I just finished up a series of automotive shop management seminars: one three-hour seminar repeated five times over three days, to be precise. This kind of an opportunity, especially multiple seminars delivered within a compressed timeframe, might be among the most exhilarating, yet most exhausting things I do.
Despite the wear and tear on my body and my mind and the frustrations and anxieties that accompany traveling in general today, I still enjoy the opportunity to sit down with a group of shop owners and other industry professionals to share what I’ve learned about this crazy business of ours. Helping other people to avoid the same traps I’ve seen others fall into – including some of the traps I’ve fallen into myself – brings with it a very special sense of accomplishment. Realistically, it is perhaps the most rewarding thing I do. Aside from that, I just like being around the majority of people who work in this industry regardless of where they are from or what role they play. After a lifetime in this business, I guess it has become the one place I am most comfortable. It’s cheaper and easier to get a drivability or performance problem diagnosed and repaired on your 2002, OBD II vehicle, than it is to get your lawnmower serviced. In addition to the satisfaction I receive from these seminars, they may be my most reliable source of information regarding the state of our industry as it actually is: how we really are doing. I learn a lot when I’m out and about. I learn a lot about the incredible people that do what we do, and I learn a lot about what has become normal for our industry, if there is such a thing. I probe and poke and investigate, especially with regard to the conditions in the marketplace we are all facing or are likely to face in the future. This last series of seminars was no different except for the incredible depth and quality of the comments and questions that bounced back and forth across the room. There were shop owners, manufacturers, jobber store owners and warehouse distribution professionals present from all over the United States and Canada, and each person had their own story to tell and something interesting to say. Generally, there is a grab bag filled with statements and observations, comments and questions that I drag home with me from wherever I’ve been and from who ever I’ve talked to. This past weekend was a little different, however. I still have that big bag filled with observations and information to process and absorb, but there was one particular comment that came up toward the very end of the very last seminar that has captured both my imagination and my attention, and it won’t let me go.I think it is something for all of us to think about – to work over and to work through in our minds. Certainly, something that warrants a response consistent with the magnitude of what I am about to share with you here. In the end it just may prove to be a reality check of sorts, not only for me, but for the rest of the industry as well. It is something you may not want to hear, but I believe it is something you really need to hear because it just may turn your assumptions about yourself, your business and this industry completely upside down.This information bubbled to the surface as we were finishing up a discussion that focused on what automotive service really should cost: what it should “sell” for in order to accurately reflect the investment we have had to make in the tools, time, training, education, facility and informational resources necessary to do what we do every day. I asked everyone to pick a number they felt was representative of what we have to do and the environment we must create in order to be able to do it in comparison to any of the other skilled trades, as well as what we are apt to be held accountable for by our peers, the government and by the people who bring us their cars and trucks to work on. I asked them to consider what the labor cost per hour was the last time they had a plumber or an electrician out to the house or the shop. I asked them to consider what it cost to have a computer repaired or a network installed, or a washing machine, dishwasher or a home air conditioning system serviced or repaired. The answers were fascinating. Regardless of where they were located or what their labor rate might have been – and despite the fact that, in many cases, every shop owner there was posting a labor rate well below the rates that they were suggesting were justified, necessary and appropriate – shop owners from all over North America agreed that automotive shop labor rates should be anywhere from $100 to $150 per hour or more. In other words, they knew they should be charging substantially more than they were charging now. They just accepted the fact that for whatever the reason, they couldn’t get it.We “Oreo Price” our products and services based upon what other garage owners are charging.Somewhere toward the end of that discussion, a warehouse distributor raised his hand to make a comment. One of the jobber stores he operates has a small engine repair business associated with it. The operation was languishing until he brought a new manager onboard. After a few weeks, the new manager went to the owners of the warehouse with a laundry list of things that he felt were necessary to turn the small engine repair business around. Attached to that list was the following commitment: If the management team provided him with what he asked for, he would have to raise the labor rate for small engine repair to $84 per hour within just two weeks.The owners of the warehouse felt they had little or nothing to lose so they complied with the manager’s requests, and he delivered. Within a couple of weeks the shop labor rate for small engine repair was, in fact, $84 per hour. Perhaps, more important, the wait to get your lawnmower, lawn blower, chain saw or other small engine serviced, maintained or repaired quickly went to two weeks or more.Everyone left the seminar with that information and more, and quite frankly I don’t know if they were as deeply impacted or disturbed by what they had heard as I was. All I really know is how it affected me and how I believe the knowledge that was shared about this little side-business and its hourly labor rate should have impacted everyone else in that room.What could be so powerful or compelling? Well, how about this: The labor rate for servicing cars and trucks in the same market area is not much higher than $60 per hour, if it’s that high, and the wait for service is nowhere near as long. In other words, it’s cheaper and easier to get a drivability or performance problem diagnosed and repaired on your 2002 OBD II vehicle with all the training, tools, technology, equipment and time involved in that, than it is to get your lawnmower serviced.
