AndersonAuto

Oil costs 2.58 a quart. 5 quarts is $12.90. Filters average a couple bucks. Lube dude costs $15 an hour. Figure .3 to do the oil change, that's $4.50.  12.90+2+4.50=19.40  

The lube dude's hourly production is good, but he's new so I don't have great tracking on him yet.

Again, I don't really care if I make a dime on oil changes. I'd do them for free if I had to. Making money on oil changes is not the point of the oil change.

10 hours ago, AndersonAuto said:

I'll have to look at my oil cost tomorrow, but I do know that it's only 53 cents a quart more than the blend I was buying. That makes the synthetic oil change cost about $2.50 more than the blend oil change was, and I raised the coupon price by ten bucks. I make more money on the coupon oil change, and it's a smoking deal for the customer.

Straight costs (parts and direct labor only) are $19.40 assuming my lube dude is doing the oil change. GP is then 35% if they're using the coupon with the cheapest price. But GP on the LOF isn't the point. The point is getting the car in to do the inspection and talk about what the car needs besides the oil change.

I'll have to look at my oil cost tomorrow, but I do know that it's only 53 cents a quart more than the blend I was buying. That makes the synthetic oil change cost about $2.50 more than the blend oil change was, and I raised the coupon price by ten bucks. I make more money on the coupon oil change, and it's a smoking deal for the customer.

I hope everyone had a great month. April seemed to be off for a lot of shops, so if yours was one of them I hope it turned around for you.

I had a great month!  My guys turned in an all time record month. They beat the snot out of the previous record by $15K, and had a higher GP doing it. Car count is up, ARO is up, and I spent most of the month at the lake working on my boat while my guys took care of business.

Tomorrow is one of my favorite times. I get to go in and write some serious commission checks. I'll probably flip everyone a Benjamin while I'm at it.

Life is good.

I pay flat rate with no guarantee. Easy for me, easy for the techs. All I have to do is keep the phones ringing and the bays full.

3 hours ago, Dan Reichow said:

How cheap is cheap

$47.50 regular price, but most people show up with the $29.95 mailer coupon. If not the mailer, they at least will want the $34.95 coupon from my web site. I rarely sell the oil change at full price.

We just surveyed April's repair orders, and found we do an oil change on 67.7% of our RO's. That seems about right for the way I market my business. 

I have the cheapest full synthetic oil change around, and market the crap out of it. I do a full synthetic oil change cheaper than Jiffy Lube will do a regular oil change, then I discount it further with a coupon. I do full synthetic so cheap, I don't even offer dino oil any more. I hear all the time that only cheapskates will come to my shop with that sort of marketing, and will bleed me dry. If that's so, how do I have a $513 ARO at 60% GP? 

Our customers (and yours too) see an oil change as a commodity. As far as they know, an oil change is an oil change. It's a lot like gasoline to them. Sure, there are some people who will only put a specific name brand gasoline in their car, but that's not most people. If two gas stations sat side by side, and one had gas priced at 25% more, which one would do a better business? Which gas station would sell more Coke and Potato chips?

Be the service center that sells the commodity for less than the guys down the street, sell more Coke and Potato Chips (and brake jobs) as a result.

49 minutes ago, xrac said:

This is a post that every shop owner should read. Too many of us have picked labor rates based upon no financial calculations. 

Picking a labor rate based on what everyone else is doing makes no sense at all. Obviously you want to know what the competition is doing, and if the math says you have to be way above them or way below, why is it that way? But the bottom line is that your expenses are not their expenses, and you have to make what you have to make to stay in business, and be profitable enough to be around to serve your customers next year.

About 15 years ago I was in dire straights. I was dangerously close to having to lock the doors and going home. I calculated my break even point, and what my labor rate would have to be to survive. Not make money, just to stop losing money. I raised my labor rate $15.75 in one day.  Not one single customer complained. Not one. The only complaint I got was from my advisor, which ended quickly when I gave him the choice between selling the new labor rate, or going home forever.

The bottom line is that no customer is going to complain. Charge what you have to charge to make your business successful, and stop worrying about raising the rate a few bucks to do it.

9 hours ago, Wheelingauto said:

Anderson, sorry to hear about the bad day. There are too many of those. Not to rain on the bad day but this opens up a discussion that needs to be had IMO. From what I have been told, this Drew tech thing is subscription based, does not have full coverage (lines) and does not have full operation (only does ECM's). I think there are 2 problems created by using this resource. First off, it could limit a techs ability to understand the entire workings of the network by plugging in a unit and letting someone else deal with it. If the tech gets to the point of knowing it needs to be reprogrammed and then plugs in the unit and it works (or not in your case) limits the desire/ability to do it all in shop. (I hope that thought makes sense). Kind of like a shop that does brakes but has no idea how ABS functions.

