Industry pricing, just a thought..A must read thread

[WE4]

I saw the article and thought it GREAT! He gets right to the point and makes valid points about the industry. This has woken me up and I am going to run our place of this mentality and direction. Others should take heed and listen.



Written by Mark Kline of Lakewood, Colorado.

Mr Kline owns a ScandiaTek repair shop in Lakewood Co. He holds a Master ASE – certified Technician and master automotive machinest certifications. He was also the president of Saab Rocky Mountain dealership Service and Parts in 1978



For the past five years , I have been trying to buy an additional shop. Each time I have found one , it’s been the same old story. The shop is run by an excellent, well meaning techincian and is jammed with loyal happy customers. Why shouldn’t they be, with cheap prices and great work? So I get the paperwork, and learn the truth about the shop’s financial health: little or no profit, and the IRS is their prime lender.
The shop is doomed because the “tired owner" is the business and the low price is its main product. If I bought it and brought the pricing up to where it should be, I’d lose most of the customers. Once again, ……it is too late. So I pass on the deal and sure enough, it soon goes of buisness with a parking lot full of cars.
Several years ago, a new shop opened near me….number 6, I believe. As usual, it has damaged my new customer business because the owner thinks he’s a marketing genius by setting his prices so low that no one can beat it. No one would want to!!! I don’t even know who he is competing with as it is so far below everyone elses.
So once again I must wait, and once again another of my competitors—over time will join the rest of these low ball marketing wizards in the unemployment line. But not until he’s made the public think the other well run shops are “Ripping them off” ! ( HOW TRUE IS THIS?)
If I could make a dream law, it would be that automotive shop owners must take a buisness course before being licensed to run a shop. Why is it so many of us refuse to VALUE our work? I even see this with long lived shops. Somehow they have managed to survived on miniscule profits’, being afraid, or to lazy, to price their work at a professional quality level. I could see if they did “poor” work, But these are often good technicians!
Now I have been preaching this for 21 years, and I have been called a number of unpleasent things by what I deem ”confused” other shop owners. I have never understood what is wrong with charging top dollar for TOP QUALITY WORK:; or what is off base about making a decent return on the risk and immense effort it takes to run a shop. Finally, I would love to know what is amiss in having the resources to hire and pay for the BEST personnel, being honest with the IRS, and having enough saved to retire on.
If you think about it, you will find you DO NOT set the price of your work, the cost of doing a good buisness does. So stop guessing and stop belittling our line of work. Throw out those pointless flat rate books. Pay your people salaries, including you. Forget about what the other shop is charging. Who say he knows what he is doing? Just because he is busy does not mean he is making money. Sit down with your accountant and figure out what it takes to run your buisness and meet your goals. Be brave, and actually make an “ honest profit”.

MY DREAM SEES A DAY WHEN ALL COMPETE ON WHO IS BETTER……..NOT ON WHO IS CHEAPER!!!!!!!

You want cheap work, pay a cheap price.

Mark Kline

Bruce... WE4 comment:,
I truly believe in this and the “smart” people will see this and respond accordingly. What good is paying a cheap price if the shop will not be there 3 years from that day? Honestly, Think about this….

 

[HOTTOGO]

Soooooooo..... TRUE.......

Too bad it doesn't work like that. If only more businesses would think like that, maybe it would be easier to find quality worksmanship! But Bruce I don't understand what you mean, "This has woken me up and I am going to run our place of this mentality and direction. " I think your already of that mantality, so what's to change?

 

[Dan K]

Re: Soooooooo..... TRUE.......

Originally posted by HOTTOGO
But Bruce I don't understand what you mean, "This has woken me up and I am going to run our place of this mentality and direction. " I think your already of that mantality, so what's to change?

Uh-Oh.....

/me sees PTS pricing going up 30-40% on everything!

Bruce, what did you mean by that?

 

[WE4]

Dan K is the man

He is one that understood.

