Transmission Repair

Depending on how many hours a tech is flagging, $40/hr. can be tough with the rampant inflation.  My question would be, "why didn't the shop offer to at least match the dealership?"  It may well be there's more to the story than just pay.  How about working conditions?

7 hours ago, Theta said:

Interesting insights on advertising!

Does anyone have experience with Kukui and they effectiveness?

 

 

I have no experience with Kukui, but I know of them.  Personally, I would not hire anybody who doesn't use call tracking so you can SEE the effectiveness of your PPC.  Paid call tracking is much better than Google's free call tracking.  Not enough data with Google.

Check this spreadsheet out:  

On 4/20/2022 at 4:40 PM, bantar said:

If you become a PPC expert, then you are ahead of the game!   I fear that the game has evolved and sprouted some sharp knives that one must avoid.  Google is always playing cat-and-mouse with those trying to game the system.  So, once you land on a strategy, it gets reworked by Google.  

You and I, both have very healthy advertising budgets.    In this response, I'm going to champion a good advertising budget and push back on the need to DIY.    I could likely DIY this, but I just don't find it enjoyable.    I used to DIY my pool, but I was terrible at it because it wasn't enjoyable and I was lazy.  My paid experts seem to be lazy too (but that's an angry story for another day!).

For the rest of us, whom are either too lazy or busy to do this (I'm both), there can be value in hiring a competent PPC advertising expert to help you.  This is important, because bad PPC is very costly.   Good PPC is less costly.   Knowing how to tune the the results to get optimal costs takes skill and time, as some of the tuning comes from trial and error, feedback and trial and error some more.    Things that impact your costs are your Google Website score, Google Ratings, the quality of your ads, the quality of your landing pages and how well things that are searched are matched.   Ultimately Google ADs are a computerized bidding war.  My costs for a top advertising position for a given search term are lower with good fundamentals. 

For reference, I'm paying $350/month for managed Google PPC advertising.    Last month, I spent $700 on ads, which resulted in 7,716 impressions (# times one of my ads was presented) with 619 clicks @$1.13/click ($700/619) and 260 calls-to-action $2.69/calls-to-action ($700/260).  (I think the 2nd costing method (actions) is a better way to score success).   Do this wrong and you can easily pay 10X for the clicks and thus get less clicks overall.    I'm not tracking the actual conversions and true cost of conversions (because I don't want to invest that next bit of effort to do so and don't think I need it.  Yes, I'm violating the marketing rule that says you track every conversion).  I get monthly status reports with tons of data that I could review.  Instead, I have my ad manager interpret the results for me and send me a monthly summary in addition to the raw data.  She tells me how we are doing compared to previous months and where we are making changes, etc.   Reading the raw data can be overwhelming and interpreting it correctly more so.   I may spend 15 minutes on the detailed data reports.

With Google, we can specify a targeted ad budget and they reduce the number of impressions shown to stay within or close to your budget.   The real challenge is finding someone who is actually competent with PPC.  There are many who say that they are the best, but are they???   How can you tell?

Secondly, I'm not investing in SEO for my website.   It's hugely expensive to fight your way to the top.  I'm using advertising instead.   Now, there are some SEO principals that you must mind and it wouldn't hurt to have your website cleaned up to at least a C+ grade.  I follow an SEO technical forum, but do not have any desire to be an expert on this topic.  I try to pick up the latest buzz only.    

If someone had some good data, it might be interesting to see if using a hyper-SEO optimized website service such as Kukui @ $1000/month (or more) is more valuable than advertising?   I know nothing about this topic or vendor.

 

P.S.  Not that long ago, I was only paying $300/month for this SAME service.   They had the audacity to raise my rates!   😡   Later, I followed suit.  😇

Hiring a PPC company is how 95% of the shop owners handle their PPC marketing.  You're not alone, there. I devoted a huge amount of time learning through reading, YouTube, and a lot of trial & error.  The reason I  spent so much on PPC was I was always #1 at the top Google whenever anybody searched anything related to transmission repair.  I thought of it sort of like a "contest" to always be listed at the top simply because that's usually the default choice for most people searching.

