Quantcast
Jump to content

TIRE PRICING


Jeff

Recommended Posts

I have wrestled with the same issue. I am not much of a tire shop at all, I pretty much got my tire equipment to give a better overall service to my customers and to provide every service in house. I have learned though the mark up on tires is abysmal. Most of my customers are savvy with what they can get from tire rack and such and its a tough sell a lot of times. I have not figured out a good way to sell tires and actually dread having to recommend them to my customers. I will often try to recommend the other services needed on their vehicles before mentioning tires (unless they are terribly chewed up) just simply because the profit margin on other services is significantly higher.

Link to comment
Share on other sites

Selling tires can be your most profitable service you can do in your shop! Forget about profit percentages, look at profit dollars. I'll try to break it down to make sense. Let's say your labor rate is $80 per hour and you sell an additional $80 in parts at 50% profit for each hour of labor billed, your profit dollars are;

 

Labor sale $80

Part Profit $40

 

Total Gross Profit $120 per hour.

 

By selling tires at $20 over cost, plus charging $20 for mounting and balancing you will have the follow gross profit dollars by selling and install 4 tires in an hour of bay time;

 

Labor sale $80 4 tires x $20 each for mounting and balancing

Tire sale $80 - 4 tires x$20 markup on each

 

Total gross profit dollars $160 per bay hour. In addition you get the opportunity to inspect the brakes, shocks, struts, front end components, maybe sell the wheel alignment, road hazard protection plan etc. Tires can be install by an entry level tech or general service tech costing half of what an "A" level tech cost.

 

I know we often look at profit %, but it's really profit $ that pay the bills.

 

Just my opinion.

Russ

 

  • Like 1
Link to comment
Share on other sites

On most tires with a wholesale cost less than $100 I try to add $20 sometimes $25 plus $15 for installation. That gives us a final price that it competitive. We have Walmart, Sams Club, Pep Boys, Discount Tire, and a Best One all within less than a mile of us.

I must not buy enough tires. If I mark up $20.00 I'm higher than everyone around me!

 

Sent from my DROID RAZR using Tapatalk 2

Link to comment
Share on other sites

All great information! One more thing I can add. With tires you need to be competitive, but price is not the only concern. We sell a lot of tires and we know that we are not the cheapest. We track all local tire stores, Sears, etc. But we offer the customer benefits that differentiate us from the competition, such as: Lifetime rotation, road side assistance, road hazard, flats fixed free, etc. We focus on the benefits, not the price. You will be surprised at how many of your good customers will not worry too much on price.

 

I know I cannot compete on price all the time, but I can compete on benefits.

Link to comment
Share on other sites

Tires tires tires, I do dread tires and pricing but there is money to be made. Like Joe said, concentrate on what you guarantee and not being the lowest price.

 

For instance, we only do full synthetic oil changes so if you buy tires from us we will rotate your tires every oil change :).

Link to comment
Share on other sites

All great information! One more thing I can add. With tires you need to be competitive, but price is not the only concern. We sell a lot of tires and we know that we are not the cheapest. We track all local tire stores, Sears, etc. But we offer the customer benefits that differentiate us from the competition, such as: Lifetime rotation, road side assistance, road hazard, flats fixed free, etc. We focus on the benefits, not the price. You will be surprised at how many of your good customers will not worry too much on price.

 

I know I cannot compete on price all the time, but I can compete on benefits.

 

Joe, how does your shop handle the road side assistance aspect? I'm guessing that you outsource this to a towing company or someone like AAA.

Link to comment
Share on other sites

Very competitive in my area with a tire shop being basically on every major corner. I have had okay results with just marking up $100 on four tires, or $50 on two. That includes mounting, balancing, and I add a $2 fee for tire disposal if they leave the tires with me. Some shops still install all four for what I can buy all four tires for at cost. I have no idea how.

 

I have an old machine and I don't mount tires fast enough to really make money over my hourly rate. I spend too much time with the wire wheel cleaning the wheels but I hate having to redo them over bead leaks.

 

Good luck!

