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A/C Service and Repair, and LOF's How to you price them?


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Hi everyone,

 

Just to give a little background, I am now part owner of the family business with my Dad who started the business. My dad while a great businessman, give way to much away and has his own old school ways of doing things and his own way of pricing, which means giving way to much away. After having a sit down talk with him, and letting me make some changes to the fundamentals of our pricing and billing structure after reading many articles on this great site. I Setup a pricing matrix for our parts and tires, so our margin has gone up, along with making sure we are getting enough labor and not giving away all our diagnostic time and such. In the first three months I have been making these changes and now are gross profit is up 45% over the last three month compared to the last few previous years and doing better with each and every change I have made. Now I am moving on to the smaller things that we are doing wrong or as they come up.

 

The weather is getting warm, and It's becoming A/C season. The way he currently handles A/C is we do a free inspection, which includes checking all the standard stuff like, compressor operating, belts, visual check for leaks, system pressure etc. Then he charges a flat rate of $100 for Servicing the system including freon. And then many times i get stuck diagnosing a electrical problem with the fans or compressor operation after we service the system as he will just throw it in with the service since the system was low and was not cycling. How does everyone else price there repairs and handle the process of A/C service, I know they way he is doing it now is totally wrong and shorting ourselves far to often, and then also not charging by the ounce/pound for freon also needs to be done.

 

My second thing is oil changes, currently he has two set prices for oil changes, $30 flat for a filter, regular oil, labor, and a multi point inspection. Then we also have a synthetic oil option for $50 dollars including all of the above. I know this is a horrible way of doing it but he has been doing it like with for 10+ years and I know we lose money on oil changes that take six or seven quarts and have an expensive oil filter. We also only offer one brand of oil, and we get a lot of request for like a mid level Castrol GTX oil change, or a more premium Mobil One. I know there is many ways to fix this and price it but I wanted to get opinions of what you charge and how you bill it out, along with what options have worked for you.

 

Thanks

-Donny

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On a/c we charge 1 hour labor plus freon. We fully charge the system and add dye. If the system operates we do a real quick check for leaks and send them down the road with an appointment to recheck for leaks at a later date. Approx. 2 weeks later.

 

If the system is full and has an electrical problem, we use that hour we already sold them and diagnose it. Then call them and sell it.

 

 

On oil changes, I just try not to lose money. If you are not a quick lube center, you are not going to pay the bills changing oil.

 

Oil changes are a convienence item I offer my customers, not a profit center.

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There are several things in a shop that if you CHOOSE you can menu price. A/C Recharge, Tire Replacement and Balance, Alignments, Oil Changes are some. For A/C recharges I charge a flat 129.97 and every spring I send out a 99.97 special. It also includes a VISUAL inspection of the system. If there is anything extra such as fan problems, component problems etc then that would go on our regular diagnostic and repair rates. As for Oil Changes, they are a difficult point of contention. Most general repair shops practically give away oil changes. Depending what your ARO and car count goals are, cheap oil changes may not work for you. A person coming in for a cheap oil change is most likely not a candidate to spend money on other repairs. The main purpose for a LOF from our point of view is the inspection process. It gives us the reason to thoroughly inspect a vehicle for any other possible problem areas and to present out findings. This is what fuels the shop and generates high ARO. The other model is get as many cars in the door and let that average out with a low ARO. I personally charge what I feel is a fair amount of an oil change. With what I pay my technicians for the inspection process and the labor to perform an oil change I always lose money. It is a loss leader for me however my goal is to make sure my inspection is AMAZING so I can sell it.

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If oil changes are considered a loss leader or to be done at no or very little profit, why are there so many quick lube places in business if they are loosing$$

 

I charge what the job is worth. A 4 cylinder basic car such as a Camry with synthetic blend is $40.00 + tax, takes about .4 labor.

A BMW 3 series is $110 + tax, takes about .6 labor. Always performing a full check over and reset service light.

We very seldom only do a oil change, usual it is done with a service that helps ARO.

We sell tons of service and "discovered" work by performing the check over.

I find any new techs I hire need training as to how to quickly look a car over to sell legit work.

 

A/C evac & recharge is $99.00 + parts, R134 quantity used times $20.00 per pound, dye, oil.

Dave

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If oil changes are considered a loss leader or to be done at no or very little profit, why are there so many quick lube places in business if they are loosing$$

 

It's a completely different business model.

