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When/if To Charge For Diagnostic Charge?!


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Just wanted to get a better feel for other shop owners and how they handle charging for diagnostic work. We classify diagnostic work as anything that the customer comes in to have fixed but does not know what parts need to be replaced. Do you all usually charge a diagnostic fee and then charge a parts and labor fee after you find out what the problem is or do you roll the diagnostic charge into the labor to replace the part if the customer has the work performed at your shop? What do you all classify as diagnostic and what are your charges? We currently have diagnostic charges for under car/under hood starting at $40 or 1/2 hour and electrical/computer diagnostic starting at $80 or 1 hour. Some feedback would be greatly appreciated!

 

Would you have a diagnostic charge for the following or just the 1.2 hours of labor and parts required to replace the alternator:

 

Customer comes in and states that there was a large popping noise heard this morning and now she hears a constant smaller popping noise. Our tech figures out that it is the coupler attached to the alternator. He performs an alternator test to verify that the alternator does in fact work properly. The CSA presents this information to the customer and he chooses to replace the entire alternator versus just the coupler.

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This is one of my greatest pet peeves.

 

The biggest gripe I hear is that there is no money in troubleshooting. I disagree.

 

It is how you sell the job and how you train your techs that determine how you present and sell diagnostic work.

 

I have two types of diagnostics specials one for $45.00 and the other for $125.00

 

I purchased and trained my diagnostics techs to use the Picoscope for fast and efficient troubleshooting. http://www.picotech.com/

 

With the scope and experience and access to Mitchell schematics your techs can find issues within an hour. If it is an intermittent problem that you are going to have to chase send it away to someone that likes to spend their time doing that kind of work, since you will not be making any money if that is not your specialty.

 

As much as you can, always tack on an additional 1/2 hour to every ticket that you can sell. This will cover for your customer service hours that you can't bill for. So if the service guide tells you 1 hour, sell the job for 1.5 hours.

 

From experience, 95% of diagnostic problems we face in my shop are cabling related, either the wires are corroded, cut or chaffing somewhere.

 

As regarding my diag specials, we read the codes for free, if they want a basic written report is $45, if they want a complete diagnostic report is $125. I sell a lot of $45 reports.

Edited by HarrytheCarGeek
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So does that mean that if the customer chooses to do the repair with you guys that you do NOT charge the diagnostic fee and only the labor and parts to fix the vehicle or do you still charge the diagnostic charge in addition with the labor and parts to fix the vehicle? I've noticed that a lot of shops in my area do NOT charge the diagnostic fee if the vehicle is fixed at their shop and only charge this if the customer chooses to leave without having the vehicle fixed. I don't understand exactly why the diagnostic is not charged as it still takes time (even if it is 1/2 hour) to find the issue before recommending parts and labor that will address the customers issue. Any and all comments are greatly appreciated!

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So does that mean that if the customer chooses to do the repair with you guys that you do NOT charge the diagnostic fee and only the labor and parts to fix the vehicle or do you still charge the diagnostic charge in addition with the labor and parts to fix the vehicle? I've noticed that a lot of shops in my area do NOT charge the diagnostic fee if the vehicle is fixed at their shop and only charge this if the customer chooses to leave without having the vehicle fixed. I don't understand exactly why the diagnostic is not charged as it still takes time (even if it is 1/2 hour) to find the issue before recommending parts and labor that will address the customers issue. Any and all comments are greatly appreciated!

 

 

From my perspective do your numbers. It seems to me you are looking at this issue too rigidly, loosen your language a bit.

 

This is the guideline, -charge what the market will bear.

 

Having said that, you have to find a way to compete, and at the end of the day the score is kept in dollars made.

 

So, if you can detail your bill as to specify a diagnostic charge, then do that. If you sell the job as a whole without itemizing then do that.

 

As long as you make a profit and get to stay in business, more power to you. It is your customers that decide if you are taking care of them by coming back time and again.