And, yes, I am sick and tired of when all the dust settles I am broke. I work and care wayyy too much.

Up yes, but maybe half that.

Keep an eye out. More likely, first of year.

 

[bose]

pricing

I run a business in a different field than transmission repair so I have some insight as to pricing.In my area I am one of the most affordable technicians in my area to call for appliance repair.I am surely making money and have been for the last 21 years.Now I could raise my prices 20% and still afford to lose some customers.I would probably be making more money because I would be doing less driving for service calls.You have to be careful to not lose business.I wonder if this had anything to do with the meeting of the transmission experts and if all prices are going up.Bruce

 

[Rick]

The market will determine what you can charge as well as your reputation and quality of work. I've always thought companies more credible that have had gradual price increases over time. The ones that don't raise their prices just end up making less and less when you should be at least keeping up with the cost of living increases. Otherwise what's the purpose.

 

[Dan K]

Hmmm...I guess I should probably order that 9/11 soon then huh?

Some of us need to realize that we get what we pay for and that customer service and support after the sale are more important than saving $20.

 

[bose]

pricing

If you look at 20% of 1500.00 it is 300.00.Twenty dollars is nothing but that would be on a 100.00 item.There are not too many 100.00 items on a transmission.Bruce

 

[HOTTOGO]

Re: pricing

Originally posted by bose
If you look at 20% of 1500.00 it is 300.00.Twenty dollars is nothing but that would be on a 100.00 item.There are not too many 100.00 items on a transmission.Bruce

i didn't hear Bruce say he was making a 20% across the board hike or even a 20% n anything and I beg to differ on there not being many $100 parts in a tranny. I'd be willing to bet He sells more $100 and less items on a daily bais than he does the more exspensive ones. I also doubt he'll lose any buisness with a price increase as those that know what they are paying for are willing to pay for quality and customer service.

 

[WE4]

Re: pricing

Originally posted by bose
I wonder if this had anything to do with the meeting of the transmission experts and if all prices are going up.Bruce

Man, you guys or Bose anyway, kinda called it. We are all faced with the same dilemmas. We are all looking for a solution. I do believe that individually it would be rather difficult but as a "union" or a group, the quality, service and price will be alot more stable and consistant. That is NOT what this thread was about. This thread was about one guy's view on the industry and how it has been affected. I have always believed the same. I try to be more than fair, but when I bring High profile people out to see our operation and they all say "You are giving your stuff away" I have to think twice. That is really not the issue here either. I was just trying to make a point on what I and others have to deal with everyday, and if 1 of you, the next time you purchase from anybody , happen to think about this, it was well, worth it. ( Even tho I HATE to type. )

Thats all...... But yes, an elite bunch of us with the 2004r's do alot more talking and conferring than any of you could know.
And.... a black list has been started!! ROFLMAO!



interesting things to ponder.......


Bruce
WE4

 

[trbo668bird]

I have been a tech for the last 13 years and have worked for a number of shops whose management decided that the way to stay in business is to lowball everybody else, which in itself is only part of the problem. In most cases when you're lowballing all the other businesses you end up attracting the "something for nothing crowd", these people are a tough bunch to please. The SFN's always complain about the price, are never happy, they always come back complaining about some bizarre ever since problem (i.e. ever since you rotated my tires my engine's leaking oil), they also think when they pay you to fix their car nce they think they own your eternal soul. A business will not last very long catering to these kind of people. The long lasting profitable businesses are those that charge a competitive rate for the services performed and charge for everything the customer wants to have repaired, and does a good quality job doing it. In any other industry this is called value, this aproach generally attracts people who understand that you get what you pay for, and when a person is happy with what they pay for they return happily and are very likely to refer others as well. Unlike the SFN's they only know that they aren't satisfied, they never will be.
I know who I'd rather do work for, I'm sure anybody else,no matter what industry, would feel the same way after a little thought.
Bruce, you are providing a top notch service for everyone and you most certainly should make more than the minimum wage you're making now.