Less time per RO, lower trained/paid techs, lower overhead (way less tools etc), and upsell upsell upsell ("can we change your air filter?" doesn't matter if it's 3 months old).

Anything that's quick for a buck in that line of work.

 

Oil changes are a loss leader at many general repair shops, some shops do well with it (good inspections are key), others not so much.

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There is something to be said about having a fair price for an oil change. Your car count might take a hit however the quality of customer you get will certainly be better. That customer that is willing to spend a fair price on an oil change is probably going to be more receptive to any recommendations from your inspection process. I like to be competitive with my oil changes, or within the ball park as some say. Definitely higher than most but not pricing myself out to the point where people look the other way.

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I have to agree with others here, I try to stay competitive with other local shops on oil changes, but they are definitely nothing I will retire off of. They are however, a great opportunity to look the car over. Using digital multi-point inspections and top quality oils and filters as selling points, I'm able to charge on the higher end and also not be in such a rush. My customers have come to expect their digital inspection report with every oil change and they know we set spare tire pressure (even the ones buried in their trunk). All that being said, I still barely break even on just an oil change.

 

As for A/C service, that is something I need to get on top of ASAP. We're in the 80s already in Texas, so cars will be showing up soon with A/C complaints. Look forward to hearing other's feedback

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I burn waste oil for heat so the $32.99 lof isn't a total loser. It keeps us in contact with the customers. We do courtesy inspections but overall we don't push anything on oil changes. If we notice a problem we schedule them back in. Standard 4.5qt lof is $32.99, synthetic is $49.99. I make more on their synthetic oil change. We grease the hinges, set tire pressure, fix the loose heat shields, top off the fluids.

Tires get rotated as needed, no charge if they are our tires. If we notice a nail we'll fix the tire. I try to give people much more than they expect.

 

European and diesel oil changes are filters + oil + .3 labor.

 

Oil changes give the tech a break too, we do a lot of challenging work so its nice to get a car in and out easily once in a while.

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On R134 do you charge for a pound or break into fractions if you use less. In other words if you use freon is it always 1-2-3 pounds or is it .6 pounds, etc.

I charge to the 1/4 #. Allows for some loss.

I should have said for the BMW oil change we use the correct BMW spec. 5/40 euro LL01 oil.

If you look up labor time in your guide most euro cars are at .5 to .6 for a LOF, extra if you need to connect a computer to reset the service light.

Dave

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  • 1 month later...

What is everyone's margins on oil changes? I use only Oil that meets Volkswagen/Audi specifications so i pay around $1,100 for a 55 gallon drum of Pentosin, when i could be paying $500.00 for a synthetic oil that doesn't meet vw/audi specifications. Alot of our customers are aware of Volkswagen's oil requirements and are always asking if our oil meets their specification so after you throw in a good quality filter our oil changes run from $75- to over $100.00 with a high 20's% margin. Then a few of them will beat you up on the price. We are only charging $12.00 labor on oil changes, Im not loosing money on oil changes but id like to figure a way to get my margins a little higher.

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I charge $30 on all oil changes and pay my guys .3 hrs for every oil change. Filter and Oil are added on top of my labor. I don't make a ton off oil changes at all. You are a VAG specialist and for your own integrity keep using the proper oil. That is what you will make your mark on, being a honest specialist.

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What is everyone's margins on oil changes? I use only Oil that meets Volkswagen/Audi specifications so i pay around $1,100 for a 55 gallon drum of Pentosin, when i could be paying $500.00 for a synthetic oil that doesn't meet vw/audi specifications. Alot of our customers are aware of Volkswagen's oil requirements and are always asking if our oil meets their specification so after you throw in a good quality filter our oil changes run from $75- to over $100.00 with a high 20's% margin. Then a few of them will beat you up on the price. We are only charging $12.00 labor on oil changes, Im not loosing money on oil changes but id like to figure a way to get my margins a little higher.

BMW 3 series = 55% GP. VW 1.8 = 51% GP. Profit pays the bills! Pentosin does cost about $1.00 more per qt, we use Euro spec Kendall in 55 gal drum.

Dave

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Which VW/Audi spec? VW 502 00, 504 00, 507 00? There isn't just one ;)

 

I have also thought about the oil change situation. I, like others, do not make money on oil changes NOR do I lose money. I come out pretty much even and I am using Valvoline oil which most know is very expensive. The biggest point for me is the inspection process but its crazy to perform a service where you don't make any money. Oil change prices haven't changed in years! unbelievable....