With that being said, most shop owners don't have the energy or time to learn PPC marketing like I did.  I usually stayed in my office and once I got home, I would try to learn more or come up with more keywords.  I started out with well over a 1,000 key words and over time, I whittled down to only 30 or so.  It was a lot of fun while it lasted.

However, when the new owner took over the business, one of the first thing he cut was PPC expenditures.  Transmissions aren't like regular automotive repair shops where you develop relationships and get repeat business.  If we get repeat business, it's more that likely a warranty job or somebody with very bad luck. 😞  I learned transmission are normally a 1-shot deal and a prominent listing at the top of Google is much more crucial than in general automotive repair.

The only way I could actually measure effectiveness of PPC was to use call tracking  That way, I knew what jobs came in from PPC and which ones didn't.  I used 

edit[1]

Get A Life

We sometimes get so buried in our day-to-day stuff, we often forget about promoting our business to keep us busy.  Let's not confuse busyness with profitability.  We juggle things at home and in our businesses.

In the early days, I would commit to a full-page Yellow Page ad.  However, I would put an unlisted number in the ad to where if the full page ad didn't work out, I could simply cancel the number and not have to be responsible for the ad.  The full page ad was $1,000/mo.  OUCH!
I never found it to not be profitable until YP was replaced by the internet.  I moved from Yellow Page thinking to internet thinking and it was quite the transition.  I learned the internet was so much more powerful.  With a few mouse clicks, I could turn off or turn on my paid ad.  Wow!
I hired internet ad agencies but wasn't happy with the results.  I eventually decided to do all my internet advertising myself via a crash course in learning by trial and error.  I not only watched a lot of YouTube videos on the subject, but I also read.  A lot. More than a lot because I love to read.  That's how I learned transmissions and now, it's how I would learn paid advertising online.  It was an awesome change for me.

My mouse and keyboard suddenly gave me an infinite amount of power.  I became my own internet promoting service. I felt better about every dollar I was spending because I was in control.   It cost me nothing except for the ads themselves.  There was no need to pay someone else $$$$ to do for me what I learned to do for myself.  It was great.
I slowly learned the MORE I paid for Pay-Per-Click (PPC) advertising, the more business I would get.  I eventually learned the ratio was 12-to-1.  For every dollar I spend on PPC ads, I would get $12 worth of new business.  Annual sales went from $700K to $1,2M seemingly overnight.  And I was only spending about $50K/yr. for my advertising, all in.  Spend $50K to get half a million more in business?  I'm in.

I suddenly (2 years) went from a builder to a PPC expert.  Anything to get me off the bench. 🙂 lol!  I was simply getting older and was happy about the change.  My advise is for you to do the change.  I simply learned that rebuilding didn't pay near  as well as well as running my internet PPC ads.  It was simple 2nd grade math.
My best advice is to follow what I did.  It will pay you ENORMOUSLY.

I wrote this over a decade ago and it answered 4 important concepts about virtually every problem that could happen in a shop or to a shop.  It's titled "CLARITY".

Periodically, every shop needs maintenance in multiple forms.  Ours included...

• Air Compressor
• Spray Cabinet Parts Washer
• Recirculating Solvent Sinks
• Water/Oil Traps
• Evaporative Shop Coolers (Swamp Coolers)
• Office HVAC Filter Changes
• Parking Lot Stripes

I got really tired of training new employees on how to perform these maintenance duties.  Training usually involved employees watching me doing all the maintenance duties.  I had been using YouTube to sell transmission work since YouTube came out in 2005 and it finally dawned on me.  Why couldn't I use YouTube for maintenance duties?  So over the course of a year, I made about a dozen short videos on how to perform the various maintenance duties require around the shop.  Suddenly, teaching new employees how to do maintenance became so easy.  I'd assign them a chore to do and pull up the video for that task.  Since I've retired, I deleted most of those videos but I did manage to find one on servicing our air compressor.  I hope this gives other shop owners ideas to do the same.  Here's the video...

