Transmission Repair

You are making sense, Joe. We advertise "our estimates are written in stone" and we stick to that. I've posted this before, but here it is in our promo video. Although I've never actually calculated how much we win, or lose, on each job. I just looked at the monthly/quarterly/yearly totals and compared them to my production payroll numbers. I would adjust up if we were losing but I seldom adjusted down. I believe that it's easier to do with transmission repair than it is with general repair.

Different shops tend to write/sell labor by whatever method makes them feel the most comfortable. I'm no different. Behind the scenes, we calculate the number of hours X hourly labor rate. However, on the printed estimate or invoice, we show a lump sum with the quantity of ONE. That way we don't get into any discussion about the number of hours or how much we charge per hour. If anyone asks, we simply say, "We don't charge by the hour, we charge by the job." End of discussion. Since I've retired, I let my Adobe subscription lapse so I don't have a way of redacting a sample estimate to black out the customer's personally identifiable fields. Please bear with me as this estimate was written 11 years ago. You can see from my sample estimate exactly how we did it. We did give the customer his AAA discount because that's how we got the job in the first place. I never got into an hourly discussion with any customer.David Breding Revised Estimate.pdf

A recent article in Ratchet & Wrench magazine said, "Flat rate puts the burden on the employee and hourly puts the burden on the shop." In the transmission business, I agree. I don't know of a shop whose main source of revenue is automatic transmission repair that pays their technicians by the flat rate system although many general repair shops and dealerships do. To me, if the front and back office are doing their jobs properly, including, marketing advertising selling And by treating their customers right by giving them a pleasing experience, there should be plenty of jobs to perform. Sadly, shops like that are in the minority. I only discovered this truth in the last 7 years I was in business because I came from a technical background, not business. In most shops, the technicians fully expect slow times. It wasn't true in our shop once I harnessed the power of the internet. Although we had our first website in 1997, we didn't start using it properly until ten years later when I started spending more of my time in the back office. I came to learn that no matter what the pay plan was, it was the office's responsibility to keep the shop busy and full of work. That bears repeating, it is the office's responsibility to keep the shop busy and full of work. I think the best techs like to stay busy by nature. At least that has been my experience. Techs that were slackers didn't stay around long or if they did, they soon got with the program from peer pressure from the other techs. I don't care what compensation plan a shop offers, if the techs can't pay their bills with some leftover, they won't be around long. Whether what's left over after paying bills goes to savings, entertainment, or whatever, that's their choice. The key phrase I would often use is "a comfortable living." Some techs struggle to buy tools as reported in this article. Conversely, I believe most shops have their techs suffer the burden of ineffective marketing, advertising, and sales that lead to slow times. To me, from a tech's perspective, this isn't right. It's management's equivalent of a recheck or comeback. Why should the tech be penalized for it being slow? This is why we always paid by the hour and it worked well for us. It placed the burden of keeping everyone busy on me, and not penalizing the techs if I didn't keep them busy. Any compensation package is perfect as long as the tech makes "a comfortable living." If you want to know what most technicians think, read this WrenchWay industry survey. My solution for others is to either learn how to use the internet effectively or hire someone who can. That was my solution to the perfect pay plan.

I mean no disrespect, but you may be hurting your business instead of helping it. How would you feel if you went into a shop for something minor and they came back with a laundry list of needed repairs? If it were my shop, I would only mention safety-related items. Just by virtue of the customer coming in for an oil change, tells me they want to take care of their vehicle. I would be treating the customer like I would want to be treated. If they get hit with big-ticket estimates trying to be sold every time they pick up their vehicle, I would hazard a guess they would eventually find another shop to do business with. I'm not trying to tell you how to run your business or find fault how you position your shop in the marketplace. If I offended you, please forgive me.

This post is slightly off-topic, but I feel there's a lesson I could pass along. We've discussed transmission repair as being a transactional "one and done" event. While we don't sell the customer for their next major transmission job per se, we do sell and schedule the customer for their next ~10-day recheck. Our service writers never had a problem with doing so. This is not only to road test and check for leaks, but it was one of the stipulations of our 5-year/100K mile warranty. A minor leak today could turn into a major transmission repair tomorrow. It would be on our dime, too. Something for shops to consider is having a BBB-sponsored arbitration text box on the warranty document or repair order. Check with your local BBB and see if they could help. Our BBB required the BBB arbitration clause to be in a separate text box prominently displayed on the front of the RO or warranty. If they sign the RO/warranty, the customer will receive our 5/100K mile warranty. If, for whatever reason, they don't want to sign the warranty, then they get our 1-year/12,000-mile warranty. By signing the text box, if a disagreement arises, the customer is giving up any legal means of remedy in favor of a BBB-sponsored neutral arbitration. We never had a problem with it, nor did anybody want to use the BBB as an arbiter. Below is our BBB text box disclaimer. The shop named below is the shop we sold our business to.

Concerning DVIs... A customer once told me, “I went to the shop for an oil change, and they came out with a list for thousands of dollar's worth of work. All I wanted was a damn oil change.” Has anybody else experienced this?

