant where you have to pull the exhaust manifold and timing chain and it's gonna cost $875. "My Grand Am was so much cheaper, why does my Cavalier cost so much more?"

 

I have found that trying different approaches, explaining the warranty, the knowledge of what parts will ultimately provide the best value (reliable long-term service) and that I am not selling parts, I am providing a long-term solution to an automotive problem, etc. doesn't work for the consumer who doesn't trust and is only looking for the CHEAP. I have never won one of these arguments. I have tried the steak to the restaurant and that didn't even get an acknowledgement, "Well I have 5 kids so we don't go out to eat." You just can't win with the customer who already has so little regard for you and your profession that they see no value in the intangible value that you provide in a job done right instead of a job done.

 

But as I said, I like your approach and will certainly try to keep it in mind the next time I have an objection. Maybe I can turn my losing streak into a winner.

 

Thanks!

 

I think we have to have a basis for how my method works. Our whole sales process starts with taking the conversation away from auto repair and breaking it down bare bones with the customer. The customer has a problem and we are here to help them. Their problem is not a broke car but rather its I can't get to work, I need reliable transportation to take my kids to school, I have a hot date and I need my car for the week, we are taking a long road trip for the holidays and I don't want to get stuck, I am stressed I don't know who to trust with my car, etc. Our goal is to tackle their real problems through repairing their vehicle. Our conversations focus on how what we are going to do is to help them have trouble free driving for their road trip, get their kids to school, get them to work etc.

 

When we have a customer that only focuses on price we put them through our process. Our goal is to turn their thinking away from auto repair being a commodity. If after this process they are still stuck mentally in the same place, we fire them as a customer. There are plenty of shops out there that need the headache... I mean business. They will not be my customer.

 

In theory you want to fill your shop up with the best profile clients. In reality that means you will be picking and choosing the good ones and firing the bad ones. If you are having problems with customers questioning your prices and integrity most likely its either your sales process that is broken OR your customer acquisition strategy needs some help.

 

This is just my humble opinion.

 

 

My guess Is that if most of us did a spreadsheet with our monthly labor sales as a starting point and subtracted ALL of our costs, at best we would be at break even and in most cases we would be in the negative.

 

I explain this to customers to point out that the parts markup is our profit if you look at the numbers this way and when you want to bring in a part for us to install we lose money. When they tell me the part can be bought cheaper online I fully acknowledge that fact but tell them that buying parts online is for do-It-Yourselfers. If explained in a friendly but confident tone I have found that most people will understand.

 

SPG365, with all due respect I believe you may need to revisit how you are calculating your numbers. If you are properly calculating costs directly related to Labor you will find wages, payroll taxes, benefits, unemployment insurance, possibly business insurance. Your loaded costs should never be 100% of labor sales. Industry targets 30-35% loaded costs. If they are you are really upside down.

 

Also beside that, breaking down the finer points on how you make your money will ALWAYS go right over the head of a customer. To business owners and entrepreneurs we love the word profit. To the regular consumer, profit is a dirty word and it is generally related to negative feelings of big business. It is human nature for people to not want you to have more than they have. What they see is a shop full of cars, a building they probably think you own, assets and equipment etc. You get the picture.

 

In my experience it can go both ways. If you get an intelligent customer they may understand. Otherwise you will find people don't seem to understand why you need to make money on parts.

 

 

I had a customer lask week sent me a very mean e-mail because I kept her car all day and I did not finish her rear shock absorbers, the item she dropped it off for.

 

What I did do was a complete inspection on the vehicle during which I found a leaking transmission cooler. I sent her an estimate stating this to which I got the nasty response.

 

When she came t pick it up, I showed her and her husband the leak, they said "oh". The vehicle came back in today, we are fixing the leak, they are putting off the rear shocks as they are not as important as the leak, imagine that.

 

My point is that no matter what you are going to have some problem or trouble customers that just don't "get it" Just keep doing the right thing and do not let the jerks get the better of you.

 

Good job. Best way to stave off pissed off customers is to set time expectations during the check in process.