1:44  Servicing The Shop Air Compressor  1:44

Cheers, Larry

[email protected] 

Here's multiple short videos on hiring techs from ActAutoStaffing.com

Cheers, Larry

[email protected] 

5 hours ago, Joe Marconi said:

60% overall gross profit (parts and labor) is a realistic and needed number to attain. For a general repair that usually means a labor margin of 70% and a part margin of 50%.  Even in this age with the Rock Autos, Amazon, and eBay, a shop must achieve its needed part profit. 

While there are differences around the country, it's becoming more uniform in terms of overhead expenses. 

Sit down, and crunch your numbers. Review all your expenses.  Understand what it takes to be in business. Your expenses should be around 40% of sales revenue. BUT, here is the difference: Once you know the Cost of Doing Business, you then add an ROI, a return on your investment. That's right, profit. 

Typically, general repair shops target a goal of 20% net profit.  There are other factors involved, but these are the core numbers of a general repair shop: 60% overall GP, keeping expenses at 40%, and a goal of 20% net profit. 

 

Well put Joe.  Some accounting software places the labor under expenses, including office payroll.  I need to make it clear the office payroll and technicians' payroll are in two different categories.  Technician's payroll is a Cost Of Goods Sold (COGS) account and any office payroll is under an expense account.

Another is the owner's pay.  If he/she works predominantly in the shop repairing vehicles, their payroll is a COGS account.  If he/she works mostly in the office, then their payroll is an expense account.  In either scenario, the shop owner's pay should be commensurate with what a normal employee would be paid for the same job.  The owner's pay IS NOT the net shop profit. 

This was a hard concept for me to grasp early on.  In the beginning, I thought my pay was what (if any) money was left over in the checkbook.  Later, I began to think the net profit was my pay.  Much later in my career did I finally learn the concept of my pay should be commensurate with what a normal employee would be paid for the same job.  Throughout my career I was always learning more and more about accounting and that was a good thing.

Cheers, Larry

[email protected] 

This article is 7 months old but nonetheless important.  For those of you who use QuickBooks, now Mailchimp is part of QB.  You can use the Mailchimp software and send Emails to groups of customers.  Here's the article from the September 2021 issue of Fortune magazine.

https://fortune.com/2021/09/13/intuit-to-acquire-mailchimp-in-12-billion-deal/

Cheers, Larry

[email protected] 

1 hour ago, IDAS Cleveland said:

We are based in SE Tennessee and are charging $100/hr for asian and domestic & $125/hr for European and diesels.  We shoot for 35-40% markup on parts.  We have lately had quite a few customers asking for work on 1975 and older vehicles and I have not been adjusting my prices much for this.  But like some other shop owners I think I will increase the price for those jobs as it always includes many suprises and 10x time comittment.  Thanks as always for all the great info!

Like Joe said, that's not even relevant.   We were (I'm retired since 60, 7 years ago) a transmission specialty repair shop in the greater Salt Lake Market area of Utah.  2015 was the last year I was in business.  We based both parts markup and labor profit to obtain a 60% gross profit margin and a 20% net profit before taxes.   We charged by the job, not by the hour, however, when calculating the job price for a routine repair we used $125/hr. and that was 7 years ago! 

Because of inflation, everybody expects things to cost more.  Right now is an IDEAL TIME to recalculate your prices.  If you've read any of my previous posts, you'll know that on the rare occasion somebody asks how much we charge per hour, I always say, "We charge by the job, not by the hour."  That worked 100% of the time.

Take your COST of parts and labor for any give period, the longer the period the more accurate your calculations will be.  Divide that figure by .4 (inverse of 60% gross profit) to arrive at what you should be charging overall.  You can break it down from there.  Continue to monitor and adjust your prices until you reach a 60% gross profit.