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I charge 49.95 for oil changes on gas 99.95 on most diesel and anything that requires special oils such as the vw's I run it under my matrix with a minimum 55% gpm. It's worth noting that some of those vw oils aren't much more than a standard oil - but I'm not one to take any chances!

 

Sent from my SM-N910V using Tapatalk

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In today's age I rely on the fact that most of my customers find me through some sort of marketing avenue that comes with qualifications (review sites, website, SEO, word of mouth). They already know the work we perform and if the reason why they won't choose us is because we are a bit higher with our Oil Service prices then I am most likely better off without them as a customer. My tune would probably be completely different if I was on a main road/street and banked on a much higher car count.

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I was thinking about oil changes pretty hard the other day, we did 46 oil changes 2 weeks ago (before memorial day travel). There was no time left to do any real work. I worked nights and weekends getting the profit jobs done. Almost all the lof's were good regular customers, so what would the cost be to turn them all away? Its a catch 22. I don't lose on oil changes but I don't make as much as other work.

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I advertise A/C check and recharge for $89.95 including Freon. It makes it really easy to explain that if it needs recharging to make it cool, that it's only $89.95. If it's already charged and needs diag, then $89.95 covers the first hour of diag. If it is say...2008 car, 1/2 lb. low, we charge it and let it go. They're happy...we're happy. If it's 2001 car and out of freon, we tell them we need to add dye at $12.95, so it's $102.90. We shoot the freon w/ dye, it cools, and they come back when the freon gets low and we find the leak. We don't charge for the second recharge, but we charge for whatever repairs are needed.

 

We started this program last year, and it is customer-friendly as well as shop friendly. Advertising a $29.95 or $39.95 A/C check doesn't make sense or make any friends. That's what we previously did. We really like our new program.

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  • 2 weeks later...

I charge $30 on all oil changes and pay my guys .3 hrs for every oil change. Filter and Oil are added on top of my labor. I don't make a ton off oil changes at all. You are a VAG specialist and for your own integrity keep using the proper oil. That is what you will make your mark on, being a honest specialist.

Yes, I couldn't agree more. We worked a deal with our worldpac rep and got our gas engine oil changes to around 40% or more depending on oil filter.

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Which VW/Audi spec? VW 502 00, 504 00, 507 00? There isn't just one ;)

 

I have also thought about the oil change situation. I, like others, do not make money on oil changes NOR do I lose money. I come out pretty much even and I am using Valvoline oil which most know is very expensive. The biggest point for me is the inspection process but its crazy to perform a service where you don't make any money. Oil change prices haven't changed in years! unbelievable.

We use a few different oil specs depending on the engine installed, but mostly 507.00/504.00, and 502.00/505.00. We are not the cheapest oil change in town but the people that really care about their VAG car don't seem to mind the $60-$80 oil changes.

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  • 2 weeks later...

I did a study of every professional business in a 5 mile radius around my shop that performs oil changes. I called each of them on the phone, and told them I owned a Chevy Cavalier, and wanted to know how much an oil change was. (Of course, I didnt set any appointments...) I learned how much everyone charged, what it included, and what, if anything, made me feel like they deserved my business. (Why choose THEM?)

 

Then I priced my oil change to reflect an amount that was just below the most expensive, and just nominally above the average cost, to include a filter, up to 5 quarts of oil, and of course, a chassis/suspension lube. What really helped us to stand out was the risk I took when I decided to stop charging for tire rotations, and start doing them FREE with every oil change. My LOF service went from $27.99 to $38.99, but with the addtional, free tire rotation and brake system check on top of the comprehensive vehicle inspection, it was easy to show the additional value.

 

The result? We lost a handful of people wanting a $19 service, but the additional dollars from the increase in service cost, in addtiion to the additional brake jobs we now sell MORE than makes up for the few customers who've gone to the quickie lube joints run by the 18 year old managers trying to ram $60 air filters down their throats.

 

In the end...don't worry about the price...focus on how you'll train your service advisors to reveal the increased VALUE in the service proposition. It works.

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      Got your attention? Good. The truth is, there is no such thing as the perfect technician pay plan. There are countless ways to create any pay plan. I’ve heard all the claims and opinions, and to be honest, it’s getting a little frustrating. Claims that an hourly paid pay plan cannot motivate. That flat rate is the only way to truly get the most production from your technicians. And then there’s the hybrid performance-based pay plan that many claim is the best.
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