Second, why limit the ability of the shop by using a generic tool like that as opposed to the factory unit. A IDS only costs 1k or so to purchase and a years subscription to Fords tech site is only $850. By doing it all in house it requires tech ability and knowledge and there is less room for error. I would think in a shop your size you would already be equipping it with factory stuff as opposed to the generic.

I would think as shops grow in size and revenues (or specialize if smaller) they would seek out OE solutions to the technological problems we are being faced with. The further behind we fall the more outdated our abilities will become.

The Drew Tech box is not a subscription, but a per use fee. They gave me the box for free, and if I decide I don't like it, then I simply send it back.

The main reason for getting it was that while I can program just about anything with my PassThru Pro, it's a big time consumer. Seems like every time we flash a vehicle, there's some sort of update that needs to be done, consuming lots of tech time doing it. Then there's the matter of us not doing enough flash jobs for any of them to get good at it. While we're a big shop, we still only do 4-5 flash jobs a month. Now spread those 4-5 jobs among 6 techs, and all the different makes and models, and there's no way for a tech to really get good at any of them. So they burn a lot of time updating software before it will allow them to flash the car, then they have to remember how to actually get the flash software from that particular manufacturer, then remember our user name and password to that manufacturers web site. Seems like every manufacturer has different rules for user names and passwords, so none of them are the same and most make you change it regularly. Then start flashing the vehicle. In all, my techs were spending a couple hours jumping through all the hoops to get a simple flash done.

Then there's the economics of it aside from my tech's time. I have a new WiTech that I bought 1 year ago. I have to purchase an annual license just to own the WiTech, then I have to purchase a subscription for the flash software. In all, a couple grand a year, plus the tool which was not cheap. I flash maybe 10 chryslers a year. There's absolutely no ROI in it. The Drew Tech box doesn't do chrysler yet, but when it does, and assuming it does them well, you can bet I won't renew my WiTech license.

Not a fantastic day today. I was supposed to be working on my boat, but we had a problem child. Ford E-350 we put a transmission in, the supplier said we had to install the latest flash on the PCM. We recently started using the Drewtech remote programming service and it's been pretty seemless so far. Not today. The truck has a few aftermarket items installed and Drewtech thinks one of them (gps tracking unit or magnet operated antitheft system) may be interfering with the CAN bus. Anyway, after screwing with it all day long, they bricked the computer. Ford dealer says 7-10 days. Ordered a reman, wasn't even close to the right part. Found another reman that will be here in the morning. May or may not be the right one.

This is my most profitable fleet customer's box van. I need this thing to go down the road and soon.

A good friend of mine uses TV ads as his main driver for new customers. After seeing that more of his customers were women than men, he decided to move his commercials to "female friendly" shows. HGTV and the like. He saw an immediate drop in his results. After some digging, he found that in married couples, the wife decides how much they're going to spend on car repair, but the husband decides where to take it. This was true in his market, no matter which spouse takes the car to the shop.

This is a generalization of course, and isn't true in all cases, but it was enough to make him move his commercials back to the previous shows.

I run almost every part through my matrix. Doesn't matter where it comes from. The exceptions are engines, transmissions, and the like.

I haven't found any good reason to discount dealer parts. I rarely tell customers where a part comes from. Rarely meaning almost never. Like NEVER.  I get things from "my supplier".

I give twice the warranty the dealer gives me, and the dealer doesn't cover labor on any of it. Why on earth would I make less on their part?

I had a great April. Car count was down (382 last year vs 353 this year) but since I increased my ARO by $110 over last April, we came out ahead by $27K. Also my GP % was up almost 4%, so my GP Dollars are up $21K.

Car count is up YTD by 80 RO's. ARO is up. Sales are up. GP is way up. ELR is up. And my guys are absolutely destroying May.

I had a very weak January, down 23K from '16, and 40K off our target. Finally made up for that, and then some. Life is good.

I despise Yelp. I don't have a perfect track record on Google, but it's pretty good. A 4.7 rating out of 58 reviews. Yelp on the other hand I get a 1 star rating for 5 reviews. This happens because good reviews don't get posted. The good reviews are deemed unreliable, even though the user may be a long time Yelper with many reviews, so Yelp hides them from public view.  I know from the experience of a few friends that if you are a paid advertiser the good reviews tend to be "reliable" and therefore get posted, while bad reviews don't. One friend of mine used to advertise on Yelp and actively encouraged customers to leave a review, and when he stopped paying Yelp he had almost all of his good reviews magically disappear, but all the bad reviews stayed.

I know of at least 20 good Yelp reviews I've had. Only 5 bad reviews show on Yelp, and a couple of the reviewers I can't even find in my database. I even had a few good reviews that Yelp was showing which have recently disappeared. Crooked bastards.

59 minutes ago, J.P. GLENN said:

This is very similar to what we keep talking about doing.  We are a much smaller shop as of today, but we are planning to grow quite a bit over the near future.  How many employees do you have to make that system work?