[Wheelingauto]

I recently did a drivabilty repair on a 1999 Bonneville, a week after all was done the customer called to share his concern about the price of the MAF we replaced. I told him there we many out there and the only ones we have positive results with were the AC Delco new ones. He stated he could buy the same thing for less of course. The sensor cost me over $250 and my margin is 39%. Am I out of line charging this?

And how do you handle price objections similar to this?

 

I've always hated being questioned about price after an agreement was made. You gave them a price, they agreed, Should be all done but....we have to address questions like this at some point

 

I prefer to be completely up front as others have said. I run a business that uses both parts and labor to accomplish what I am selling, a properly repaired automobile. This requires me having vendors who I trust will provide me with quality components I can use to repair your vehicle. Sourcing things from an unknown and the cheapest vendors come with risks I am unwilling to take even if you are. We also must make a resonable profit on parts in order to remain in business.

 

There was another good example in another thread about sourcing internet based parts here :

 

Buying online can be risky. Each year billions of $ worth of counterfeit parts are sold. Remember Amazon, Ebay etc. allow any business to sell on their website. There is no way to know if the Moog, Denso, or even Dorman parts you order are real. Companies overseas are copying parts, boxes etc to match the original and then they end up on the internet. Buying from the cheapest supplier or using a website that allows anonymous suppliers is just asking for trouble.

 

Either way you need to establish a policy which accounts for the few times you may be asked this.

[BrianJeffrey]

Thanks for all the great info!

It seems to me that the general population has a misconception that everything should be high quality, cheap and immediately attainable.

 

I did call my customer back, make sure the vehicle was still operating as should and share his concern about the part price. I stated to him again why I buy on quality and not price and asked him what the warranty process was for the parts he found were. He didn't know, it was a short conversion.

[JustTheBest]

Brian, I commend you for taking the time to call the customer back! Regardless if there was a problem or not, a simple follow up call goes a long, long way.

The only other comment I have is that you claim the general population has a 'misconception' - but the fact is that their perception IS their reality.

 

I am NOT saying they're right - in fact - I agree with you entirely. But the fact remains that their perception is their reality.

 

That's why in one of my first responses to this topic was NOT to make it about your business model and all that - you've got to look at if from the customer point of view. That's their reality.

 

Hope this helps!

 

Matthew Lee

"The Car Count Fixer"

[Hands On]

This whole thread is a good refresher on handling these issues, good thread

[Dan Reichow]

It is a hard decision - For one though - 39% percent is giving it away.

As I have said like others stated here on the net , continue to market to the right client is the first fix .

Second - Is to offer Value - Parts Warranty - 3Yr / 36,000 Warranty - Free Towing if Fails - No labor if it fails , Loaner Car if needed - Value added options help with parts pricing.

What you can do - we all price parts on the issue of comeback / warranty / overhead- For the price shopper or upset client , I will reduce warranty to ? and normally they get the value and not willing to risk it for the price difference.

The only issue on discounting you have to have the right profit margin to start with.

[Hands On]

It is a hard decision - For one though - 39% percent is giving it away.

As I have said like others stated here on the net , continue to market to the right client is the first fix .

Second - Is to offer Value - Parts Warranty - 3Yr / 36,000 Warranty - Free Towing if Fails - No labor if it fails , Loaner Car if needed - Value added options help with parts pricing.

What you can do - we all price parts on the issue of comeback / warranty / overhead- For the price shopper or upset client , I will reduce warranty to ? and normally they get the value and not willing to risk it for the price difference.

The only issue on discounting you have to have the right profit margin to start with.

 

Offering a discount with less warranty is a very dangerous game to play because that customer will absolutely forget that they agreed to no/less warranty when the part fails and they will hang you out to dry in reviews if you refuse to take care of it.

[3PuttFever]

It's never fun to have these conversations. I recommend to not over-think it. Focus on the value, warranty, and service. You can shop around and find just about anything you buy for 'cheaper' but once you spend that much time researching, calling, talking to sources a new product or technology will have been invented. LOL

 

For my shop keeping morale up when customers low-ball or distrust us. We try to focus on the good customers and ALWAYS doing what is right for our customers. If making money isn't reasonable in a customer's mind then I don't have time for them.

 

KISS - get them on the road, fix their issues, maintain their cars, and do it honestly. It'll work out!