Let's say your parts and labor costs you $100K in a given period. (month)  Divide that by .4 (40% costs) and that is what you should be SELLING parts and labor for.  EXAMPLE:  $100,000 costs divided by .40 (40%) = $250,000 revenue or $150,000 (60%) gross profit margin.  That sounds like an awful lot, but isn't really.  All your expenses including rent, taxes, insurance, tools, equipment, and etc. all come out of that $150K, so it's really not that much.

Others may have an alternative method to calculate your prices, but that's the one I use in the transmission business.  Many business accounting software packages like QuickBooks and others can help you monitor individual accounts for profitability.  Separate accounts may be higher or lower than the 60% gross profit number but just remember what you really need to track is the OVERALL profitably of your shop target of 60% gross profit.

Cheers, Larry

[email protected] 

Covering The Cost Of Marketing

After quite a few years in business I learned the inverse of the rule that a business's price should cover all costs.  Early on, whenever I considered something new, or something that would make my job easier, or improve business, I would often think "I can't afford that."  
After a number of years in business, I slowly learned I could afford any of those things as long as I raised my pricing structure to cover those new costs to doing business.  I soon learned very few people were giving me price objections when closing sales at a newer, higher price.  I felt good about my prices because I knew they were rightfully justified and not some willy-nilly price increase.

This was especially true when considering any new technology for your shop.  What once was considered as a luxury item is now very essential.  Shop Management Systems, Digital Inspection, and Text Messaging soon became our industry's norm.  Soon, I proved to myself that SEM (paid Search Engine Marketing) coupled with call tracking was just as essential.  SEM is sometimes referred to as Pay-Per-Click (PPP).  Here's a little history...

Our annual sales at our transmission shop had plateaued at $700K before SEM and call tracking.  Cautiously, we dipped our toe into SEM at first.  Later, we tried call tracking with only 10 phone numbers.  Combined, we were spending about $1K/mo. and we saw an $8K/mo. increase in business.  To make a long story short, I came to learn the more I spent, the more our sales grew.

Eventually, we were spending a combined $5K/mo. on SEM and call tracking with 100 phone numbers.  I have to explain why so many phone numbers.  Ninety-two of those numbers were in a "phone pool" with a 10-day cookie attached.  Whenever somebody did a search for anything transmission-related, they would have one of those numbers attached and display on our website.  Each different search would get a different number out of the phone pool shown on our website.  It would take too long to explain the technology but let it suffice to say that the call tracking company handled it all with a couple of lines of JavaScript added to our home webpage. After 10 days, the cooking would expire and go back into the Phone Pool to be used for another search.  The rest was all done behind the scenes on their servers.

It seemed to me, the more I spent, the more sales went up.  I leveled out at $5K/mo. only because of the limited size of our Salt Lake City area market.  We appeared on every search and the very top listing on most searches, if we weren't at #2.  I learned there were only about 1,300 transmission-related searches per week.  I couldn't pay any more simply because there weren't any more clicks to be had.  In the course of a year, our sales went up from $700K/yr. to $1.2M/yr. which is a $500K increase for less than a $60K/yr. investment.  
During this year of learning and growing, I slowly raised our prices to cover the new increased cost of doing business.  In my mind, I wasn't paying for it out of my pocket, my customers were paying for it.  It worked out to cost 12% of the $500K/yr. increase in business or 5% of the $1.2M/yr. in total sales.  I ended up raising our overall parts & labor prices about 8%.  Nobody even flinched, let alone complained.

I think this sort of mindset when considering any new technology should be the norm.  I don't know of a shop that doesn't try to cover its' cost of doing business.  Just consider raising your prices to cover any new tool, equipment, or technology.

In my next post, I'll talk more about SEM and call tracking.
 