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Thank you all for you candid responses. Seems like this is definitely a hot topic. My question for Harry is not really whether to have it itemized as a diagnostic line item or included in the labor charge for replacement of a part but more so if you charge it or do not charge it, regardless of where it appears on the invoice.

 

I totally agree with Joe in the fact that it seems like it is much easier for my CSA's to charge for brake pad replacement versus charging for diagnostics that do in fact require my ASE master technician who costs the shop more for his labor time and usually needs more advanced equipment/tools to find the problem. This is why we have been charging for diagnostic work even if the customer has the repair/job done at our shop as we believe that the diagnostic/testing is totally seperate from the labor time it takes to replace the necessary part. The only time this would not be the case is when there is overlap and for the diagnostic parts or areas are removed in the same area that the part that needs to be replaced is located. In thtat situation we would adjust the labor time needed to replace the part.

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I charge whatever I can charge regarding any particular job, that includes the time to diagnose the vehicle.

 

As much as I can, I do not bill by the hour but by the job.

 

I had customers tell me if the job took less than the specified time if I would cut the bill, that's why I do not quote hours but flat rates for the particular jobs.

 

Yes, there are drawbacks if there are hidden/occult damages but you must leave yourself room for that eventuality by advising the customer that it may happen.

 

Do not be afraid to charge for your work, if you do good work at a fair price your customer will keep coming back to you.

 

Also, keep in mind the socio-economic level of your customer, and do not worry catering to those that drive Lexuses that don't even have a budget to maintain a bicycle.

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You have to know what your worth. If you check it/take a look for "free" consider it part of you advertising cost and make sure you can contact that customer later to reward him/her for referrals. When you use expensive equipment and your best guy charge what you can for testing ($130.00 per code/system) and promise to report asap. When you contact the customer explain to them that they have spent x and will be spending y to complete the task . Don't get weak. Your family , creditor's and customers are depending on you.

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I've written a lot of articles on this subject of diagnostics. (Check out "Diagnostic Fee - Diagnostics Free") When I first started in this crazy business some 30 years ago diagnostic charges were not the norm. In fact if you charged someone for diagnostics they wanted to be incorporated into the final repair.

Never liked that, it seemed to me as if it was some sort of "bonus" for the customer to have me do the work.

 

After years of trying to make diagnostic charges work here's what I've resorted to. I tell them this; "Diagnostic Charges run between 35.00 and 75.00 dollars depending on the depth of diagnostics needed." Believe it or not... I been picking up more first time customer s this way. Some only hear 35.00, some have already made up their mind that it's going to be 75.00, so they'll tell me, "Don't go any farther than 35.00" Which is no problem. At that rate unless it's simple already, I'll give them an overall guess and tell them that we need more work to be more accurate.

 

Honestly, this has work better than the "free" the "included in the repair" or the "we don't charge" methods. :D

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Gonzo, what do you consider a diagnosis? Let's say you have an EVAP code and you need to do extensive testing. How is that handled?

Anytime a test gets involved like an EVAP then it becomes a working job. Anytime parts have to be removed to gain access OR things like a smoke machine has to be added to aide in the diagnostic work the customer is informed and charged accordingly.

 

One time I had a guy refuse the extra charge for using a smoke machine and the labor involved. He said, "diagnose it without the equipment." I told him, "Well, were done... here's your keys." That changed his tune.

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After years of trying to make diagnostic charges work here's what I've resorted to. I tell them this; "Diagnostic Charges run between 35.00 and 75.00 dollars depending on the depth of diagnostics needed." Believe it or not... I been picking up more first time customer s this way. Some only hear 35.00, some have already made up their mind that it's going to be 75.00, so they'll tell me, "Don't go any farther than 35.00" Which is no problem. At that rate unless it's simple already, I'll give them an overall guess and tell them that we need more work to be more accurate.