[_2080]

Now that I no longer have a business. I buy my parts at rockauto.. They sell ac delco for my chevy and motorcraft for my ford.

their prices are lower than I ever got from World Pac. So to tell the customer that they are getting a cheap part, no longer fly's these days.

In the past , if a customer would start asking questions about price or quality of service. It only meant one thing. They were thinking that you are

cheating them. Now I found that VERY disrespectful. I would always tell them that If there was a doubt in their mind about me doing the right thing

for them. They were free to go to another shop. Some left, most stayed.

Never explain to your customers why you charge so much. it's non of their business. It is a sign weakness on your part.

You need to make a certain number each day,week,month. If you don't you will go out of business.

As simple as that.

[Hands On]

Now that I no longer have a business. I buy my parts at rockauto.. They sell ac delco for my chevy and motorcraft for my ford.

their prices are lower than I ever got from World Pac. So to tell the customer that they are getting a cheap part, no longer fly's these days.

In the past , if a customer would start asking questions about price or quality of service. It only meant one thing. They were thinking that you are

cheating them. Now I found that VERY disrespectful. I would always tell them that If there was a doubt in their mind about me doing the right thing

for them. They were free to go to another shop. Some left, most stayed.

Never explain to your customers why you charge so much. it's non of their business. It is a sign weakness on your part.

You need to make a certain number each day,week,month. If you don't you will go out of business.

As simple as that.

 

 

I am curious as to why you would no longer have your business? I always wonder when I see guys who do consulting and got rid of their shop also. I can not imagine ever getting rid of my shop, not untill I am ready to retire on a sail boat, and when I do I certianly would not be buying parts from Rock Auto.

[_2080]

To put it simply.

I love working on cars but I should have kept that as a hobby.

Dealing with customers and lot's of other people for 30 years 17 of it having my own shop became too much for me to handle.

Too many techs become self employed, thinking there will be riches to come.

Yes I used to own all the top euro trash cars.Although the Jag I had was very reliable and trouble free, which was pretty strange.

Never the less, chasing that carrot was a big mistake.

I had the opportunity to become a cop in my early 20s.

I should have done it. Now I would have had one hell of a great pension. What do I have now? A tool box with half of obsolete tools

and problems with mental health.

When I was young , the older techs would tell me I should quit and do something else. I should have listened, instead I just got pissed off.

Well, maybe in next life.....I hope.

[Handson]

Wow I really thank you for such an honest reply. There is no doubt that business ownership is not for everyone. There are times that I question my own sanity, but I love owning my shop more then working on cars and more then my hobbies so I know it is right for me. I hope that you have found happiness after the fact.

 

If you got yourself an account with factory motor parts to get your own personal parts you may get better support then you do from Rock Auto. Also keep in mind that a factory puts out varying levels of quality of the same part. Some venders get the parts that pass Q/A 100% and others get the "scratch and dent" units.

[Handson]

Wow I really thank you for such an honest reply. There is no doubt that business ownership is not for everyone. There are times that I question my own sanity, but I love owning my shop more then working on cars and more then my hobbies so I know it is right for me. I hope that you have found happiness after the fact.

 

If you got yourself an account with factory motor parts to get your own personal parts you may get better support then you do from Rock Auto. Also keep in mind that a factory puts out varying levels of quality of the same part. Some venders get the parts that pass Q/A 100% and others get the "scratch and dent" units.

[kent2112]

Having the confidence to charge the correct markup, deny customer supplied parts, and not compete with but beat mail order parts is the key.

 

If you call your local dealership parts department and ask for the price on a water pump it will be list price. If you call the same dealership service department and ask for the installed price and then a breakdown you will find the part price is doubled. Nothing illustrates the difference in correct markup between the two industries and you need the same mentality and markup.

 

When we are told "I can get it for less" we state that we can too. Then we calmly explain that a local service department and a warehouse in the Midwest have very different business models. Our service model have a heavy investment in floor space, technicians, overhead, the local economy, and most importantly local taxes. We are an integral part of our local community and support local charities, the highway department, the school district, state taxes and levies, state labor regulations, state consumer protections, and the list goes on and on. Unfortunately, the out of town warehouse model and it's inventory of Chinese parts does not in order to increase sales for their shareholders. That's why you can't go into red Lobster with your own lobster. (The local likes his road plowed, his children to go to school, etc. and will be willing to support that).

