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By Joe Marconi in Joe's Blog13 commentsMost shop owners would agree that the independent auto repair industry has been too cheap for too long regarding its pricing and labor rates. However, can we keep raising our labor rates and prices until we achieve the profit we desire and need? Is it that simple?
The first step in achieving your required gross and net profit is understanding your numbers and establishing the correct labor and part margins. The next step is to find your business's inefficiencies that impact high production levels.
Here are a few things to consider. First, do you have the workflow processes in place that is conducive to high production? What about your shop layout? Do you have all the right tools and equipment? Do you have a continuous training program in place? Are technicians waiting to use a particular scanner or waiting to access information from the shop's workstation computer?
And lastly, are all the estimates written correctly? Is the labor correct for each job? Are you allowing extra time for rust, older vehicles, labor jobs with no parts included, and the fact that many published labor times are wrong? Let's not forget that perhaps the most significant labor loss is not charging enough labor time for testing, electrical work, and other complicated repairs.
Once you have determined the correct labor rate and pricing, review your entire operation. Then, tighten up on all those labor leaks and inefficiencies. Improving production and paying close attention to the labor on each job will add much-needed dollars to your bottom line.
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By Transmission Repair
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By Joe Marconi
Many shop owners have increased their labor rates in the past year or so. That is great news. Now, what's your next move?
Anyone who knows me knows that, in my opinion, in general, we have been too cheap for too long. But, determining your labor rate is not the only consideration to attaining a profitable business.
What about productivity, efficiency, keeping expenses in line, gross profit, and net profit?
What are you doing to ensure you are meeting the financial needs of your business and also paying your employees the money they desire?
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By Joe Marconi
For the first time in a VERY LONG time, I see a lot of positive news with regard to labor rates. More and more shop owners and managers are crunching their numbers and increasing their labor rates to better ensure their companies achieves a profit and also to be able to pay their employees what they deserve.
Profit is needed in order to build for the future and to be able to attract quality people.
I really think that this is perhaps the best time in our recent history to revisit your labor rates and bottom line and adjust your rates accordingly.
Have you adjusted your labor rates recently, or plan on it?
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