 

Honestly, this has work better than the "free" the "included in the repair" or the "we don't charge" methods. :D

 

Genius! hahahaha

Edited by HarrytheCarGeek
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I have to agree with you Joe. The whole reason I even started this thread was b/c of the response I was hearing from SOME customers in regards to being charged for diagnostic work. A portion of the customers do not understand why check engine lights are not diagnosed for free since it is advertised by AAMCO, Advance Auto, etc. as being done for free (we all know that there is a catch to this "free" diagnostic). The other portion are willing to pay upfront but expect that that payment is refunded or removed from the total bill if they choose to have the repair done at our shop b/c this is how some of the dealers/other shops in our area operate. I do wish that all shops would charge and charge appropriately for diagnostic work. This would help justify the charge in the mind of the consumer as consumers often decide what is valid and not valid by what the majority of operators are charging or not charging. We charge for diagnostic work here at our shop and try and educate the consumer on why there is a charge. Some of the consumers understand, while others don't and fall back on how they were not charged at other shops.

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  • 4 weeks later...

I love the customer diagnosed problems the best. If a customer walks in and wants me to replace x because its the problem I normally just do it. Too many times have I tried to explain that more than one system can make it look like x failed and they want to debate it or have me diag it for free.

 

More often than not it wasn't the problem and they are so disappointed that they then want to pick my brain and knowledge and have no problem paying for it. I've earned many loyal customers this way and they never question anything I tell them anymore.

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If a customer comes in with a CEL and asks me to "hook that machine up to there car and see exactly what wrong with it" I will pause, take a deep breath, try not to laugh and then go into detail the process of diagnostic work. I explain to them that there is a 1 hr minimum ($65) and in most cases we can have the problem pinpointed within 2 hrs. But in rare cases it could go higher such as when parts need to be removed to gain access to the components that needs testing. I was once one of the free diagnosteers in the beginning stages of my shop but soon learned that exploring cars for free was a fruitless adventure with no reward. I had a very smart man tell me that if a customer is not willing to dish out 65 to 130 bucks to figure out what's wrong with the car then they ain't serious about getting the thing fixed in the first place. Things have worked out pretty well since I adopted this policy and more often then not I make the sell on diagnostic work. It's all about presentation I guess.

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What do you guys do when you let the customer know that there will be an $80 diagnostic testing charge (1 hour of labor) and as part of the process of diagnosing the "air bag" light, you reset the light and it does not come back on? 10 minutes have passed as you reset the light first to see if it would come back on and it has not. Do you charge the full $80 or 1 hour diagnostic testing charge? Do you discount it and charge 1/2 hour?

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We usually have three "levels" of diagnostic charges, .6 hours, 1.3 hours, 2 hours.

 

The first level includes alternator testing, starter, battery, overheating checks, fairly simple stuff.

 

80% falls into "level 2" which is check engine light, car is cranking but not turning over, intermittent issues. The charge for diagnosing can increase based on if additional work is needed. ie. tracing possible shorts in wiring harness, etc

 

Level 3 is ABS and Airbags, this is to start, and does not necessarily mean there won't be additional charges... remove seat, dashboard, steering column, etc

 

 

 

In my experience places that are under charging for troubleshooting are not 100% confident in their troubleshooting skills and perhaps may be "guessing" with parts swapping, trial and error, etc.

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This is an interesting read. It is good to read your perceptions on this, especially with what I am seeing is the concern with dealerships doing free diag and it being tough to compete with. I have to admit, yes the dealers do a lot of free diag, even now without the hitch of "it's free if you do the work with us." The reason it is free is not because the dealership is absorbing the cost, it is because the tech is absorbing the cost because the dealership refuses to pay us, saying the opportunity to upsell a job is benefit enough to us.

 

Let me just say, I applaud you guys who are charging, rightfully so, for diagnostics and educating the customer on what diag really is and why it costs money. I also have long lived by the idea that the customer who expects it to be free and uses the price shopping line to try to call you a crook for covering diag time is not the customer you want to keep anyway.

