When to Bill Dollars—Not Hours
If your collision repair shop is billing every operation in hours or fractions of hours, you could be missing out on cash each time a car runs through your facility.
Kedma Ough, a former director for the federal government’s Small Business Administration and current chief funding officer at Target Funding, a system to get money and resources, says charging flat or predetermined rates allows your company to compete on a fair level of knowledge and experience.
“You’re building a sense of culture,” she says. “You don’t want to be the lowest labor price, you want to be the best value.”
Here are her tips for the trade.
As told to Maraya King.
Offer packages where you can.
While no two jobs are the same, there are certain steps that need to be completed throughout each and every repair. We recommend our clients quantify basic packages wherever they can.
By bundling routine operations into a package, collision repair shops can charge more for their services, while keeping customers informed about the next stages of the repair process.
Don’t shock the customer.
When your shop is ready to implement going from hours to a flat rate, it is imperative that you notify your customers beforehand. We encourage our clients to communicate the internal changes with your customer base at least 60 days before they take effect.
For a successful transition, you must clearly communicate to your customers that the procedures are not changing—the service is improving. Our past clients have worked with marketing teams and even recorded their own at-home videos to explain how the service is improving and outline where the money is going.
Thank yourself later.
One benefit that our clients have found by charging predetermined rates is the ability to project future finances more accurately. Charging predetermined rates can give your business a baseline for its revenue, rather than relying on a certain threshold of labor hours that can be harder to predict.
Charging predetermined rates has also helped our clients improve the overall culture of their companies. When charging hourly, it is hard to quantify the value of the work. But by setting predetermined rates, shops can reflect the level of education, experience, and equipment they offer through their prices.