Andre R

Ford does stand for Flip Over Read Directions

Autohausaz.com

We use a base hourly rate plus a flag rate. For example ; $10.00 per hour worked, time and one half over 40 hours.Then $10.00 per flagged hour up to 34.9 hours, $1.00 bump per hour back to the first hour when they reach 35 hours,another $1.00 at 40 hours and anther $1.00 at 45 hours. You can set the base rate and flag rates to suit the techs level of experience. You can also just give raises on what they flag, change the points at when the increases kick in based on your shops efficiency and volume. You could even put your lube tech/ Gs tech on this plan.

I'm sitting here reading this thread and getting flash backs of some of the excuses/reasons that I had used for not charging what I needed to to stay a viable,profitable buisness . I too thought that I couldn't charge " those prices" ,my customers just wouldn't pay them. I went to the seminars,read the books and still did it my way because my area was different . Then came the day I had to tell my wife that we were losing our home of 22 years be cause I did it my way. We couldn't afford to stay so after some discussions we moved 2800 miles and started over. That was in 2007. In 2008, in the middle of the reccession I was forced into ownership again and started making the same mistakes all over again. One day I was talking to a friend who owned his own buissness and I was complaining about not making what I thought that I should,we couldn't afford to do this or that,blah blah blah. He looked at me and just laughed and asked why was I doing it then. He started asking me some very pointed questions about how I charged and what those charges were based on.That was uncomfortable but I got it.I started looking at my costs and started remembering some of the information I had gotten for those seminars . I started applying that info to my buisness and it worked.My labor rate went from 75.00 to 97.50 over night. My parts prices went from list or less than list to a 5 tiered matrix. We charged for all the labor we produced. I was ready for all the push back I knew I was going to get. NOBODY NOTICED!!! My customers still came in and had work done, We still were fixing cars. All those years of struggling and doing without,putting my customers financial well being over mine and my family's for nothing. Sure I didn't sell every job but the ones I did sell I made money on. Our average RO was 270.00 is now 497.00 . Our gp on parts was at 35 % to 38 % is now at 50%. OUR labor gp was around 50% is now at 72% . Our total gp was at about 43% is now at 60%. Our net was about 5% is now at 28%. I will never have to have that discussion with my wife again! Your customers are coming to you because they trust you, not that shop dow the street. All of your prices have to be based off of your costs .Period. If your basing your prices off of anything else, STOP. Thats like the old joke," I lose money on each job but I make up for it in volume" . If you can't price your services fairly and make money than why are you doing it!!

To start with, get your check book and write down all of your buisness expenses for the month and total them. Next write down your techs average pay for a week and multiply it by 4.3. Next figure out what you want/need for a pay weekly and multiply that by 4.3. Add it all up and thats what you owe on the first of the month when you turn the key in the door to open your shop. Next add up your labor sales for the previous months that you have been in buisness, divide it by your labor rate and then divde that by the number of weeks it represents. That is how many hours you have produced per week on aveage. Now multiply the number of hours by 4.3 . Divide your expenses by your hours and you have a starting point of where your labor rate should be. Example; expenses are $9500.00 monthly tech pay $750.00 x 4.3 = $3225.00 your pay $1000.00 x 4.3= $4300.00 total expenses $17025.00 using 15000.00 in labor sales a month x 12 months is 180000.00 your labor rate is 75.00 , thats 46 hours a week. 46x4.3 =197.8 17025.00 divded by 197.8 is 86.00 By this example your labor rate should be $86.00. Now keep in mind your profit on parts and the fact that this labor rate would only have you breaking even with no profit for anything else. If you use your numbers it will give you a starting point for a labor rate that is based on your expenses and your production. The numbers used are arbitrary and don't represent anything other than to be used in this example. The 4.3 is the average number of weeks in a month.

The Audi person you wrote about is probably driving a car way over his/her wallets ability to pay.I see this alot with 3rd and 4th owners of upscale cars.You were probably their 7th call and the first 6 woulndn't work on an Audi . Personally I always give estimates over the phone.I question them on why they think they need this repair or service. I find alot of them are at a repair facility and they don't believe what they are being told. I had a person call us recently , they were at another repair facility and were being told that their alternator should be replaced for a cost of $700.00. The car was a 2003 toyota, the reason for replacing was the alternator was dirty. This was a 20 something year old female at the toyota dealership she normally went to and had gone to previously for other repairs. I gave her a price for an alternator and then told her to go anywhere else but there. She did come to us and she had a laundry list of recomendations, one of which was to replace an alternator because it was dirty. My point in all this "these people" as you put it are looking for information because their car broke down and they have no idea the cost or the time involved and worst case scenarios are running through their heads, price is the only thing most know to ask but believe me they are listening to the tone and empathy or lack there of in your voice. I'm not the cheapest or the most expensve in my market,but I get alot of these " price shoppers" because most shops wont give them the time of day. Some have even checked your shop out on yelp or google and just want to make sure they have enough money for the repair so they don't waste their time or yours. We are in the service/relationship/repair buisness. None of that happens until "those people" make the decision to bring their vehicle in and start that relationship. You can spend hundreds on val-pac ads or money mailers giving away free stuff that costs you actual money or spend a little time and empathy and convince them they called the right place and have found someone who cares enough to listen to their problem and is willing to help . If this sounds preachy or as a knock on you I apologize, it's not how it was meant,just offering a different perspective and the way I handle things here that works for me.