Time to Raise Prices?

[xrac]

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[FROGFINDER]

I raised my rate in July from 79.95 to 85.95. Didn't see any real loss in business but it has been a tough go for a while now. Avg ticket is 2.6 hours so it made about a 15 dollar difference in each ticket. Then my neighbor, a used car dealer, told me the local new car dealers were lowering their rates. Took a Focus in to dealer for a security issue I couldn't address. In their service drive the sign that had 110.00 per hour had the 110 crossed out and 89.95 marked in at the bottom. A quick survey found many of the local dealers had LOWERED their rates from over 100 to the 90 range. Makes me wonder if I made the right decision. I know what I need to make based on avg car count. But if I have a slow week then the numbers all go out the door.

MR. WIZARD I DONT WANNA BE A SHOP OWNER ANYMORE!!!

Dealers have the advantage of being paid by the manufacturer for recall's and warranty work. They can lower their posted labor to make them look like a better value than the independent shop.

[Andre R]

I'm sitting here reading this thread and getting flash backs of some of the excuses/reasons that I had used for not charging what I needed to to stay a viable,profitable buisness . I too thought that I couldn't charge " those prices" ,my customers just wouldn't pay them. I went to the seminars,read the books and still did it my way because my area was different .

Then came the day I had to tell my wife that we were losing our home of 22 years be cause I did it my way. We couldn't afford to stay so after some discussions we moved 2800 miles and started over.

That was in 2007. In 2008, in the middle of the reccession I was forced into ownership again and started making the same mistakes all over again.

One day I was talking to a friend who owned his own buissness and I was complaining about not making what I thought that I should,we couldn't afford to do this or that,blah blah blah. He looked at me and just laughed and asked why was I doing it then. He started asking me some very pointed questions about how I charged and what those charges were based on.That was uncomfortable but I got it.I started looking at my costs and started remembering some of the information I had gotten for those seminars . I started applying that info to my buisness and it worked.My labor rate went from 75.00 to 97.50 over night. My parts prices went from list or less than list to a 5 tiered matrix. We charged for all the labor we produced.

I was ready for all the push back I knew I was going to get.

 

NOBODY NOTICED!!!

 

My customers still came in and had work done, We still were fixing cars. All those years of struggling and doing without,putting my customers financial well being over mine and my family's for nothing.

Sure I didn't sell every job but the ones I did sell I made money on.

Our average RO was 270.00 is now 497.00 . Our gp on parts was at 35 % to 38 % is now at 50%. OUR labor gp was around 50% is now at 72% . Our total gp was at about 43% is now at 60%. Our net was about 5% is now at 28%.

 

I will never have to have that discussion with my wife again!

 

Your customers are coming to you because they trust you, not that shop dow the street. All of your prices have to be based off of your costs .Period. If your basing your prices off of anything else, STOP. Thats like the old joke," I lose money on each job but I make up for it in volume" .

 

If you can't price your services fairly and make money than why are you doing it!!

[xrac]

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[mspecperformance]

I'm sitting here reading this thread and getting flash backs of some of the excuses/reasons that I had used for not charging what I needed to to stay a viable,profitable buisness . I too thought that I couldn't charge " those prices" ,my customers just wouldn't pay them. I went to the seminars,read the books and still did it my way because my area was different .

Then came the day I had to tell my wife that we were losing our home of 22 years be cause I did it my way. We couldn't afford to stay so after some discussions we moved 2800 miles and started over.

That was in 2007. In 2008, in the middle of the reccession I was forced into ownership again and started making the same mistakes all over again.

One day I was talking to a friend who owned his own buissness and I was complaining about not making what I thought that I should,we couldn't afford to do this or that,blah blah blah. He looked at me and just laughed and asked why was I doing it then. He started asking me some very pointed questions about how I charged and what those charges were based on.That was uncomfortable but I got it.I started looking at my costs and started remembering some of the information I had gotten for those seminars . I started applying that info to my buisness and it worked.My labor rate went from 75.00 to 97.50 over night. My parts prices went from list or less than list to a 5 tiered matrix. We charged for all the labor we produced.

I was ready for all the push back I knew I was going to get.

 

NOBODY NOTICED!!!

 

My customers still came in and had work done, We still were fixing cars. All those years of struggling and doing without,putting my customers financial well being over mine and my family's for nothing.

Sure I didn't sell every job but the ones I did sell I made money on.

Our average RO was 270.00 is now 497.00 . Our gp on parts was at 35 % to 38 % is now at 50%. OUR labor gp was around 50% is now at 72% . Our total gp was at about 43% is now at 60%. Our net was about 5% is now at 28%.

 

I will never have to have that discussion with my wife again!

 

Your customers are coming to you because they trust you, not that shop dow the street. All of your prices have to be based off of your costs .Period. If your basing your prices off of anything else, STOP. Thats like the old joke," I lose money on each job but I make up for it in volume" .

 

If you can't price your services fairly and make money than why are you doing it!!

 

 

Thank you very much for this post! I think a lot of us on here can relate. I know I can.

 

I used to think of myself a decently smart person but the best thing I did for myself was to tell myself, "I know nothing." Without doing this I was stuck in my old ways that got me no where.

 

If you are one of those 1 in a million and can be super successful on your own then more power to you. For the rest of us mere mortal shop owners the best thing for us is reading, training, learning.

[FROGFINDER]

I'm sitting here reading this thread and getting flash backs of some of the excuses/reasons that I had used for not charging what I needed to to stay a viable,profitable buisness . I too thought that I couldn't charge " those prices" ,my customers just wouldn't pay them. I went to the seminars,read the books and still did it my way because my area was different .

