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By Elite Worldwide Inc.
Whenever a customer tells you they can’t afford to do the repairs, and they ask you if you can help them out “this one time’”, you need to give careful thought before you lower your price.
First of all, there is a cardinal rule in sales that says before lowering your price, you need to build more value in your service. Yet as we all know, there are going to be some occasions where no matter how good your sales skills are, the customer simply won’t have the ability to pay for the recommended services. In such cases, you and your advisors will have three options. One, you can let the customer walk; two, you can drop your price; or three, you can follow the proven path we have provided to tens of thousands of advisors over the years.
First of all, if you let them walk, both you and the customer have lost. They’ve lost the time they’ve invested in having their vehicle inspected, and when they leave your shop their problems still exist. You’ve lost the marketing dollars you invested in bringing the customer through your door, you’ve lost the time you’ve invested in inspecting the vehicle and estimating the job, and you’ve lost the opportunity to help someone in need.
The second option you have is to lower your price, and while you may close that sale, you’ll also be sending a message to your customer that if they wouldn’t have asked for a discount, they would have paid too much. If that’s not bad enough, it gets worse, because they know if they ever decide to come back they’ll need to negotiate with you, regardless of the prices you quote. The good news is, there’s a third option, and it’s one that’s used by the top shop owners in America with great success….
Putting first things first, you’ll need to see if the customer qualifies for any legitimate discounts you offer, such as Senior Citizen, AAA or Military discounts. You can also limit the number of repairs to the ones they can afford at the time. Another option (which works well in some cases), is to scale back on some of the benefits, such as the length or terms of the warranty. If you and your customer find none of those solutions to be acceptable, you can consider telling them that you will keep their vehicle at your shop (space allowing), and perform the repairs if and when your time allows (when another customer cancels their appointment at the last minute and your tech has the downtime, for example). What your customer would be sacrificing is the immediacy and convenience.
Please bear in mind that when making any decision to lower your price, you need to ask yourself who is ultimately going to pay for the discount, because the answer will inevitably be your other customers. Secondly, if you have the right advisors, with the right principles, they’ll know in their hearts it’s just not right to charge two people different prices for the same service. To put it another way, I’m sure you would not want your mom or dad walking into any business and buying a product or service when you know the customer right before them… paid less. Never forget, principles, not shell games, lead to two things: higher profits, and the ability to sleep at night knowing you are not playing games… with other people’s money.
Since 1990, Bob Cooper has been the president of Elite Worldwide Inc. (www.EliteWorldwide.com), a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers the industry’s #1 peer group of 90 successful shop owners, training and coaching from top shop owners, service advisor training, along with online and in-class sales, marketing and shop management seminars. You can contact Elite at [email protected], or by calling 800-204-3548.
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I'm finding the more I look into tire prices from box stores the more embarrassing my tire prices become. In the past month or so I've found tires for sale at Wal-mart, Discount Tire, and Fleet Farm cheaper than I can buy them. Have any of you ran into this? If so does your supplier match prices and make it so you can profit a bit?
By Jay Huh
Hi everyone, first time post and it's been good reading everyone's input on this forum. Just so happened to stumble upon this forum and it's awesome having other people in my shoes.
I quit my job as a service advisor and started doing side work out of my garage @$35/labor rate. Became a mobile mechanic with $45/hr 3 months after. Got a shared building with 2 bays and bumped up to $60 an hour. 8 months later, I am now at my current very own 6 bay facility with 4 employees and I just bumped up my rate to $75/hour. I have 2 national chains that share the same wall (Meieneke and Precision tune) and they charge $95/hour.
Problem is, I still have customers that come to me from my $35/hr days and feel extremely bad and guilty for charging new rate. Should I be? Best way to implement change without losing customers? From the customers perspective, do you think they understand the operating costs and justification in price increase?
By Joe Marconi
A woman called her dentist the other day and asked how much would a root canal cost. Her dentist replied, “Sure, hold on, let me look that up. Ok, that’ll be around $1400 for that job. Would you like to come in and have that root canal done?” Ridiculous scenario, you’re thinking? I agree! A dentist would never give a price over the phone without first examining the patient.
Why do some shops continue to give prices over the phone? Even something as simple as a wheel alignment price can lead the customer and you in the wrong direction. Do you really know the car needs an alignment?
Pricing over the phone is the same as giving them a diagnosis. When a customer calls for a price on a water pump and you give a price, you are saying to them, “Yes, it IS the water pump and here’s the price. And then you get the car in the bay and it needs hoses, a thermostat, and the radiator is leaking, not the pump.
Giving prices over the phone also tells the caller to please judge you on price alone; a road I refuse to go down.
I know this is going to push a lot of buttons today, but my tip today is to resist giving prices over the phone. Get the car into you bay, perform the inspection and/or the proper testing and then when you know what the problem is, sell the job.
We are professionals, no different than the Dentist.
By Joe Marconi
I got a call the other from a shop owner friend asking me to help calculate his labor rate. I told him that before you calculate your labor rate, you should check your labor production (also known as effective labor rate). I asked him to total up his total tech paid hours for the month and then divide those hours by his total labor dollars sold for the month.
He got back to me and was surprised that although he posted a $90.00 labor rate, his actual labor dollars per hour was only $62.00. I pointed out that this is a production problem, not a labor rate price issue.
Raising labor production is equally important as understanding what your labor rate should be. In fact, ensuring your labor production is where it should be will add much needed dollars to the bottom line.
One thing to consider; low labor production is not just the responsibility of the technician. You need to also take into account: Are you billing enough hours? Are you charging properly for diagnostic time? Are the techs waiting too long for parts or for the service advisors to sell jobs? Is there too much down time between jobs?
Look at the entire shop operations and workflow process. Each minute increase in labor production will add much needed dollars to your bottom line.