On 4/16/2022 at 1:55 PM, Joe Marconi said:

Great topic discussion!  For me, this hits home, since I recently sold my company.  I knew it was time to pack in when I found myself getting too frustrated over everything, and I didn't have the desire or the passion anymore to work through the issues. In my younger years, I took on any challenged and worked through them. That changed and I knew it was time. 

But after 41 years in business, and 47 years in the auto business, it was a good run. Fortunately, I did a lot of the right things after a decade or so of struggling. So all is.

My advice to ANYONE in business:  build your personal wealth while in business, and it's never too young to plan for your exit. Life may throw you a curveball. 

Again: Great Discussion! 

 

My biggest piece of advice is to own your own shop and real estate, along with your home.  That will come back to you in spades.  That's the situation we were/are in.

Like I've said before, we have no monthly payments to speak of.  Property tax, insurance, groceries, utilities and a little gas is all we have monthly.  We paid off and cancelled our credit cards because we don't need them.  My wife calculated that if we made ZERO on our investments, we could still afford our lifestyle till our mid 80s.  We're in some investments that will never lose the principle.  That's good enough for me.

3 hours ago, Joe Marconi said:

When I had my shop, we did track lost leads, but we had to define what a lead was. For me, it had to be a customer asking a question about an issue or auto-related topic and the ability of the person on the phone to convert that into an appointment.  

While we did record calls, we left it up to the service advisors answering the phones to log a lost lead. (Each advisor had a daily log sheet). This wasn't the most accurate, since, without verification, we were not always sure what took place. 

However, I relied on the right people and the right culture to get as much information as possible. 

Now, not everyone calling is a potential customer either. A call asking about bodywork, or installing his own brake parts is not a lost lead, if not converted to an appointment. 

Open and honest discussions with the personnel are crucial in an effective lost leads process. 

When I worked for Aamco, they had a similar lead sheet.  However, one of the owner's complaints were how the store manager was judge and jury of what constituted a lost lead.  The manager would often classify lost leads as a telemarketing call.  Very few, if any, lost leads.  I think every shop should use call tracking.  I could enumerate all the benefits and features, but that would take too long to do it justice.  Check out the call tracking company I used.  They'll give you a 30-day free trial with 10 phone numbers.

https://www.convirza.com/

Some of the things they can do are:

• Record and score caller and respondent.
• Tell you the lead source.
• Tell you both the raw search term and keyword source of the call.
• How many calls.
• Custom-tailor it to your needs.

I had the scoring where the AI engine had to hear the word "appointment" at least 3 times on our end to have a decent score.  At one time, I had over 100 phone numbers in a "phone pool" because we had so many calls.  300 to over 500 phone calls a month were not unusual.  We kept a spreadsheet on it only for a couple of years until I had proven to myself our system was off the charts.  We were using paid ads on Google, Bing, & Yahoo to the tune of $50K/yr. (4.2% of gross revenue.)

You can check it out here and ask any question here, or Email me at [email protected] 

Phone Calls vs. Sales 2011 & 2012

We've never had anybody who answers the phone not have the proper telephone procedures and training.  The sole purpose of the phone is to set an appointment.  It's not to be used for pricing or diagnosing.  No, we didn't track lost sales per se.  The only way we tracked phone performance effectiveness was we used call tracking software that would score callers on the likelihood of being open to setting an appointment by the words used by the caller.  It would also score how we did on our end as well.  Those score reports were as close as we got to tracking lost sales (appointments).

Due to the nature of our business (transmissions) when customers said "no" to a repair or rebuild in our shop, they would find another way to fix their problem.  Usually some other shop, sometimes a used unit.  "Saving" a lost job is virtually not possible.  A few would abandon their vehicles. (dead jobs in the back parking lot)

On 8/23/2021 at 11:37 AM, Theta said:

Would you mind touching on what your rent to revenue percentage was while you ran the business?

I agree that location is great advertising, just how much do you spend to make sense?

The buyer that folded, do you know the circumstances? 

Thanks for your insight.

I'm sorry... I just caught these questions 10 months later. 😞

Rent was 8.9% of my gross sales.