Then came the day I had to tell my wife that we were losing our home of 22 years be cause I did it my way. We couldn't afford to stay so after some discussions we moved 2800 miles and started over.

That was in 2007. In 2008, in the middle of the reccession I was forced into ownership again and started making the same mistakes all over again.

One day I was talking to a friend who owned his own buissness and I was complaining about not making what I thought that I should,we couldn't afford to do this or that,blah blah blah. He looked at me and just laughed and asked why was I doing it then. He started asking me some very pointed questions about how I charged and what those charges were based on.That was uncomfortable but I got it.I started looking at my costs and started remembering some of the information I had gotten for those seminars . I started applying that info to my buisness and it worked.My labor rate went from 75.00 to 97.50 over night. My parts prices went from list or less than list to a 5 tiered matrix. We charged for all the labor we produced.

I was ready for all the push back I knew I was going to get.

 

NOBODY NOTICED!!!

 

My customers still came in and had work done, We still were fixing cars. All those years of struggling and doing without,putting my customers financial well being over mine and my family's for nothing.

Sure I didn't sell every job but the ones I did sell I made money on.

Our average RO was 270.00 is now 497.00 . Our gp on parts was at 35 % to 38 % is now at 50%. OUR labor gp was around 50% is now at 72% . Our total gp was at about 43% is now at 60%. Our net was about 5% is now at 28%.

 

I will never have to have that discussion with my wife again!

 

Your customers are coming to you because they trust you, not that shop dow the street. All of your prices have to be based off of your costs .Period. If your basing your prices off of anything else, STOP. Thats like the old joke," I lose money on each job but I make up for it in volume" .

 

If you can't price your services fairly and make money than why are you doing it!!

NOBODY NOTICED? Then you are not charging enough and cheating yourself and your family!.

If your customers are not calling the Police-You are under charging!

 

I am being sarcastic BUT:

Trying to think of my Neighbor like myself I ask How much is Greed?

As a service advisor I don't mind charging premium prices for my time, experience, skills but I have a problem working for a shop owner that pressures his crew to charge what works out to be $270 per hour, parts not installed or old parts cleaned, services not done professionally or not at all. NOBODY NOTICED EXCEPT ME!

[FROGFINDER]

Don't enter a price war. No one wins a price war. For a dealer to lower the labor rate that much means that the dealer is desperate and in financial trouble. The same way you saw no change in your business when you raised your labor rate, the dealers will see no change in their business. All they will accomplish is less income. Do what you do best, provide the best customer service and WOW the customer each and every time. Take price out of the picture by doing this.

 

Think about this, ever go into a Starbucks lately? They are feeling the affects of the economy, but you still pay 2 to 3 times for a cup of coffee. They focus on the customer, not the price. We need to do the same.

 

Hang in their, better days are coming. I know it and I feel it. We have turned the corner, and the road looks pretty good.

Starbucks is an addiction to sugar and caffeine.

[xrac]

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[mmotley]

Be Wary of Implementing Price Increases. http://www.shopownermag.com/implementing-price-increases/

 

GREAT article!!! I can't agree more with his comments about parts pricing too.

 

Just realized this article was written by Bob Cooper of Elite. The common sense approach laid out in that article is now really making me consider going to Elite for training/coaching.

Edited December 24, 2014 by mmotley

[GobblesAuto]

I recently talked with a local moving company and was told their rate was $125.00 per hour. Don't know the details if that was per person or additional travel charges etc.... I know they do have a nice truck. It just came up in conversation and it was not elaborated on. Just food for thought.

[mmotley]

I recently talked with a local moving company and was told their rate was $125.00 per hour. Don't know the details if that was per person or additional travel charges etc.... I know they do have a nice truck. It just came up in conversation and it was not elaborated on. Just food for thought.

I work right next to a moving company. If I had to guess, there is no way it is $125 per person. I know how they pay their guys. Just FYI

[KMS]

We have gone away from the price shoppers. In the past year I raised our labor rate from $101.58/hr to $117.58/hr without any drawbacks. I feel most customers do not shop on price alone, and I will never tell anyone that we are the cheapest. Sometimes we charge more, sometimes we charge less. It hardly ever matters what the price is as long as you provide a "Great Service Experience!" Try not to dwell on what other shops are charging. Ever shop needs to charge a certain amount to profit. Don't let price run you out of business. Also, remember we don't charge for parts and labor, we charge for service.

[_2080]

More often than not I use repairpal.com Prices 98005 area code.

 

You guys charge way too little. I charge 130 on newer European stuff and 110 on older.

90 the rest of cars. And customers still tell me I got low prices.

 

Gene.

[328ijunkie]

Do you guys charge labor time based strictly on book time? Weve raised our labor rate mainly for perception (to push some of the price shoppers away) but not really for additional gains although jumping 10/hr on labor with 3 techs doing say 2000hrs of labor a year is 60K...

[FROGFINDER]

I have read/heard, whatever somewhere, don't quote me on that

That, if at least two of your customers don't tell you that you are too expensive or charging too much, it means you are not at your "optimal" hourly rate. So think of it as a compliment from them.

Now, if those two customers are the only ones you got in for that week, that's a problem, isn't it?

As far as "price sensitive" (lmao not at them, but with them at myself) customers and responses to their complaints, i usually ask what they do for living and if they wouldn't mind doing the same job for about half the salary.

This usually takes care of the highly analytical types, others just won't hear you no matter what.

If the customer does not call the police you have not charged enough.