So, getting your lawnmower serviced is expensive … Even more expensive than getting your car fixed. So, what? Everything is expensive.At first, the implications of what had I had just heard didn’t quite make it through the concrete barriers we all seem to have erected in order to protect us from new information or new ideas. But, then it slowly registered. How could we reconcile the fact that getting a snowblower repaired somehow had more value than enabling the late-model family sedan or SUV to pick up the kids, take Mom or Dad to work, make it possible for Grandma or Grandpa to get to the doctor, carry everyone off on vacation or transport Junior to an out-of-state college this fall? The answer is, we can’t. We can’t reconcile it, and we can’t justify it. I couldn’t do it during the seminar, and we can’t do it now. Without diminishing the skill and ability it takes to inspect, test, analyze, evaluate, diagnose or repair a problem in the small engine repair environment, I’m not sure anyone is capable of convincing me that there is a legitimate reason working on a late-model car or truck is almost 30 percent less expensive. Yet, it is a reality that shop owners across the nation willingly accept.Perhaps you can help the rest of the industry decide just what automotive service really
is worth.There are really only two ways to price any product or service effectively. You can establish your costs and then add the appropriate margin of profit. Or you can determine an effective and/or compelling price-point and then figure out how much product or service you can offer for that amount of money. For the most part, our industry is guilty of choosing neither. As an industry, we “Oreo Price” our products and services based upon what other garage owners are charging – or at least on the basis of what we think they are charging. Everyone is looking at everyone else and pricing accordingly. They are establishing their prices based upon what they see – or think they see – instead of by actually doing the math and establishing a price based on their cost of doing business, what the market will bear and an adequate return on the time, effort and capital they have invested. This could be reality for most of us, but you must admit, it is a reality that just doesn’t make any sense. What makes sense is the notion that once you are confronted with new knowledge or new facts about your current reality, you really shouldn’t be able to look at it in the same way again. In other words, once you are armed with a new paradigm, a new set of assumptions about your world and your place in it, that reality is changed forever. And you should find yourself forever changed. The only question is whether or not this is a reality you will have to deal with and the only way you are going to find out is by doing the due diligence required in any kind of substantive research: You’re going to have to check. Call around and see what other people in other skilled professions are charging for their products and services, and then you can decide. Decide for yourself first … and, then, perhaps you can help the rest of the industry decide just what automotive service really is worth: worth to you, worth to the vehicle owner and ultimately, worth to the society we serve.
Despite the wear and tear on my body and my mind and the frustrations and anxieties that accompany traveling in general today, I still enjoy the opportunity to sit down with a group of shop owners and other industry professionals to share what I’ve learned about this crazy business of ours. Helping other people to avoid the same traps I’ve seen others fall into – including some of the traps I’ve fallen into myself – brings with it a very special sense of accomplishment. Realistically, it is perhaps the most rewarding thing I do. Aside from that, I just like being around the majority of people who work in this industry regardless of where they are from or what role they play. After a lifetime in this business, I guess it has become the one place I am most comfortable. It’s cheaper and easier to get a drivability or performance problem diagnosed and repaired on your 2002, OBD II vehicle, than it is to get your lawnmower serviced. In addition to the satisfaction I receive from these seminars, they may be my most reliable source of information regarding the state of our industry as it actually is: how we really are doing. I learn a lot when I’m out and about. I learn a lot about the incredible people that do what we do, and I learn a lot about what has become normal for our industry, if there is such a thing. I probe and poke and investigate, especially with regard to the conditions in the marketplace we are all facing or are likely to face in the future. This last series of seminars was no different except for the incredible depth and quality of the comments and questions that bounced back and forth across the room. There were shop owners, manufacturers, jobber store owners and warehouse distribution professionals present from all over the United States and Canada, and each person had their own story to tell and something interesting to say. Generally, there is a grab bag filled with statements and observations, comments and questions that I drag home with me from wherever I’ve been and from who ever I’ve talked to. This past weekend was a little different, however. I still have that big bag filled with observations and information to process and absorb, but there was one particular comment that came up toward the very end of the very last seminar that has captured both my imagination and my attention, and it won’t let me go.I think it is something for all of us to think about – to work over and to work through in our minds. Certainly, something that warrants a response consistent with the magnitude of what I am about to share with you here. In the end it just may prove to be a reality check of sorts, not only for me, but for the rest of the industry as well. It is something you may not want to hear, but I believe it is something you really need to hear because it just may turn your assumptions about yourself, your business and this industry completely upside down.This information bubbled to the surface as we were finishing up a discussion that focused on what automotive service really should cost: what it should “sell” for in order to accurately reflect the investment we have had to make in the tools, time, training, education, facility and informational resources necessary to do what we do every day. I asked