Advertising was predominantly online PPC with Google and Microsoft advertising @ 4.2% of sales.

The buyer was terrible at business.  I sold him the shop with the previously doing $1.2M/yr. for the 3 previous years prior to the sale.  Starting almost immediately after purchase, sales began to fall.  The 5th year of his ownership, sales were down to $400K/yr. making his rent 33% of sales.  It wasn't sustainable.

I hope these answers help.

J. Larry Bloodworth

15 minutes ago, xrac said:

Here's my answers:

1. Definitely

2. Most likely

3. I am working on it

 

 

I did mental gymnastics for 7 months before I finally pulled the trigger to sell.  The biggest part for me was the old adage, "Live rich, retire poor."  Knowing I was going to retire on a fixed income was the scariest part for me.  Luckily my wife, who is an accountant by trade, kept impeccable books.  When you show your books (cash flow) to a prospective buyer, don't forget the "add backs".  Those are expenses that would not be there if you weren't there.  Those numbers flow directly down to the bottom line of cash flow.  For example...

• Your income (including "hidden" but verifiable income)
• Any vehicle expenses
• Insurances
• and any other things you can think of.

My add backs added slightly over $200K/yr. to the cash flow that my bottom line that I didn't previously show.  A great thing to remember when selling your business.

Another thing, to get an idea of what businesses like yours is going for, go to https://www.bizbuysell.com/ and take a look.  Prices are all over the map because those are asking prices.  In my case, the average Aamco franchise asking price was about $100K.  I felt very lucky getting $330K for my business.

Stay well, stay safe.  Larry 🙂

This is a 2-part article out of GEARS Magazine, a transmission trade publication from June 2015.  It's written by a retired multi-transmission shop owner by the name of Thom Tschetter.  He still writes for the magazine.  He used to own 10 transmission shops in the greater Seattle area before he retired.  I think it's sound advice.  The title for the article is When Enough Is Enough.  The article revolves around 3 crucial questions regarding retirement...

1. Have I had enough?
2. Do I have enough?
3. Will I have enough to do?

Here are links to the article:

When Enough Is Enough; part 1

When Enough Is Enough; part 2

1 hour ago, Southards said:

Thank you!! Watched the whole thing.  Very informative. 

Thank you.  After 30 years of service, my dad retired as vice-president of the 3rd largest steel company in the U.S. back in the 1980s.   He was wholly dependent of his company pension and S.S. for retirement.  The pension fund ran out of money in the 1990s, went bankrupt, and a pension fund insurance policy took over.  The sad part was when he got a letter from the insurance company stating they were now going to fund his monthly pension payment.  Sounded good at first, till he received another letter telling him his pension payments were going to get cut by 50%.  OUCH!

That took place when the whole country was in the process of dumping pension plans because they simply aren't sustainable.  It's a pyramid/Ponzi scheme that eventually fails.  Nowadays, we have to make our own retirement.  I'm retired, and the best advice I can give any shop owner is they need to buy the shop real estate.  Shop owners won't make enough on the sale of their business to fully retire, but they will with the sale of the shop real estate.  That's what I did.

On 3/21/2022 at 12:15 PM, Joe Marconi said:

Thugs?  Too strong? My religion forbids me from saying a few other choice words. I think you make very good points.  For many shops across the country, they are doing just fine, but I have to think that the increases in prices and gas has to be affecting the average consumer. We do need change, I just hope it comes soon enough. 

As Larry Kudlow says, "The cavalry is coming." talking about the November elections.  I'm an open minded voter who votes for the best person for the job.  However, somehow, I end up voting Republican 90% of the time.  Here's the GOOD NEWS... There are currently 31 House Democrats who are not going to run for office come the mid-term elections in November.  Most are retiring, but not all.  I think that will be a lot better for our country.  Give a 30-second listen to this: Biden’s sinking popularity points to GOP sweep in fall

I find it odd how we can elect a new president (Trump's full of it, the vote wasn't "stolen") to office and everything go to hell in a handbasket so quickly and affect our industry so much.  I still stay in close contact with a couple of local transmission shops and they both tell me business is down.  The two shops and myself are in the Salt Lake City market area.

