For as long as I can remember, we have used a simple but antiquated estimating method that employs a "rate factor" for calculating paint and materials pricing. This system, based on the total refinishing units for the repair job, is not an accurate or fair depiction of what we need on a specific job. It doesn't reflect actual usage requirements or variables in the products needed. It's a "one rate fits all" method that recently has been scrutinized by government agencies in states like California. They too agree that this system is not accurate and results in consumers not being invoiced properly.
The continuing use of the rate factor system is especially ridiculous in light of the fact that as an industry we recognize its inaccuracies. All of us – repairers, insurers and other service providers - know that the cost of the paint for different colors differs for most paint systems. We know that prices differ from brand to brand and within product lines. We all understand (or should) that the amount of preparation time needed for different paints will differ based on factors such as the type of part used (aftermarket, reconditioned or used), the extent of damages requiring repair and the original condition of the panels.
In the last five years, our industry has made great strides working together to improve the accuracy of the information we use to repair cars and do our jobs. More than ever, the complexity of new vehicle technology demands we use accurate repair information. We are learning that the accuracy of the initial estimate is absolutely critical to improving both efficiency and part procurement.
So why is agreeing upon and using the most accurate information when it comes to pricing paint and materials so difficult?
Answer: I compare it to a poker game. When you know you don't have the winning hand, you have two options. The first is to fold. The second is to bluff and raise the stakes in an attempt to get your opponent to fold.
In the poker game we play in our industry, insurers bluff and raise, and shops too often simply fold, even though they hold the winning hand - the winning hand, in this case, being accuracy and the fact that shops, if they would stick together, could dictate pricing and a whole lot more.
We're familiar with the notion that "If every shop in a market would decide to use 'it,' insurers would have to honor it, and it would become the standard, the prevailing practice." However, when a shop decides to implement such a practice, it is typically met with the insurer responses: "I am sorry we don't accept this because it is not a prevailing practice" or "You are the only one that seems to have a problem with the current system." The shop often just gives in.
It's time for us to raise the stakes. We don't have to bluff since we have the better hand. This is not about raising materials rates. It's about being able to accurately invoice for what we are doing.
For a number of years there have been alternative options available for material and paint pricing. These options have been brought up in national forums and meetings for at least a decade. I have spent time reviewing them and have come to the conclusion that our best option is ensuring that the providers of these methods/systems must be unbiased and accurate beyond approach.
We must scrutinize and hold companies that are, or soon will be, providing information to the highest ethical standards. If the provider cannot be an independent resource – if it has demonstrated or ever demonstrates that it can be influenced by an individual or industry segment – we must not rely on them. The stakes are too high in this game to allow this to happen.
I hope you will support this movement to replace the method we are using today with a far more accurate system that reflects what is performed on each individual vehicle. No one should have any grounds to dispute accuracy. Accuracy should be neutral. Bluffing should never be an acceptable option.
