Charge Enough for Your Services
Bob Winfrey made a decision a long time ago to focus on quality, not on price.
The owner of All Precision Collision Repair has been in the collision repair industry for 32 years, and in the past he’s tried to beat large, national competitors on price. After two companies he was with went out of business on that strategy, he knew it was time to learn a lesson.
“We were trying to match their prices, but without the volume. We couldn’t make enough money to survive,” says Winfrey, whose shop is located at the Gaye Chevrolet Dealership in Marshville, N.C., a town of 2,500 located 30 miles east of Charlotte. “Here we decided to maintain a higher standard of quality.”
Quality doesn’t come cheap, though. Winfrey, who thoroughly dissembles vehicles before writing estimates, is meticulous in charging for every item that’s considered acceptable in the industry. He reckons that his estimates are anywhere from 60 to 100 percent higher than the original insurance company appraisal.
“They’ll tell you to paint a door in an hour. You can’t even sand the door in one hour,” says Winfrey, adding that he carefully explains all of his charges to insurance adjusters, who don’t typically challenge him on them. “If you’re going to do it properly, you have to get compensated for your labor.”
To Charge, Or Not To Charge?
By charging for everything he can, Winfrey is in the minority among small- to mid-sized collision repairers, according to a recent study by Web-Est, an estimating software company in Oldsmar, Fla. In surveying about 1,000 of its customers, Web-Est found that 70 percent were not charging all of the accepted fees for their services or labor.
“I was surprised,” says Eric Seidel, CEO and president of Web-Est.
Some of the items shop operators mentioned that they don’t necessarily charge for included coloring, sanding, buffing, hazardous waste removal, car cover, antifreeze, front end alignment, seam sealer, corrosion-resistant material, tire mounting and balancing, masking jams, towing, cleaning the vehicle, used-part clean-up, batteries, adhesive removal and shop materials.
Some insurance adjusters are better than others at accepting such meticulous estimating, Seidel says, adding that a reluctant insurance adjuster is not a good reason not to charge for something.
“It’s a heck of a lot better to just charge by default” for accepted items, Seidel says.
That’s not necessarily true, says Rick Tuuri, vice president of industry relations for Audatex North America Inc., based in San Diego. First of all, different states have different laws for collision repair estimating, and that might affect what repairers can and can’t charge for.
Secondly, making a conscious business decision to not charge for certain items can be one way of building customer loyalty—both with paying customers and with insurance companies.
“It’s not that they’re eating the cost of these items,” Tuuri says. “It’s that they’re making a rational decision to get more business that way. There’s nothing wrong with saying you’re going to comp some things for your own edification. I know a lot of people it works for, and it works well for them.”
Still, Tuuri recommends that shops put all their itemized service and labor on the estimates, and then note, “No charge.”
Tech It Up
Shops that use estimating software typically have an easier time managing estimates and supplements, whether they charge for them or not, says Tuuri, whose company makes estimating software. Tuuri estimates that 25 percent of repairers hand-write their estimates or use outdated software for them.
“It’s hard for us to figure out why some shops still hand-write their estimates,” Tuuri says. “The systems are priced well enough today and the returns you can get on that investment are so high.”