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Has Gas Prices and Other Costs forced You to Raise Prices?


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With the cost of fuel and everything associated with it, are you planning to raise prices this year? You need to remain profitable, but you need to remain competitive also. The fine line between profit and chasing people away is a tough line to cross. How are you handling the current economic conditions?

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Flash Sale + Social Proof

I am in line with your thinking. We need to position ourselves with lost leaders to attract customers. We also need to be very profitable where we need to be. I think we could do a lot better if we charge what we deserve with respect to diagnostic work. We tend to give away too much in that area. What are your thoughts?

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Well, I believe that everything should get raised annually, but keep your lost leaders (oil changes, etc) at the same price points, if you can. Adjust your pricing to reflect your cost of doing business. Labor and parts increases on larger jobs. Maintenance increases where needed, after doing a market survey in your area.

 

Common service prices should be set according to a competition survey.

 

Other prices should be set according to overall GP.

 

Price marketing should be used effectively as needed (yes, I will beat you on that timing belt job if I have stuck techs).

 

Many shops will get behind the curve during the rapid inflation which is not underway....and it will kill many of them.

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The biggest thing anyone can do is trend tracking/graphing of all key numbers to see which direction they are headed to prevent getting behind.

 

Also, constant monitoring of GP and expense figures.

 

Keeping your costs down and not losing any customers is key. I'd rather drop the price than have them walk out the door!

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I fear price wars. Has this become a trend in our industry to stay alive?

 

Almost all types of businesses almost always have price wars. It's the intensity that varies. The intensity in our industry is picking up and will likely grow significantly soon.

 

A few shops will be able to stay out of it. Most will not if they want to be a player. Many who ignore it may get run over.

 

The trick is, if you need to get into the battle, is to maintain decent GP. There are many ways to be price competitive without simply lowering the price. One just needs to be creative in what they offer.

 

Different levels of parts, service, what is included, and warranty are some examples. Adjust to what the customer wants while remaining profitable instead of focusing on what you think they should want.

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I think the only way to stay in the game IS to remain profitable. I do agree that many "price sensitive" services must be priced accordingly. We are too often judged on the prices of the basic services we offer. However, in other areas the boxing gloves come off, such as diagnostic work, electrical, engine repair, transmission repairs, etc. In these areas we need to charge what we are worth.

 

I have this fear that if we focus too much on price to the consumer, they will loose site of the value we have to offer them. I rather be a Ruth Chris Steak House than a McDonalds.

 

But, that’s me.

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