33 minutes ago, Joe Marconi said:

Let me add another thought to this conversation.  Every expense, in some way, must be passed on to the customer.  As business owners, we need to factor in all costs of doing business; every can of rust penetrate, every shop rag we use, every wire tie, every nut, bolt, washer, etc. This is how a business operates.

Some states allow a Shop Supplies fee to offset the miscellaneous fees that aren't normally billed on the customer's invoice. Be careful with Shop Supplies and hazmat charges, in some states you can recoup what you spend, but you cannot make a profit on it. 

The bottom line here is truly the bottom line.  Shop owners need to sit down and look at all costs. And then adjust their part and labor margins to ensure that a reasonable net profit is attained. 

Profit is not a dirty word. Profit ensures that shops are providing the very best service and repairs by reinvesting in the best tools and equipment, afford ongoing training, and remain in business to continue to serve their community. Also, profit provides a decent wage for their employees and themselves.

Sorry to go on about this, but it came to mind, and thought it fit into this conversation.  

 

 

Joe, I fully agree with you.  However, how a shop charges for those items is up to the discretion of the owner or manager.  I, personally, never have line items that aren't either parts and labor because I don't like explaining "extra charges".  I chose to charge for those things by factoring it into the labor we charge.  As I've posted before, we charge by the job, not by the hour.  90%+ of our jobs are repetitive canned jobs.  However, when calculating the labor on a new type of transmission or one we don't have canned yet, we use $125/hr. to calculate the price of the job.  We went to $125/hr. "behind the scenes", so to speak.  On the rare occasion somebody would ask our hourly shop labor rate, I would respond with "We don't charge by the hour, we charge by the job."

You have to remember I sold our business in 2015 and I set that labor rate way back in 2013, 9  years ago at the time of this writing.  At the time, I knew we were the highest in our market area for hourly labor charges, but virtually nobody knew it.  Think about it, no consumer knows the price of any transmission work.  You can't price transmission parts at Auto Zone, only complete units.  Nobody walks in with their own parts or rebuild kit.  I feel our situation was rather unique in comparison to the majority of the industry.  We intentionally located in a very affluent area of the Salt Lake Valley where there were virtually no price objections.  I doubt that most shops could do what we did.

3 hours ago, JimO said:

Most of the jobs we do are already entered in my shop management system as “canned jobs”. When I entered all these canned jobs I added all miscellaneous items such as clips, retainers, conditioning discs, nuts/bolts/washers etc.. onto jobs that would routinely utilize those items. Over the years I have adjusted these canned jobs to include more items or in some cases removed some items. My estimates are done using my shop management program so in most cases the forgotten or overlooked part or a part that commonly fails is included in the estimate. If The part is not used then it is removed from the invoice. The above covers all of the small, incidental items in most cases. If I fail to include a clip or small priced item and add it to the final invoice I very rarely have anyone question it. I always have the option to N/C the item if I think this particular customer will cause a fuss over a low price, unexpected part. Over time you get to know your customer, even first time customers. When I review an involved estimate I always try to verbally inform the customer of the potential need of additional parts or labor based on my past experience. When the unexpected happens and the additional part or labor is costly I call the customer as soon as possible and inform them of the need and cost of the additional part or labor. Letting something like this go until the customer receives the invoice is never a good idea. When we increase the cost of a customer’s invoice because of unexpected issues we need to realize that we are spending the customers money so they deserve to be informed and be brought into the decision of how to proceed. Concerning signs - I find that most people don’t read signs so I don’t post a sign concerning this matter. I suppose if I had a sign and the customer questioned an additional charge I could then point to the sign but that to me would be wrong. Pointing to a sign when a customer is standing in front of you, upset about an up charge will only add fuel to the fire.