 

When we are asked to install parts purchased elsewhere we explain we can't. Then we calmly explain the part markup supports the entire business and its employees as stated above. But the biggest reason is liability. When you supply a part not only do you forgo all consumer protections and warranty claims on the entire repair, you incur a liability most consumers aren't aware of. We have an insurance company and they require product liability coverage from our suppliers. If you purchase a Chinese part from an out of town supplier and heaven forbid someone gets injured when it fails who pays the claims? Your insurance company owns the right to sue anyone it wants to recoup claims including you, it's in your policy. If we use our part it is an easy claim because our insurance will pay it and then go after our supplier. If you hand someone a part and ask them to install it who is liable then?

 

Most people don't understand the intimate details of running a service department and probably shouldn't learn as they go.

[mspecperformance]

Having the confidence to charge the correct markup, deny customer supplied parts, and not compete with but beat mail order parts is the key.

 

If you call your local dealership parts department and ask for the price on a water pump it will be list price. If you call the same dealership service department and ask for the installed price and then a breakdown you will find the part price is doubled. Nothing illustrates the difference in correct markup between the two industries and you need the same mentality and markup.

 

When we are told "I can get it for less" we state that we can too. Then we calmly explain that a local service department and a warehouse in the Midwest have very different business models. Our service model have a heavy investment in floor space, technicians, overhead, the local economy, and most importantly local taxes. We are an integral part of our local community and support local charities, the highway department, the school district, state taxes and levies, state labor regulations, state consumer protections, and the list goes on and on. Unfortunately, the out of town warehouse model and it's inventory of Chinese parts does not in order to increase sales for their shareholders. That's why you can't go into red Lobster with your own lobster. (The local likes his road plowed, his children to go to school, etc. and will be willing to support that).

 

When we are asked to install parts purchased elsewhere we explain we can't. Then we calmly explain the part markup supports the entire business and its employees as stated above. But the biggest reason is liability. When you supply a part not only do you forgo all consumer protections and warranty claims on the entire repair, you incur a liability most consumers aren't aware of. We have an insurance company and they require product liability coverage from our suppliers. If you purchase a Chinese part from an out of town supplier and heaven forbid someone gets injured when it fails who pays the claims? Your insurance company owns the right to sue anyone it wants to recoup claims including you, it's in your policy. If we use our part it is an easy claim because our insurance will pay it and then go after our supplier. If you hand someone a part and ask them to install it who is liable then?

 

Most people don't understand the intimate details of running a service department and probably shouldn't learn as they go.

 

All great points however my experience has been that you can rarely go into such an explanation and have a customer follow along. My best strategy is to change the conversation entirely. Sometimes we use elements of some of the point illustrated above. We have noticed that it is a rare occurrence that you can actually convert a hardcore price shopper when you throw your fast ball, curve ball, change up and they are still beating your door on price and "I can get it cheaper."

 

To the OP's original question, I still believe that if you are having problems with client's questioning pricing after the fact then there was a problem with communicating and selling the value of your service. Sometimes they are just that type of person and you have to resell them on the value of what they purchased opposed to the nuts, bolts, fluids and parts.

 

Lets remember no matter who Mr. Customer when you are talking about YOUR costs of doing business they are tuning most of that out. The only station Mr. Customer likes to listen to is WIIFM, WHATS IN IT FOR ME. Make the conversation about them and make them feel that what they purchased from you is of great value to their lives. It is true after all isn't it? We all believe that what we are selling to our client's is the absolute best service for them. I know that I do.

[Wheelingauto]

When we are asked to install parts purchased elsewhere we explain we can't. Then we calmly explain the part markup supports the entire business and its employees as stated above. But the biggest reason is liability. When you supply a part not only do you forgo all consumer protections and warranty claims on the entire repair, you incur a liability most consumers aren't aware of. We have an insurance company and they require product liability coverage from our suppliers. .

