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Educate customers on the labor component

Monday, April 29, 2019 - 06:00
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The most progressive independent shops across the country have become very focused on their knowledge base within their operation. With the shortage of competent technicians within the industry, we have to acknowledge that a shop’s skill level that has been achieved is expressed through its labor rate. No shop has the right to charge top rates to the public if they are incompetent in terms of automotive maintenance/repair knowledge; conversely, too many shops do not charge enough for the skill level they have acquired. Skilled shops must charge the right dollar for their skill level. It makes no sense to sit there and look around the market at everyone’s pricing to determine the door rate because every shop is not the same in their depth of knowledge capabilities.    

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For 15 years now we have been talking about the necessity of a minimum of two door rates. One is obvious; the basic mechanical rate used for mechanical work such as brakes and suspension, and the second is a diagnostic rate representing the skill required to diagnose a drive-ability problem or interpretation of information. If your shop is still stuck on one “catch-all” rate, then I would recommend getting into a proper business class to learn how to and the benefit of implementing multiple door rates as our future demands it. Vehicle complexity requires a broader depth of knowledge and to maintain the right skill level in terms of technician capabilities to handle the technology, the right dollars must flow into a shop to support its capabilities. Drivability and analysis problems require a diagnostic rate. Those shop owners who ignore this business strategy and stick with one catch-all rate have found each year getting more difficult. They are not changing their business model required to stay up with the times in our industry. Inertia in this business is a road to bankruptcy.

The basic mechanical door rate is established for “remove, replace and repair.” The second door rate is established for electrical diagnostics and is usually referred to as the shop’s “diagnostic rate.” This labor rate is used for interpretation or analyzation of numbers, graphs, electrical, and codes. This rate is critical in a shop today in order to bring in the right dollars if a shop wants to sustain the right skill level. In this category, more training, more equipment and more one on one time with the client is required to sustain shop credibility, consequently, the lower mechanical door rate is not sufficient.

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Time to introduce your clients to a third door rate required today

We now need a third door rate within the shop today. The importance of understanding this logic to this point is to realize that a shop must acquire specific skills over a period of time in order to complete the loop of knowledge to serve a client professionally. The critical business philosophy to understand is that a client is not paying a shop “to fix a problem now.” The client is paying the shop for “the knowledge obtained to this point in time.” To gain this knowledge a shop has and does incur costs, and future knowledge will incur additional costs if the shop wants to remain on top of their game. Rates will be adjusted as these future costs and investments are continually evaluated.

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