 

Jim,

Because we are a transmission-only repair shop 90% of our work is repetitive... very repetitive.  There's even stuff that I can almost predict to break.  Like Joe says, I factor stuff that breaks and shop supplies into every canned job; even Brakleen (we use hexane).  Occasionally, we see a new transmission or one we don't have a lot of experience on and the standard factoring is automatically factored in.  I pride myself on my estimates being dead-on accurate.  That's mainly because we don't give written estimates until an RDI. (Remove, Disassemble, & Inspect)  If we find something after the estimate, we eat it.  Once we have the transmission out and apart, it's really hard to miss something.  Actually, in our shop, the word "Estimate" is a misnomer.

How often have you been met with the sales objection of "I'll just buy another car?" when trying to close a big ticket repair?  Being a transmission-only repair shop, we heard this sales objection quite often.  It used to be anyone could buy a fairly decent used vehicle for $5K-$10K and never look back.  Everything automotive-related costs a lot more now.  Used vehicles, new vehicles, and yes... transmission repair.  Today, it's not uncommon for a transmission to run $5K or more.  5, 6, 7, 8, 9, & 10 speed transmissions are what modern vehicles are equipped with.

The average price for a good used vehicle today is $20K or more.  According to JD Power, used vehicle prices have increased in price more than new vehicles, or more, as illustrated in the chart below.  This chart shows the AVERAGE change in selling price of both new and used vehicles.  My wife and I purchased a brand new fully loaded RAV4 Hybrid last year.  We paid slightly over $50K.  A few years ago, that same vehicle was only $40K.  Whether new or used, people are faced with sticker shock when they go actively looking for another vehicle.

When any shop is faced with the sales objection of "I'll just buy another car.", we need to bring our customer into the modern real world reality that the sales tax alone on another vehicle is often just as much or higher than the price of the big-ticket repair we're trying close on.

1:35  https://youtu.be/3vlFp-3wGzE

As I've posted before, it's my belief is that the sale of an automotive business isn't enough to fully retire long-term.  However, I just watched a documentary put out by Detroit Public Television titled When I'm 65 that is a good retirement history lesson as well as good information for Millennials and Gen X'ers.  Its content is a little too late for baby boomers.

If I had to give one piece of advice to a younger shop owner (I'm currently 67) it would be to buy your shop's real estate.  If it's a good location with ample traffic count, the later sale of your shop could fully fund your retirement as it did me.  With that being said, here's the link to the retirement documentary, When I'm 65.
 

I've posted about this before, but here are more benefits of using QuickBooks Desktop Pro as your accounting software.

I started “playing” Quickbooks Pro Desktop in 1999 while I was using a transmission shop-specific shop management program.  I had heard of QB before and thought it was more for accountants than a shop owner.  As I used it more and more I discovered so many customizable features, I likened it to more of a minefield of rabbit holes.  On top of that, I was forced to learn accounting.  I didn’t like it at first, but in the end, it turned out to be a blessing in disguise.

Fast forward a few years and I had somehow managed to design my own estimates, repair orders, reports, and chart of accounts.  I eventually abandoned my shop management program (and the monthly payments) for QB.  Out of all the good things I could say about QB, the most important benefit was the ability to print a highly accurate profit & loss statement along with a balance sheet in real time.  I didn’t have to wait days, weeks, or months for an accountant to supply these to me.

The accountant’s P&L and balance sheet were effectively an obituary of how we were doing in the distant past, not an accurate reflection of up to the minute in real time.  I could accurately measure how we were doing day to day, week to week, and month to month with a few mouse clicks.  Unbeknownst to me, over the years QB had become the gold standard of small business accounting.  Our CPA loved it and charged less than his other non-QB clients.

Lastly, not only was I free of a monthly fee for shop management software, I was free from accountant fees.  The only thing that cost was our CPA for the annual tax return.  All in all, I felt like I was in more control.