Think you’re not making enough profit on paint materials? Here’s the process I would use to determine if this is the case and if so, fix it.
First, I’d look at your profit-and-loss statement to see how you are doing against two key benchmarks for paint materials. I’d look at your sales to make sure that paint materials account for 10 percent or more of your total sales. Then I’d look at your cost-of-goods-sold (COGS) to make sure you weren’t spending more than 6 percent of your total sales on paint materials.
Those benchmarks on a per-job basis mean that for a $1,000 job, you should charge $100 or more for paint materials, and your paint materials costs for that job shouldn’t exceed $60.
So what if you’re not at those numbers? Let’s start with the sales side. Maybe your estimators aren’t writing very good estimates. They might be missing labor operations, for example (your shop’s average should be 9.2 or more labor hours per job), in which case they need some training.
They also might be accepting paint and material caps or thresholds, in which case you may want to consider using one of the paint invoicing tools, such as PaintEx, ComputerLogic’s “PaintLogic” or Mitchell International’s “Refinish Materials Calculator.”
Another common issue: paint materials sales not being coded properly. An insurer might categorize a dollar amount on an estimate for materials for covering the car as an “alternative part,” for example, so those dollars aren’t showing up as paint materials sales when the estimate moves into your shop’s management systems. Most management systems today will scrub the estimate data to ensure items like that are getting categorized correctly, but if you find you’re having to manually adjust such things, ask the management system provider if there’s a way to have that done automatically.