We did this also as part of a big growth phase. It was definitely not without challenges. I currently have 6 techs and 3 advisors. The schedule works on a 3 week rotation, so we have 3 "teams" of 2 techs and 1 advisor. They're not really teams, just guys who are on the same schedule. The biggest challenge I had when going to this model was that I had more hours to cover than work to do. I had to hire more people than I needed just to cover the hours. For the first year I didn't have the 3rd advisor, but I needed the hours to be covered, so I worked 6 days a week until I could justify the 3rd advisor. I also ran with holes in the schedule out in the shop as well. As I added techs, I filled in the holes, but there was a lot of months where I had only one tech in the shop certain days of the week. Of course I made sure the times I had one tech also coincided with having one advisor.

The other big challenge that took a long time to get over was the fact that jobs have to be shifted from one tech to another or one advisor to another. I didn't really come up with a solid policy on this, the guys pretty much figured it out on their own. It's been a few years since I've had a lot of problem with this, but at first it was very difficult. Techs didn't want to jump into a half done job, and advisors would forget about monitoring a job that wasn't theirs. Now they're all just used to it. Techs know to pass off a job before they get started on it if it's going to need to be finished while they're off, and the advisors know to pass off a vehicle to the other advisor who's still going to be there the next day. It's all better now, but it was tough.

I'm open 7-7 six days a week. The main driver in that decision was to make things more convenient to my customers.

Techs work 7:30 - 6:30 and Advisors work bell to bell. We run a rotating schedule so everyone works a 4 day work week, and I'm able to have a full staff every day I'm open. Because of the way the schedule rotates, everyone gets a 5 day weekend every 3 weeks.

Back when I opened my shop I said I'd never be open Saturday because when I was a tech it was a wasted day. Nothing but oil changes. But the way I do Saturdays is different than the way most independent shops do Saturday. Most shops are open half day with half staff, and do almost exclusively oil changes all day. Not profitable for anyone, and techs especially hate it. By being open all day, and having a full staff, Saturday isn't much different than any other day. We're able to get some real work done, so it's worthwhile for the techs and advisors to be there. We have slightly higher car count, and slightly lower average RO, with revenue being just like any other day.

This becomes more true every year. Cars get better, and last longer.

Here's a great illustration. 1959 Bel air vs 2009 Malibu.

When cars were built "right" vs "that new plastic junk".
 

I'm in a group with RLO. John Wafler is our facilitator and I'm very happy with how things have gone for me.

 

For me, refrigerant is a high profit margin item. Most cars don't hold that much of it, and I sell it by the ounce. I can't remember the last time someone complained about the price of refrigerant because in the overall scheme of things, it's an insignificant part of their A/C repair bill. We track how much refrigerant comes out of the car, and how much goes back in, and charge the customer for the difference at $1.96 an ounce. 

I use discount oil change marketing, and it's been the single best thing I've ever done for my business.

I've gone over what I've done and what numbers it has produced ad-nauseum in other threads. All I'll add is that if anyone wants specifics they can contact me. I'm an open book, and I'll share my numbers with anyone who asks.

 I hope that every one of you can have the sort of success that I've had, not that my way is the only way. There are others here who have had similar success using completely different methods, some have done even better. But it's definitely a way that can work, and work quite well if done correctly. Don't let anyone tell you it can't work, or you'll go broke attracting nothing but the wrong customers. That's simply not true.

I do a 5000 mile interval on my full synthetic, and yes, I make more money doing $29.95 coupon synthetic oil changes than I did on $19.95 coupon for a blend.

I spend a boatload on marketing, to include the cheap oil change. ROI on that cheap oil change marketing is 680%, so to me it's just money in the bank.

17 minutes ago, Shopcat said:

It is up to us to police our industry. Most frightening words in the world? "I'm from the government and I am here to help".  We  should have regular training, a defined career path, apprenticeship programs, etc to build technicians. A lot of owners simply wait until they need, say an A tech, then are surprised when they are hard to find.

 

I completely agree. The thing that seems to be most damaging to this plan is the number of people who can't (or most likely don't want to) see the value difference between a qualified tech and a guy who can barely speak the words "I'm a mechanic". 

I agree with Joe, it's getting pretty convoluted these days. Fortunately Kansas has left these things alone, so far.

Lawyers love to make work for lawyers.

We do 4.5% for shop supplies with a $51 cap, and don't have any complaints. I used to try charging for every item, but I found that techs will often forget to write down how many butt connectors or bolts they used. I also can't charge out oxy/acetylene gas etc. The small parts and fluids that were going out the door without being documented ended up being significant, and I found myself constantly having to monitor it. I had better things to do, so I implemented a shop supply charge. Now I have a shop supply sales line on my P&L, and a shop supply COGS line as a sub-account of parts COGS. Now I can simply look to see if my supplies charge is in line with what we're spending.

At my current shop supply rate, I made 50% GP on shop supplies last year. Probably could have done slightly better if all those items were billed individually, but at what expense to productivity while my guys are tracking those items, and me tracking them tracking those items? I'll take the 50% GP and be happy about it.