As vehicles continue to advance with electrical components, safety features and new metal substrates, repair procedures will continue to become even more complex. These complexities create new and unique reimbursement needs, which can be difficult to be fully compensated for. It is easy for repairers to feel that we cannot receive fair compensation for what a repair requires. Many times, these items are things repairers would prefer not to do, as they add complexity, difficulty and liability to our already complex, difficult and litigation-prone jobs. Other times, simple and well-known items struggle to be reimbursed either partially or in some cases, entirely. In all cases, I have found the reason for improper reimbursement to usually be the same.
Payers seeking to control costs is normal for any individual or business. As collision center owners and managers, we want to control costs on materials, parts, labor, facilities and more. If you have ever reviewed a profit and loss statement and tried to figure out how to reduce loss, then you have tried to control costs. If you have ever negotiated price on a car or home, then you have tried to control costs. In all of these negotiations, data has to be shared in order to understand what is being asked, the value in what’s being asked for, and then to determine a fair price for both parties. The reason one house or car is worth more than the one right next to it are the features, quality, condition, etc. If these reasons are not well represented and understood, then the difference in price will not be accepted.
It is crucial for all successful collision repair centers to include everything that will be required to repair the vehicle during the estimating process. Parts that require replacement, labor required for repairs, and materials necessary to bring the vehicle to pre-loss condition, should all be included on the estimate. The cost of doing business is paying for insurance, lease payments, training, etc. The cost of doing business does not include any item or material that goes on a vehicle or any labor required to fix that vehicle. Non-included labor may include researching or purchasing subscriptions for repair procedures, scanning, diagnosing, etc. Paint materials should cover the liquids applied, as well as basic filler, sand paper and tape. The paint material calculation is out of convenience for all parties not out of any type of requirement. Paint materials do not include adhesives, foams, seam sealers, undercoatings, etc.
A proper estimate does not mean the negotiation is over. Proper estimating simply sets the asking price. You should not set the asking price for more than the value of the repairs. Setting an exorbitant price upfront will create distrust and lead to difficult negotiations. It is always easier to negotiate when the asking price can be reinforced with data and obvious value. Once the asking price is set, the next step is to present why the estimate delivers that value. What items make this repair more difficult than the vehicle being repaired next to it? How is the vehicle going to be fixed differently than the shop next door who quoted half the price? Why is the price being asked worth the amount be asked? If these questions cannot be answered, then the asking price is too high.