MIXING PAINT in the DIGITAL AGE
Instead of being spoon-fed your material charges by way of insurance bids, develop
a method of billing for actual labor, parts and materials. Accurate invoicing for paint is
an important part of the process.
Here's a big one. Recovering the cost--much less realizing a profit--on paint and materials seems to be a trick that relatively few shop owners can master. Given the ways in which insurers choose to calculate paint cost on repair work, and the prevalence of paint and material caps, it's no wonder. What difference does it make how long it takes to apply material when it comes to determining its cost? Nearly everyone in the collision industry, with the possible exception of insurance companies, has rejected this idea wholesale. Yet the formula continues to be an integral part of every collision repair estimating program available to the industry. Perhaps the adoption of an alternative depends on the repair industry's integration of paint costing software into the estimating programs.In today's business, virtually all the players in it for the long haul are using paint mixing systems in their operations. And of those, many are using smart scales and computers to store and retrieve formulas and measure paint. Dragging all the paint products across the smart scale is a natural progression for the shop manager determined to account for the cost of a sale. While projected paint usage can be included in your preliminary estimate, the final bill should reflect actual usage--including ancillary materials such as solvent, additives, adhesion promoters, etc. Of course, we may have to rely on another accounting system to account for the use of non-sprayable products used in the repair processes.The Game's Over
As our industry changes, the familiar claims system is evolving to a much more logical process involving estimate, acceptance and final billing. There's been a steady departure from the old bid-and-bluff game in which you went high, they went low, and you somehow settled in the middle. Only then did the typical shop approach the job in the most efficient and cost effective way possible. Now, however, we find shops beginning with an appraisal in which all parties agree on the obvious and visible, followed by a process of ordering parts, doing the repair, and submitting the supplement. A management system can track costs and alert the manager when a supplement is necessary for parts price increases and labor overruns. Just as you process supplements for parts, you should manage paint and material billing. There is no law in any state to prohibit a repair shop from seeking adequate reimbursement for paint and materials--plus a fair mark-up. Repeat after me: "Paint is a profit center, not a cost of doing business."Your shop is a retail paint store. You purchase inventory in bulk (like a Baskin and Robbins ice cream store) and dispense product to the end user. Of course, those of us who grew up in this business never looked at it quite like this--paint was a cost of the job and we were happy just to have that cost covered by a paint and material allowance on the insurer's estimate. However, just because an insurer does business with their policyholder in a certain way, it in no way obligates the repair shop to follow suit. If the insurer's estimate overshoots your final cost and retail invoice to the customer, then a credit is indicated.With the advent of advanced body shop management programs, the opportunities to network these tools advance with the introduction of every whiz-bang color management system. Imagine having the ability to invoice your customers for every gram of color, every drop of hardener, every pass of clearcoat applied to their car? Now it's possible.Jack Rozint of CCC Information Services is an active participant in the Collision Industry Conference (CIC) where they have been looking at ways to overhaul the outmoded system of calculating paint and materials in repair estimates. According to Rozint, the current formula is flawed; a system of itemizing paint costs would be preferable. "Hospitals track everything from swabs to aspirin," he said. "That's why they get paid [by insurance companies] for it. But none of the [estimating] systems track paint cost."As far as future estimating software including a more accurate process for calculating paint and material usage, Rozint said, "If there was any indication it would be paid [by insurers], then it would happen."The Price is Right
Of course, an estimate does not a final bill make. Again, paint costs are a matter of invoicing actual use, which is not a feature of any estimating program. However, there is an estimating guide for paint and allied products--the Mitchell Refinishing Materials Guide. MRMG is the best--if not the only--product available for estimating sprayable and allied products used in auto refinishing. Even the states of Massachusetts and New York have recognized the Mitchell Guide as a bona fide calculator for these costs. Nevertheless, these are still only estimates of projected use of sprayable products.ComputerLogic, a source for turnkey computer systems used by the automotive aftermarket, produces a piece of software that's widely used by the refinish industry. PaintLogic is offered by such manufacturers as Sherwin-Williams, Martin Senour, Phoenix, Western, PPG, Standox and BASF-RM and -Glasso as a part of their mixing systems. Coupled with the Sartorius Smart Scale, PaintLogic offers the capability to accurately cost--and create retail invoices for--all sprayable products used in the refinish department. This includes staples such as clears, primers, sealers, hardeners and solvents.Mark Burgess, director of the Paint Technology Group for ComputerLogic, said, "We get pricing information from paint manufacturers, including component prices and standard refinisher prices, which is based on their cost of pre-mixed products [factory packs]. When the formula is retrieved for half a quart of color, the operator hits a function key and it shows prices. Published price or calculated price is based on components. Using the paint stock module, they can actually load bases and account for discounts and mark-ups they charge customers in terms of mixed cost and mixed resale."We track the usage on the Sartorius Smart Scale. We capture the same information for primers, reducers, clears and hardeners, and then assign an RO number to the mix. Our paint-costing module will print an invoice, which can be exported to our CollisionLogic and LazerLogic management programs. This is a good tool to justify costs when faced with a paint cap," he added.A New Approach
The time has come to do business in a new way in the collision repair industry. All around the country, shop owners have stepped back long enough to take stock and to gain a new perspective. They are asking questions such as, "Why can't we operate our business like any other? Why can't I make a profit? Why can't I determine my charges?"The answers they're getting are overwhelmingly positive: You can make a profit. You can determine your charges. The trick is to approach the issue differently. As the old saying goes, if you always do what you always did, you'll always get what you've always gotten.