everyone to pick a number they felt was representative of what we have to do and the environment we must create in order to be able to do it in comparison to any of the other skilled trades, as well as what we are apt to be held accountable for by our peers, the government and by the people who bring us their cars and trucks to work on. I asked them to consider what the labor cost per hour was the last time they had a plumber or an electrician out to the house or the shop. I asked them to consider what it cost to have a computer repaired or a network installed, or a washing machine, dishwasher or a home air conditioning system serviced or repaired. The answers were fascinating. Regardless of where they were located or what their labor rate might have been – and despite the fact that, in many cases, every shop owner there was posting a labor rate well below the rates that they were suggesting were justified, necessary and appropriate – shop owners from all over North America agreed that automotive shop labor rates should be anywhere from $100 to $150 per hour or more. In other words, they knew they should be charging substantially more than they were charging now. They just accepted the fact that for whatever the reason, they couldn’t get it.We “Oreo Price” our products and services based upon what other garage owners are charging.Somewhere toward the end of that discussion, a warehouse distributor raised his hand to make a comment. One of the jobber stores he operates has a small engine repair business associated with it. The operation was languishing until he brought a new manager onboard. After a few weeks, the new manager went to the owners of the warehouse with a laundry list of things that he felt were necessary to turn the small engine repair business around. Attached to that list was the following commitment: If the management team provided him with what he asked for, he would have to raise the labor rate for small engine repair to $84 per hour within just two weeks.The owners of the warehouse felt they had little or nothing to lose so they complied with the manager’s requests, and he delivered. Within a couple of weeks the shop labor rate for small engine repair was, in fact, $84 per hour. Perhaps, more important, the wait to get your lawnmower, lawn blower, chain saw or other small engine serviced, maintained or repaired quickly went to two weeks or more.Everyone left the seminar with that information and more, and quite frankly I don’t know if they were as deeply impacted or disturbed by what they had heard as I was. All I really know is how it affected me and how I believe the knowledge that was shared about this little side-business and its hourly labor rate should have impacted everyone else in that room.What could be so powerful or compelling? Well, how about this: The labor rate for servicing cars and trucks in the same market area is not much higher than $60 per hour, if it’s that high, and the wait for service is nowhere near as long. In other words, it’s cheaper and easier to get a drivability or performance problem diagnosed and repaired on your 2002 OBD II vehicle with all the training, tools, technology, equipment and time involved in that, than it is to get your lawnmower serviced.
So, getting your lawnmower serviced is expensive … Even more expensive than getting your car fixed. So, what? Everything is expensive.At first, the implications of what had I had just heard didn’t quite make it through the concrete barriers we all seem to have erected in order to protect us from new information or new ideas. But, then it slowly registered. How could we reconcile the fact that getting a snowblower repaired somehow had more value than enabling the late-model family sedan or SUV to pick up the kids, take Mom or Dad to work, make it possible for Grandma or Grandpa to get to the doctor, carry everyone off on vacation or transport Junior to an out-of-state college this fall? The answer is, we can’t. We can’t reconcile it, and we can’t justify it. I couldn’t do it during the seminar, and we can’t do it now. Without diminishing the skill and ability it takes to inspect, test, analyze, evaluate, diagnose or repair a problem in the small engine repair environment, I’m not sure anyone is capable of convincing me that there is a legitimate reason working on a late-model car or truck is almost 30 percent less expensive. Yet, it is a reality that shop owners across the nation willingly accept.Perhaps you can help the rest of the industry decide just what automotive service really
is worth.There are really only two ways to price any product or service effectively. You can establish your costs and then add the appropriate margin of profit. Or you can determine an effective and/or compelling price-point and then figure out how much product or service you can offer for that amount of money. For the most part, our industry is guilty of choosing neither. As an industry, we “Oreo Price” our products and services based upon what other garage owners are charging – or at least on the basis of what we think they are charging. Everyone is looking at everyone else and pricing accordingly. They are establishing their prices based upon what they see – or think they see – instead of by actually doing the math and establishing a price based on their cost of doing business, what the market will bear and an adequate return on the time, effort and capital they have invested. This could be reality for most of us, but you must admit, it is a reality that just doesn’t make any sense. What makes sense is the notion that once you are confronted with new knowledge or new facts about your current reality, you really shouldn’t be able to look at it in the same way again. In other words, once you are armed with a new paradigm, a new set of assumptions about your world and your place in it, that reality is changed forever. And you should find yourself forever changed. The only question is whether or not this is a reality you will have to deal with and the only way you are going to find out is by doing the due diligence required in any kind of substantive research: You’re going to have to check. Call around and see what other people in other skilled professions are charging for their products and services, and then you can decide. Decide for yourself first … and, then, perhaps you can help the rest of the industry decide just what automotive service really is worth: worth to you, worth to the vehicle owner and ultimately, worth to the society we serve.