Link to comment
Share on other sites

Jeff,

I have spent the past 40 years providing services to other auto dealers particularly with used tires, wheels and waste tire services. Of course I tend to deal mostly with those who have found a niche and are successful in selling those items along with the related auto services. I am particularly impressed with those shops who do not bat an eye at the price they charge for tires and they always have the best used tires included in the waste tires they ask me to remove from their stores. One in particular has been a customer of mine for more than 20 years and I have seen two management changes but the business is very much the same today as it was 20 years ago. From the outside looking in it seems to me they approach the tire business from an auto repair standpoint rather than the tire shop perspective I have always known. That means to me that they are very particular about the work they perform and always put the customer first. They do not do partial work on anything and if you as a customer are trying to negotiate prices they tend to suggest other shops for the work. The shop is always full when I call on them about once a month and I get the impression that means they have people waiting to make appointments. The variety of customer vehicles runs from very old restored or classic vehicles to very late model high end luxury cars and includes a lot of everyday mid priced cars probably 5 to 10 years old. The cars all seem to be in good condition by looking at them and the tires I see coming off those that needed tires are normally taken off due to a maximum of 6 years on the date of the tires. That policy is consistent with the general impression I have of these businesses. They do not concern themselves with price on anything and simply insist on doing the best they know how to do on everything. By the way the tires I see them selling are also higher priced brand names.

Now none of that applies to those who sell tires primarily where price is everything and volume is the only way they can make enough to pay their help. That is not to say that this is not a good way to go but if your heart is in Auto Repair instead of tires I suggest you consider the previous style. Good luck, the tire business has been good for me and I am having some pangs in giving it up.

  • Like 1
Link to comment
Share on other sites

Just spoke with Kauffman Tire. Here is what they are told me:

  • Deliveries 2x per day for free. Hot shot delivery for $25.
  • Tires sold at the same cost their Kauffman retail stores pay. I found this hard to believe, but the numbers checked out. Kauffman has two distinct businesses ... wholesale and retail with separate business models for each.
  • 20 different tire sizes will cover 85% of the vehicles on the road.

I walked into this conversation thinking that I would need to stock like the local Firestone to get decent pricing. Our Firestone keeps over 1,500 tires on hand at all times ... that's around $150k in inventory at all times. Not many shops can float that kind of cash.

 

However, after talking with Kauffman, it looks like getting into the tire game is easier than I thought. Keeping 2 full sets of each of the 20 sizes on hand (8 tires * 20 = 160 tires) would only cost around $20k in inventory. Going to move forward with this one.

 

EDIT: Attaching the tire size matrix showing the most popular sizes. Any tire supplier can give you this.

post-1198-0-99264000-1378224625_thumb.jpg

Edited by Wes Daniel
Link to comment
Share on other sites

we sell tires, usually pick a good brand and offer just that (hankook) , we do not stock tires anymore , used to , but was difficult to keep up with ever changing sizes and carrying multiple brands etc. we get 2-4 deliveries a day , we sell of course based on customer need but convenience as well, car is here, needs tires, we can do NOW, you get the idea. what we charge, 23.99 M+B each tire, valve stem, service pack, extra.

tires we price like this , tire cost 87.91 lets say, multiply by 1.5 , sell for 131.86 , if tire is over 100 dollars we multiply by 1.36 102.44 x 1.36 sell for 139.31 . we make some money on tire sales and alignments of course, not record breaking BUT, the car is here, needs tires, why should we lose out on that profit?, right, we shouldnt.

we sell quite a bit of tires, the ones we loose are the ones that like costco, sams club, etc.

 

jeff

Link to comment
Share on other sites

we sell tires, usually pick a good brand and offer just that (hankook) , we do not stock tires anymore , used to , but was difficult to keep up with ever changing sizes and carrying multiple brands etc. we get 2-4 deliveries a day , we sell of course based on customer need but convenience as well, car is here, needs tires, we can do NOW, you get the idea. what we charge, 23.99 M+B each tire, valve stem, service pack, extra. 

tires we price like this , tire cost 87.91 lets say, multiply by 1.5 , sell for 131.86 , if tire is over 100 dollars we multiply by 1.36  102.44 x 1.36 sell for 139.31 . we make some money on tire sales and alignments of course, not record breaking BUT, the car is here, needs tires, why should we lose out on that profit?, right, we shouldnt.

we sell quite a bit of tires, the ones we loose are the ones that like costco, sams club, etc. 

 

jeff

Wow! That's some pricing I need to look at. I'm at 12 mount and balance and 10 in markup and my competitors still under cut me!

 

Sent from my DROID RAZR using Tapatalk 2

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Have you checked out Joe's Latest Blog?

