Do You Fear Raising Prices Will Lose Customers?

[Joe Marconi]

The fear of raising prices, both in labor and part margins, always brings an element of fear. This is totally understandable. However, that fear may not be real. 

The first strategy when pricing is to ensure that you build value in what you are selling. If the perceived value is low, price becomes important. If the perceived value is high, price begins to fade as an issue. 

Additionally, understand your key profile customer. You know who they are. They are those that throw their keys on the service counter and say, "Fix it, I'll be back at 5pm to pick it up, and no need to call me for authorization."   Remember, you cannot be all things to all people.  

The bottom line here, is truly the bottom line. You need to charge the right price that ensures you earn a profit. Now, don't misunderstand what I am saying here. Raising prices to overcome inefficiencies in your business is not a sound strategy either. 

If your production levels are not where they need to be, don't automatically look to fault your techs. First, look for bottlenecks in the service staff, not charging the right labor hours, too much discounting, and not performing enough high profitable jobs. 

Your thoughts? 

 

[Transmission Repair]

Your advice is a sound strategy.  However, a lot of younger techs who become shop owners may not agree.  Our industry needs people like you, who also train.  Keep doing what you do.  Invaluable advice.

[Joe Marconi]

19 minutes ago, Transmission Repair said:

Your advice is a sound strategy.  However, a lot of younger techs who become shop owners may not agree.  Our industry needs people like you, who also train.  Keep doing what you do.  Invaluable advice.

I appreciate the feedback and the kind words.  My father would often tell me, "We get old too soon, and smart too late."  

On of my core beliefs and purpose is to continue to help others in any way I can. And I am sure you feel the same exact way! 

[Transmission Repair]

Although we use itemized invoices, the truth is that the average consumer judges if a transmission shop is too expensive by simple stuff, they have some idea what's ok is stuff like ATF, etc.  For these reasons, we don't add garbage fees like waste oil disposal, shop supplies, etc.

The markup in most parts covers selling ATF at parts store cost, and the other garbage fees. (60% G.P.) It worked extremely well for us.  It's hard to believe that pricing simple stuff like ATF, will virtually make any bottom line appear to be a good deal.  Remember, like the collision business, we are transaction-related, not relationship-related.  "One and Done."

[newport5]

I don’t think customers will notice a $10 increase in the hourly rate. Unless they ask.

It would just end up in the total.

I seldom have a customer ask our hourly rate. If they do, the owner says: “I would LOVE to charge by the hour, then I can slow down!”

[Transmission Repair]

Wow!  I just looked you up on Yelp! and you had an incredible 4.9 stars with 34 reviews.  That speaks volumes not only about your pricing but about your service as well.  We need more posts from shops like yours.  Share some more and consider joining our group for only $40/yr.  I have no financial interest in AutoShopOwner other than my $40 annual membership.

[newport5]

Thank you for the kind words re the reviews.  34 reviews is not many but I’m not after volume. I’d heard years ago that it’s not the (merely) satisfied customers who refer you, it’s the thrilled ones, the delighted ones.

I’m interested in joining, but I need to find the correct level. I want to start coaching shop owners and service advisors on how I get approvals the fun, easy way. I know there is a “professional” level, but I don’t have my program together yet, although I’m speaking on that topic at an auto event in Maryland the end of this month.

I would enjoy posting more.

[Transmission Repair]

Thank you!