Why Give Away Wheel Alignments?

[Joe Marconi]

I recently read a survey in a trade magazine showing the average national price on 4-wheel alignments. The survey contained mostly tire shops. What I surprised (and disappointed) to see was how low priced some shops charged for the average 4-wheel alignment. In some cases as low as $49.99. Don’t we give enough away? We all know that an alignment system with a rack can cost upwards of $50,000.

 

It’s funny, with bodywork, the insurance companies will either pay us a menu price or give us the time from a recognized published labor guide, which for some cars exceed 1.5 hours. Even at a labor rate of $70.00, a labor time of 1.5 is $105.00. Is the alignment service just another commodity doomed to be priced low such as the common oil change?

[Tom Ham AutoMN.info]

I recently read a survey in a trade magazine showing the average national price on 4-wheel alignments. The survey contained mostly tire shops. What I surprised (and disappointed) to see was how low priced some shops charged for the average 4-wheel alignment. In some cases as low as $49.99. Don’t we give enough away? We all know that an alignment system with a rack can cost upwards of $50,000.

 

It’s funny, with bodywork, the insurance companies will either pay us a menu price or give us the time from a recognized published labor guide, which for some cars exceed 1.5 hours. Even at a labor rate of $70.00, a labor time of 1.5 is $105.00. Is the alignment service just another commodity doomed to be priced low such as the common oil change?

 

Step one: We bought our JB 3D camera system on Ebay for under $7K.

 

Step two: We bought our Hunter rack and jacks on Ebay for just over $1K.

 

(these deals are about to get even better)

 

Step three: We offer levels (align menu) with 3 options...good, better, best.

 

Alignments are similar to oil changes in that they are one of a dozen or so items that have a fairly well known common price. I believe a shop should survey local shops for alignment prices and make sure they are in the ball park.

 

The bottom line is total GP. Adjust prices of everything as needed to hit the GP targets. Like or not, this is how business is done today and how successful businesses do well.

 

So, don't focus on the price or GP of individual services...instead focus on the end of the month bottom line.

[Joe Marconi]

Tom, I have a problem with this. GP does not always equate to profit dollars. And just because the shop down the block charges $45.00 for an alignment does not mean I need to be in his ballpark. He may not have done the math and arrived at his price because he assumes this should be the price.

 

Getting back to GP. When brake rotors were $50.00 two years and we charged $100.00, we made $50.00.

 

When brake rotors came down to $25.00 and we charged $50.00, we made $25.00 LESS money.

 

But the GP stayed the same. My bills are paid with Dollars not GP.

 

Personally, I focus on each job.

 

You thoughts???

[Tom Ham AutoMN.info]

Tom, I have a problem with this. GP does not always equate to profit dollars. And just because the shop down the block charges $45.00 for an alignment does not mean I need to be in his ballpark. He may not have done the math and arrived at his price because he assumes this should be the price.

 

Getting back to GP. When brake rotors were $50.00 two years and we charged $100.00, we made $50.00.

 

When brake rotors came down to $25.00 and we charged $50.00, we made $25.00 LESS money.

 

But the GP stayed the same. My bills are paid with Dollars not GP.

 

Personally, I focus on each job.

 

You thoughts???

 

I agree that other shops often do not do the math. It's also true that once a shop gets a too high priced reputation it can be deadly. The math does not matter....perception is reality for customers. We learned that lesson many years ago after following the advice of management trainers who preached raising prices to solve every solution in a shop. Ten years later we still have the reputation and will likely have it forever to some extent unless we move to another area.

 

As far as rotors or similar parts go, a shop can offer two levels (both which are decent name brand stuff). The lower cost rotor is a perfect example of where the GP can be adjusted to compensate for the low price alignment.

 

If you use a graduated matrix of some kind then I assume you are not using the same GP on both of the rotors in your example.

 

I agree that bills are paid with dollars, not GP...but attaining proper GP targets puts enough dollars in the check book.

[Joe Marconi]

The comment about management trainers preaching raising prices is true. In an effort to offset poor productivity, many of us were told to raise prices. The reality is that most shops (at least in my area of the country) were 2 or 3 bay shops. With a shop that size, productivity is difficult to increase. Added to the fact that you cannot always be convenient to the customer. If you bays are full in a small shop and a customer walks in for an oil change, you can’t do it. This is bad buisness.

 

I think this trend of maintaining competitive pricing combined with the chronic poor productivity for small shops will make a deadly combination. Small shops will continue to fold.

 

I think larger shops will have an easier time in the future. Their size allows them to be more convenient to the customer. We have a six bay facility and are in the process of adding 4 more bays. We have gone to a “Just say yes” policy. We let the customer tell us when they want to bring their car in, we don’t tell them. This is also contradictory to what we were taught in the past. But for us it has been our salvation.