Joe, that's a terrific story! I sold my business for $330K in 2015 which was not enough to fully retire; I only partially retired. I bought the building and real estate in 2013 for $860K. In 2020 the buyer folded and skipped out on a 10-year lease. Luckily, I was able to sell the building and real estate 7 years (10-year mortgage @5%) after I bought it in 2020 for a whopping $2.3 million. THAT gave me enough for both my wife and me to fully retire. We were able to maintain our pre-retirement lifestyle in our retirement. I wish you all the luck and success with your journey in your career. BTW, please consider becoming a full-fledged member for only $30 bucks a year! I have no financial interest in AutoShopOwner other than my $30/yr. membership.

Thank you!

Wow! I just looked you up on Yelp! and you had an incredible 4.9 stars with 34 reviews. That speaks volumes not only about your pricing but about your service as well. We need more posts from shops like yours. Share some more and consider joining our group for only $40/yr. I have no financial interest in AutoShopOwner other than my $40 annual membership.

Wow! That's a great investment. I can't disagree with your business decision. We all would like for you to share more. Why not blow $40 for an annual membership to AutoShopOwner? You'll make another return on your investment. Just sayin'. I have no financial connection to this forum other than my $40/yr. membership fee.

Estimating on the low side, 7 weekly alignments would result in a revenue stream of $43,661.80/yr. How much was your new Hunter flush mount alignment machine?

Another great article from Ratchet & Wrench magazine... https://www.ratchetandwrench.com/running-a-shop/finance/article/33019164/7-tax-prep-tips-for-new-shop-owners

Another great article by Dennis Madden, recently retired CEO of ATRA. There is also a 15-minute video embedded into the article... https://gearsmagazine.com/magazine/your-greatest-challenge-the-essential-steps-for-project-completion/

Although we use itemized invoices, the truth is that the average consumer judges if a transmission shop is too expensive by simple stuff, they have some idea what's ok is stuff like ATF, etc. For these reasons, we don't add garbage fees like waste oil disposal, shop supplies, etc. The markup in most parts covers selling ATF at parts store cost, and the other garbage fees. (60% G.P.) It worked extremely well for us. It's hard to believe that pricing simple stuff like ATF, will virtually make any bottom line appear to be a good deal. Remember, like the collision business, we are transaction-related, not relationship-related. "One and Done."

It's a great article from a CPA. Attached below...12 Deadly Sins-2.pdf

Your advice is a sound strategy. However, a lot of younger techs who become shop owners may not agree. Our industry needs people like you, who also train. Keep doing what you do. Invaluable advice.

If I could call just one automotive article a complete seminar, this would be the article. It was a very good article with some absolutely great books to read. https://www.ratchetandwrench.com/shop-life/columnists/article/33006771/bennett-10-must-read-books-for-auto-repair-shop-owners

Great webinar. My main goals at this stage of my life (retirement) are health-related. Can I get a link to the slides used in the webinar?

1:06

https://www.ratchetandwrench.com/site-placement/home/article/11461933/not-for-profit The topic title is a little tongue-in-cheek. 🙂

I don't believe in the flat-rate system. We paid by the clock hour. Unless the transmission issue was obvious, I usually did the diagnosing myself. I was the most experienced tech in our shop and was deathly afraid of misdiagnosis if I didn't diagnose it myself. One job stands out in my mind. THE STORY: We had an AWD Audi towed into the shop for no movement. We were busy and my lead tech diagnosed it as a major transmission problem. After removing and disassembling the transmission, he could find no cause for the no movement condition. He found only normal wear and tear for a 150K mile transmission. That scared the crap out of me as I was thinking I should have diagnosed the problem. We did the normal R&R and rebuild with no hard parts. After the transmission was installed back in the vehicle there was still no movement. I got into the vehicle on the lift and noticed the speedometer was registering speed, but as soon as we lowered the vehicle on the ground, still no movement, but the speedo said it was. Long story made short; the right front axle had stripped where it goes into the front diff. We replaced the axle and all was good. That was a phone call I didn't want to make. I called the customer up and explained what happened. He was fairly savvy because he was a diehard Porsche-Audi fan. I was going to seriously reduce the price due to our error, but he asked about our 5yr./100K warranty. I said for the reduced price, I could only offer a 12mo./12K mile warranty. He was emphatic about getting the longer warranty. In the end, he agreed to pay full price to get the longer warranty. Feeling bad about the misdiagnosis, we ate the axle and labor. That's one of the reasons I like to diagnose transmission problems myself. It seemed obvious to my tech at first, but his mistake almost cost me a job, and a customer.

With automatic transmission repair, part prices aren't easily looked up online like G/R is. What our customers looked at was our bottom line. The few that did look up part prices online would look up the price of a complete transmission and weigh that compared to what we charged. We rarely had an issue with our prices, although we got top dollar for what we did.

Concerning a new shop location, listen to, or read... https://www.mondaymorningmemo.com/newsletters/follow-the-sound-of-bulldozers/ Read my other posts about selecting a good location. "Expensive rent is the cheapest advertising you can buy."

HUMOR AT ITS FINEST!... (2:14)