         1 comment
      Have I got your attention? Great.
      Let me start by saying that I believe in giving praise when deserved and letting employees know when they dropped the ball. However, the truth is that no one enjoys being reprimanded or told they messed up.  
      The question is, what is the appropriate balance between the right amount of praise and the right amount of critical feedback? According to studies done by Harvard Business School, the ratio of praise to critical feedback should be about 6:1 – Six praises for every critical feedback. I am not sure if I agree with that.
      From personal experience, I would recommend a lot more praise. The exact ratio doesn’t matter. What’s important is that before you consider giving critical feedback, ensure you have given that employee a lot of recent praise. If not, whatever you are trying to get through to an employee, will fall on deaf ears.
      When you do have to give critical feedback, remember a few things:
      Focus on the issue or behavior; never attack the person, and remain calm in your actions and words Ask the employee for feedback, their side of the story Speak to the employee in private Address the issue soon after it happens; never wait Don’t rely on second-hand information; it’s always better if you have experienced the situation yourself that you want to correct Have an open discussion and find things that both of you can agree upon Have an action plan moving forward that the employee can take ownership of Use the experience as a learning tool Make sure you bring up positive attributes about them Remember, you don’t want the employee to be angry or upset with you; you want them to reflect on the situation and what can be improved. One last thing. Everyone makes mistakes. We need to be mindful of this.
  • Similar Topics

    • By Transmission Repair

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

    • By carmcapriotto
      This week Hunt discusses the differences in taxation of common expenses that you might not be aware of.
      • What kind of meals am I allowed to deduct and how are in house meals different than meals offsite?
      • How much of a deduction do I get if I donate my services to a charity or donate a piece of business equipment?
      • Should I write off my life insurance premiums?
      What other classifications should I be aware of on my P&L that could effect my end of year taxes?  
      Thanks to our sponsor partner NAPA TRACS
       
      NAPATRACS.com
      Paar Melis and Associates – Accountants Specializing in Automotive Repair
      Visit us Online : www.paarmelis.com
      Email Hunt: [email protected]
      Get a copy of my Book : Download Here
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      You’re growing -a lot, but concerned about losing the company culture you’ve spent so much time, energy, effort, and money on building. In this episode, Kim Walker shares her thoughts, ideas, and strategies being implemented to be super intentional about maintaining company culture.
      Talking Points
      Worked hard to define core values, build a team, processes You’re getting great results You’re growing But fearful of losing momentum, culture, pace, etc Keep Core Values front & center. What we do: Hiring, onboarding Firing relates back In the middle - reward + recognize Make decisions Process Documented Practiced by all Appreciated + Understood Onboarding.  How do you do it?  Is it documented? Can it be duplicated easily? Hire Slow, Fire Fast Games Kim Games (Slack) JR’s Dad Jokes + Puns Playfulness, laughter, joy. Happiness is a core value for us.  Contests. Surprises Letters to family Door Dash Travel together/retreat Training Meaningful Easily found for future reference Mentoring Day to Day Connections Slack Huddles Project Management software communication  
      How To Get In Touch
       
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - [email protected] 
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      This shop is too slow. This shop is too busy. This shop doesn’t know either way. It wasn’t long ago that we heard a good bit of chatter regarding shops who were experiencing slow days but most recently we have experienced shops on the other end of the spectrum. They’re too busy and have mentioned pausing their marketing. In this episode, we discuss what shops can do to shift their marketing instead of stopping all together.
      Talking Points
      The too-busy shop trend - sound crazy, but true. Mistake: stop marketing. Busy today does not mean busy tomorrow. Stopping all marketing creates a roller coaster effect Everything is great until one day it isn’t Do you own a business or do you own a job? It’s time to grow up. Never stop marketing; pivot instead. Change messaging to less sales/promotion and more culture Start hiring Focus on brand building Messaging Shift to: More company culture Brand awareness Great Place to work Customer Acquisition Ads Community Relations Social Media SEO Customer Retention Emails Texting Social Media    
      Thanks to our partner, RepairPal. Visit the Web HERE
       
      How To Get In Touch
      Website - https://independentautodieselrepair.com/ 
      Facebook - https://www.facebook.com/IndependentAutoandDieselRepair
      How To Get In Touch
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - [email protected] 
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      Kim + Tracy Capriotto spend time in this episode laughing, chatting, and sharing about key moments in the industry, career transitions, and working with family. Tracy shares her battle with an internal dialogue. 
      Thank you to our friends at RepairPal for providing you this episode. RepairPal is the key that unlocks more business for your repair shop. Learn More at RepairPal.com/shops
      Talking Points
      Working with family. You’re either crazy or an angel. I think it’s an angel.  What’s your top tip for working with family? what was it like watching your dad take on the automotive world with his podcast? at what point did you think you wanted in on that? what has the transition like for you joining your dad? let's chat about your Women in Auto Care involvement - what are your favorite events? what are you doing in that group?  Your greatest lesson? your favorite podcast episode you've done so far funniest edits + bloopers  
      Lagniappe (Books, Links, Other Podcasts, etc)
       
      Tracy’s Women in Auto Care Podcast Carm’s Podcast Episode about their Adoption Story  
      How To Get In Touch
       
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - [email protected] 
      Click to go to the Podcast on Remarkable Results Radio


  • Our Sponsors



×
×
  • Create New...