 

This discussion came up on another larger discussion board and it's bull. I called my insurance agent and specifically asked them about this scenario and although it sounds really really good it's bull

 

If this were the case your insurance would not trust you to secure proof of liability insurance they would require you to provide it prior to issuing policy. This would be way to cumbersome to collect and provide even if true.

 

What if someone walked in with all genuine Honda timing belt components having tried to do the job themselves and decided it was too hard. What then? I am sure Honda has liability insurance, cant complain about the quality....

 

Brutal honesty, we don't make money if we don't supply and mark up the parts. If the above scenario occurs I will install at a higher labor rate to make up for the lost GP, customer always has the choice of what to do.

[_2080]

This what I have done in the past. Labor rate pays everybodys income and shop expense.

Mark up on parts pays for comebacks. Your mark up depends on how many comebacks you have.

A good shop should not have to mark up their parts more than 30%

So when the customer brings their own parts and they are quality, Just add 30% to the price and you will be just fine.

Yes your insurance will cover everything should there be a problem.

I never had any.

[Wheelingauto]

To put it simply.

I love working on cars but I should have kept that as a hobby.

 

Too many techs become self employed, thinking there will be riches to come.

 

 

 

This what I have done in the past. Labor rate pays everybodys income and shop expense.

Mark up on parts pays for comebacks. Your mark up depends on how many comebacks you have.

A good shop should not have to mark up their parts more than 30%

So when the customer brings their own parts and they are quality, Just add 30% to the price and you will be just fine.

Yes your insurance will cover everything should there be a problem.

I never had any.

 

The statements made above sort of explain themselves. I have always been taught.....

 

When discussing parts discuss margin not markup, if you dont know the difference it is rather large. To mark up a part that costs you $100 50% you would charge $150. To have a 50% margin on a part that costs you $100 you would charge $200.

 

This has nothing to do with the comeback ratio. The best shops still need a minimum 50% margin on parts to maintain profitability.

 

Has you known this when you were in business you may have had the opportunity to fund a retirement program not only for yourself, but also the employees and have more than a tool box of old tools.

 

It is unfortunate that so many techs hang their own shingle and never learn the business skills to be successful. The only thing you are doing by working cheaper is subsidizing customers vehicle expenses at the cost of your own families financial health.

[mspecperformance]

 

 

 

The statements made above sort of explain themselves. I have always been taught.....

 

When discussing parts discuss margin not markup, if you dont know the difference it is rather large. To mark up a part that costs you $100 50% you would charge $150. To have a 50% margin on a part that costs you $100 you would charge $200.

 

This has nothing to do with the comeback ratio. The best shops still need a minimum 50% margin on parts to maintain profitability.

 

Has you known this when you were in business you may have had the opportunity to fund a retirement program not only for yourself, but also the employees and have more than a tool box of old tools.

 

It is unfortunate that so many techs hang their own shingle and never learn the business skills to be successful. The only thing you are doing by working cheaper is subsidizing customers vehicle expenses at the cost of your own families financial health.

 

 

I couldn't have said it better myself.

[Handson]

For a second I thought what market is he in that labor fees cover all expenses, now I realize he is not in any.

[HarrytheCarGeek]

The statements made above sort of explain themselves. I have always been taught.....

 

When discussing parts discuss margin not markup, if you dont know the difference it is rather large. To mark up a part that costs you $100 50% you would charge $150. To have a 50% margin on a part that costs you $100 you would charge $200.

 

This has nothing to do with the comeback ratio. The best shops still need a minimum 50% margin on parts to maintain profitability.

 

Has you known this when you were in business you may have had the opportunity to fund a retirement program not only for yourself, but also the employees and have more than a tool box of old tools.

 

It is unfortunate that so many techs hang their own shingle and never learn the business skills to be successful. The only thing you are doing by working cheaper is subsidizing customers vehicle expenses at the cost of your own families financial health.

Awesome post, we should start a thread with Autoshopowner.com's greatest insights and sticky it!

Edited November 29, 2016 by HarrytheCarGeek

[alfredauto]

All excellent posts. I might add that I refuse to even entertain price objections after the estimate was approved. The customer had the opportunity to shop around and say no before you did the work. Buyers remorse a week later? Sounds like a personal problem. They forgot their car was broken and needed you to fix it.