 

If and when I ever open my own shop, I plan to sell diag in half-hour time blocks. Giving the customer the option to continue or terminate the diagnostic process if they wish not to spend anymore. Time is money and diag is time.

 

Also, I believe all electrical work and diagnosis should be straight time, thoughts?

Edited by ADealerTech
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  • 4 months later...

This is one of my greatest pet peeves.

 

The biggest gripe I hear is that there is no money in troubleshooting. I disagree.

 

It is how you sell the job and how you train your techs that determine how you present and sell diagnostic work.

 

I have two types of diagnostics specials one for $45.00 and the other for $125.00

 

I purchased and trained my diagnostics techs to use the Picoscope for fast and efficient troubleshooting. http://www.picotech.com/

 

With the scope and experience and access to Mitchell schematics your techs can find issues within an hour. If it is an intermittent problem that you are going to have to chase send it away to someone that likes to spend their time doing that kind of work, since you will not be making any money if that is not your specialty.

 

As much as you can, always tack on an additional 1/2 hour to every ticket that you can sell. This will cover for your customer service hours that you can't bill for. So if the service guide tells you 1 hour, sell the job for 1.5 hours.

 

From experience, 95% of diagnostic problems we face in my shop are cabling related, either the wires are corroded, cut or chaffing somewhere.

 

As regarding my diag specials, we read the codes for free, if they want a basic written report is $45, if they want a complete diagnostic report is $125. I sell a lot of $45 reports.

 

Can you explain a little more about diagnostic reports? Written report vs. diagnostic report?

 

Thank you

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I charge whatever I can charge regarding any particular job, that includes the time to diagnose the vehicle.

 

As much as I can, I do not bill by the hour but by the job.

 

I had customers tell me if the job took less than the specified time if I would cut the bill, that's why I do not quote hours but flat rates for the particular jobs.

 

Yes, there are drawbacks if there are hidden/occult damages but you must leave yourself room for that eventuality by advising the customer that it may happen.

 

Do not be afraid to charge for your work, if you do good work at a fair price your customer will keep coming back to you.

 

Also, keep in mind the socio-economic level of your customer, and do not worry catering to those that drive Lexuses that don't even have a budget to maintain a bicycle.

 

How can we have flat rates for a specific job if the prices range according to vehicle?

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  • Have you checked out Joe's Latest Blog?

         5 comments
      I recently spoke with a friend of mine who owns a large general repair shop in the Midwest. His father founded the business in 1975. He was telling me that although he’s busy, he’s also very frustrated. When I probed him more about his frustrations, he said that it’s hard to find qualified technicians. My friend employs four technicians and is looking to hire two more. I then asked him, “How long does a technician last working for you.” He looked puzzled and replied, “I never really thought about that, but I can tell that except for one tech, most technicians don’t last working for me longer than a few years.”
      Judging from personal experience as a shop owner and from what I know about the auto repair industry, I can tell you that other than a few exceptions, the turnover rate for technicians in our industry is too high. This makes me think, do we have a technician shortage or a retention problem? Have we done the best we can over the decades to provide great pay plans, benefits packages, great work environments, and the right culture to ensure that the techs we have stay with us?
      Finding and hiring qualified automotive technicians is not a new phenomenon. This problem has been around for as long as I can remember. While we do need to attract people to our industry and provide the necessary training and mentorship, we also need to focus on retention. Having a revolving door and needing to hire techs every few years or so costs your company money. Big money! And that revolving door may be a sign of an even bigger issue: poor leadership, and poor employee management skills.
      Here’s one more thing to consider, for the most part, technicians don’t leave one job to start a new career, they leave one shop as a technician to become a technician at another shop. The reasons why they leave can be debated, but there is one fact that we cannot deny, people don’t quit the company they work for, they usually leave because of the boss or manager they work for.
      Put yourselves in the shoes of your employees. Do you have a workplace that communicates, “We appreciate you and want you to stay!”
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