Cheap Prices Fill Shops . . . For A While

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 story. The shop is run by an excellent, well-meaning technician 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.

This 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's too late. So I pass on the deal and sure enough, it soon goes out of business with a parking lot full of cars.

Several years ago, a new shop opened up near me - number six I believe. As usual, it has damaged my new customer business because the owner thinks he's a marketing genius by setting his pricing so low that no one can beat it. No one would want to! I don't even know who he's competing with, it's so far below everyone else.

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.

If I could make a dream law, it would be that automotive shop owners must take a business 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 survive on miniscule profits, being afraid, or too lazy, to price their work at a professional quality level. I could see it if they did poor work, but these are often good technicians!

Now I've been preaching this for 21 years, and I've been called a number of unpleasant things by what I deem, 'confused' other shop owners. I have never understood what was 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 don't set the price of your work, the cost of doing good business does. So stop guessing and stop belittling the value of our line of work. Throw out those pointless flat-rate books. Pay your people salaries, including you. Forget about what that other shop is charging. Who says he knows what he's doing? Just because he's busy doesn't mean he's making money. Sit down with your accountant and figure out what it takes to run your business and meet your goals. Be brave, and actually make an honest profit.

My dream sees a day when we all compete on who's better... not on who's cheaper.