 

[Dan K]

Re: pricing

Originally posted by bose
Twenty dollars is nothing but that would be on a 100.00 item.There are not too many 100.00 items on a transmission.Bruce

I was just using that $20 as an example. And I'm pretty sure I just bought 3 different parts from Bruce that were under $100, and only 1 that was more than $100.

I do, however, think there is a little bit of a difference between you providing a service and someone like Bruce providing a service and a product.
Someone is buying your expertise, while someone buying a transmission from Bruce is buying his expertise as well as his parts.
I don't think Bruce is going to charge us to pick at his brain and try to soak up some of that knowledge that he has. Just like I'm sure that if I were to give you a call and ask you a question in your area of expertise, you'd help out.
He's just going to ask a little more for parts that have been proven time and time again. And I don't see anything wrong with that .

 

[WE4]

This thread was not about this but now that you brought that point to light..... I know after time and volume the "total cost" of producing said product should by all rights get cheaper. The thing we face today is that even if I raised prices, I would just be getting even to where the cost has and in the near future you are behind again. Almost like you can get even but never ahead. The public sees the increase but has NO CLUE as to the increases we have seen in the last two years. Parts have gone up , EVERYTHING now has a fuel cost tax now. If it sees a truck you pay this tax. Especially on metals. Haz mat is insane. 1500.00 a year to have permission to store on site ( a lousy 110 gallons in drums all clean) and another 1000.00 to haul it away AFTER they test it. Then there is an alarm tax to have one. Then the ,... get this... air compressor tax. Can you believe that one. Then there is match the employees tax by time and a half. Then there is employees which now johnny is having a new kid, on average 3K permonth, per guy Add a 5K a year workman's comp policy and the health care hmo for the guys. Power bill is 750.00 a month and rent 4K!!!!!!!
Ok...now in our little fake buisness ( altho these numbers are very REAL!) we havent made a BLASTED dime yet!!!!!!! On each say trans you might clear 400.00 when said and done. Doesn't this just SUCK!
This is what sucks about this. Then the real killer.........EVERYBODY gets paid but me. And I have no time to do anything as all it takes is one bad week and a catchin up you will a be, as the cycle starts over.

Man, how nice it would be to just be in my backyard building swings for the kids........LoL

Bruce
WE4

 

[HOTTOGO]

Bruce, I know your original post.....

wasn't made to really be replied to, but I think you have the majority of us behind you in your indevour! I for one believe you should be making some of your hard earned cash too! and if your not then there is a problem that needs to be resolved... Your services, products and support is DEFINATELY worth it!!!

 

[WE4]

This post had NOTHING to do with PTS..

At the time I posted it. I just thought it a great article. You guy here pointed it to me. And SINCE we were on the subject, I related it to me to make a point. However, like I said it wasnt originally about us. Thanks for all your guys support as it feels really good to know what you do doesnt go unnoticed.
thanks again

Bruce
WE4

 

[Brian Schauder]

Been going round and round with the boss on this very topic.He wants to increase prices,I think they should stay the same.I don't want to be the low cost leader,but somewhere in the middle is okay.He wants to be the highest based on my work and his,I just don't agree.

Let's take getting you car painted as an example,if you pay 5k for a paint job,you expect a MINT paint job,no if's and's or but's.If you pay 1500 you expect a GOOD paint job,but in most cases aren't going to be the nit picker you would be had you paid the 5K.So you have a reasonable amount of expectations that go along with the price tag.

I happen to do the best job possible,no matter what your cost.It's the only way I know how to do it.It dosen't matter to me that other shops don't go through the extra effort that I do,and charge the same price.I could really care less what other shops do or don't do,I can only control what happens in my shop.I don't have a complaint department and that's the way I like it.NOBODY COMES BACK TO MY SHOP COMPLAINING.I think the reason it's like that is: A)Price B)expectation for that price C)quality.

