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Showing results for tags 'labor profit'.
For the first time in a VERY LONG time, I see a lot of positive news with regard to labor rates. More and more shop owners and managers are crunching their numbers and increasing their labor rates to better ensure their companies achieves a profit and also to be able to pay their employees what they deserve. Profit is needed in order to build for the future and to be able to attract quality people. I really think that this is perhaps the best time in our recent history to revisit your labor rates and bottom line and adjust your rates accordingly. Have you adjusted your labor rates recently, or plan on it?
First, I would be the last person to tell anyone that car counts is not a measurable and important KPI. Every shop needs to know their needed car count and what their sweet spot is. And then use that KPI to understand other important KPI's - ARO, Labor margin, part margins, etc. Now, with that said, the industry in general, has and will see, a decline in the amount of times your customers will visit your shop. It was not that long ago when we had customers bring their cars in 4 to 5 times per year. That has changed. Plus with COVID and many people not using their cars as they used to, we cannot rely on trying increasing car counts. We should, rather, making sure that we make every vehicle visit...COUNT. Here is my strategy to drive up sales per visit, while promoting the right culture with your customers: Ensure that the customer experience is the best on the planet! - Give every customer a reason to return back to you. Perform a complete MPI on each vehicle, but find out the particular needs of customers. What is their car used for? Get your entire staff to understand that the customer is everything and their safety and their car care needs are most important. Promote your Culture of taking care of people, not sales - Believe me, sales will come and so will the profits. Promote vehicle maintenance, safety, and reducing the overall cost of owning their car. NOW HERE'S THE TOUGH ONE: PLEASE BOOK THE NEXT APPOINTMENT AT CAR DELIVERY! Doctors do it, dentists do it, boiler service companies do it, hair dressers do it, nail salons do it, ..even chimney cleaning companies do it! It's not hard, just do it. Hope this helps. Thoughts???
Some repair operations have finality to them. By that, I am referring to jobs that do not require additional labor after the job is complete. For example; installing a tail light lens, set of wipers, an air filter or cabin filter. Once these jobs are done, they are done. There are other labor operations, such as brake work and wheel alignments, that even though a road test is required after completion, there is enough gross profit built into these jobs, that we do not need to worry about the total labor charges. Now, let’s take an O2 sensor, catalytic converter or other similar jobs. Theses jobs are not over once the part is installed. The tech needs to retest the system and the component, verify the repair and road test the vehicle. In addition, more time is needed to sell that type of repair. Where I am going with this? Understand that you need additional labor charges for retesting, verifying the repair and road testing. The labor time to replace an oxygen sensor is only part of the repair. You also need to account for the additional time needed to complete the operation: retesting, verifying and road testing. Not taking this into account could hurt labor production, which will affect your bottom line. Oh yes, I am hoping that everyone is getting paid for testing too.