I think in most cases the cost of something is directly related to overhead, period.It has nothing to do with the integrity of the person doing the work.Besides I know if we raised prices 25% I'd still be in the same boat I'm in,only with an oar an inch longer.Whoppee.Anybody want a job in the complaint dept?

 

[bose]

pricing

In answer to the person who suggested cost of living pay increases,I do adjust my prices accordingly as parts and gas goes up.I am still on of the most reasonable priceded technicians available.I am not talking about a technician who does work so cheap that you wonder how he does it.Even in this business there are better parts and less quality parts to be bought.I only use the best.I do not advertise anymore as I get enough business with word of mouth so I must be doing something right.I wonder if this thread was an experiment to see what us customers would think of a price increase,kind of testing the water to see if it would go.Hot to Go this is no flame on you but if I remember correctly you rebuilt your transmission with Bruce's advice by yourself.This was probably in the interest of saving money.I understand what you are saying about a price increase but remember there is only so much extra a customer can afford to spend before they go somewhere else.You have to have a very good bottom line today if you can spend freely and not think about it.Just as we are consumers so is Bruce and I am sure he wants good service at a resonable price when he needs something serviced.Don't forget that in other states the cost of doing business may be(is)less than in the state of California.The other Bruce

 

[WE4]

California is the big hit.

And I am willing ( and have attempted) to leave asap. However , in the long run cost would be the same. After I paid the divorce lawyer's fees ( wife will not leave her family) , the money I saved would be eaten up if not I would go in the hole. As far as testing the waters, not at all. They are going up in Jan as I havent raised them in 4 years. Everything here is going up. EVERYTHING! The child goes to a private school. The tuition was 654.00 a month last year. This year its 894.00 . justify that!
So in turn, some one has to pay for my childs education!!!!!

LOL
but not really funny, more scary than anything else!

Bruce
WE4

 

[HOTTOGO]

Re: pricing

Originally posted by bose
..... Hot to Go this is no flame on you but if I remember correctly you rebuilt your transmission with Bruce's advice by yourself.This was probably in the interest of saving money.I understand what you are saying about a price increase but remember there is only so much extra a customer can afford to spend before they go somewhere else.You have to have a very good bottom line today if you can spend freely and not think about it....

Just to clairify this, I am not independently wealthy or anything like that, but I am extremely fortunate I make inexcess of 30k more a year than I need to live on so I do have spending capital, but the reason for doing it myself (building my tranny) was simply a personal satifaction thing, as Bruce is and was fully aware of and I think understands. I have been a mechanic profesionally for 22yr. now and have been doing it ever since I can remeber holdind the drop light and handing tools to my Dad. I have NEVER in my life taken a vehicle to anyone or had anyone do any work for me when it come to vehicles (except boreing my blocks for lack of have the tooling, I even do my own head work) I do everything. I could have easily bought one of Bruces, but where's the satisfaction for someone like me in that, I have $1200 in my tranny between aquiring one and the parts I had aquired prior to leaning of Bruce, and several hundred with Bruce, so the money wasn't the object just simply and believe me personal satisfaction.....

And Bruce if you do leave Cally and move shop.... please make it the Chicagoland area so that I can at least help out part time or something..... LOL!

 

[WE4]

I have told you before how I thought you learned well

But here is the difference Mark. See you were willing to learn then attempt. However, in the back of your mind you knew that if it didnt work it was on you and you would assume the loss of the money and the time. If something didnt work out, again, more money and time. But this all you were well aware of and learned to do correctly and can advise people wisely. You happened to win twice. One with a trans that works well, and two, learned about a 2004r, how and why they function.

However, How long did it actually take you in time, meaning, from the day and the hour you started to research your little trans adventure,the organization and decision making on the puter, time reading and researching , till the time it was filled with oil and fired.
With a hourly wage of 20.00 an hour, Tell me how much "fictional money" went into this trans. Bet at 20.00 an hour it scares the hell out of alot of people and...... we havent even talked about parts yet!!



Bruce
WE4