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post #11 of (permalink) Old 05-19-2009, 02:43 PM
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I was on the 'OTHER SIDE OF THE COUNTER' for 20+ years...
And I would NOT mark up parts AND gouge for labor!

Parts went no more than NAPA 'Over The Counter' cost, which gave me about a 15% price break on the parts,
but most of the time we had someone of our people coming or going to get them, so the 15% or so was actually transportation/delivery costs.

And the shop time was billed by 1/4 hour increments.
Each job was Time Clocked In, and Time Clocked Out.

We didn't charge for waiting on parts, some shops will charge for the garage bay space even though the mechanic was actually working on something else.

If the mechanic had to wait on parts, he clocked out, then clocked in on another job...

We had a SEPARATE rate for 'Bench' jobs...
Small engines, Carry in carb rebuilds, Ect.
It's not right to bill someone for an entire bay with lift, ect. when they are only taking up three square feet on the work bench.

We paid the mechanics/machinests by their billed hours, so you can BET they were clocked in at all times,
And the office girls made sure they didn't overlap jobs.

There just isn't any other way to run a mechanic/repair/rebuild/machine shop and make it profitable... And fair to the customers!

I stayed in business for just under 20 years that way,
And the service shop, machine shop, and electronics rebuild shop were all profitable.

You can't stay profitable in a small town for long without repeat business, so we must have been doing something right!

It's just not right to gouge for Parts AND Labor...

You need to decide if you are in the PARTS business,
or in the SERVICE business, and make your profit margins on that side of things!

Last edited by TeamRush; 05-19-2009 at 02:48 PM.
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post #12 of (permalink) Old 05-19-2009, 02:53 PM
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Point well-taken, and thanks.

The one thing we DO know for sure - repeat customers are way more valuable in the long run than sticking it to one guy big time once. We won't have sales people, techs or mechanics around that feel otherwise. Word of mouth reputation is HUGE.

Hopefully that will work out for us.



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post #13 of (permalink) Old 05-19-2009, 10:47 PM
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Repeat customers are MANDATORY if you intend to stay in business more than a year or two!

Dedicated customers send in their kids, neighbors, friends, in-laws, ect., and in a small community, or in a close knit community like some ethnic neighborhoods are in cites, it's the ONLY way to exist!

I still believe in the 15% rule...

At any given time, there are 15% of the people in the world that are just not going to get along with anyone...

15% are religious fanatics,
15% are completely insane,
15% swear they were abducted by aliens,
15% swear they are reincarnated famous people,
15% think Elvis is still alive,
15% think the world is flat,
15% think flu vaccinations are a government mind control plot...
Ect. Ect. Ect. Ect....

And 15% are going to be pissed about the price, service, workmanship, ect. no matter what you do...

SO!
I've learned to tolerate the 15% I can't ever please,
(and you would be surprised how many of that 15% return for more work!)
And I really LIKE the other 85% of the customers that made my day, house & car payments, and kept myself and several employees in 'Beans & Jeans'...

Some people complained because we never gave away much more than key chains and ink pens,
I would explain that all the 'Advertisement' stuff was coming right directly out of their pockets and the asking for 'Extras' stopped right there!

What I really liked was surprising repeat customers with free service work, usually oil changes, transmission service work, stuff like that!
That always made their day, and it's like winning in Vegas, they would go out and tell EVERYONE they had a good experience at my place that day!

Anyway, Like was noted, repeat customers were our salvation, and if a guy is up front with his customers,
And gives good, quality work, can provide the old parts as proof the work was done, and keeps good records of what parts cost so you can show the customer savings,
Then they will usually see the light and as much as writing a big check for service work is,
We very rarely had bounced checks or money issues with our customers!
(banks and companies we did volume work for were another matter!)

We may have just had an exception bunch of customers, but I really liked most all of them, and they seemed to a great bunch of people!
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post #14 of (permalink) Old 05-19-2009, 11:36 PM
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Quote:
Originally Posted by writeforus View Post
Point well-taken, and thanks.

The one thing we DO know for sure - repeat customers are way more valuable in the long run than sticking it to one guy big time once. We won't have sales people, techs or mechanics around that feel otherwise. Word of mouth reputation is HUGE.

Hopefully that will work out for us.
Warehouse/Inventory is the BIGGEST problem you will face in the shop...
Bare shelf space costs you TWICE!
Once for the money you are loosing for what could be selling from that position,
And costing you for roof, taxes, heat, lights, ect.

Stocking something that doesn't sell is costing you FOUR TIMES...
All of the above, but you paid for stock in the fist place,
AND,
That money/shelf space could be used for something that DID move on top of the rent and other costs.

It's VERY easy to have $250K in a very small stock room or warehouse!
If you live someplace there is a delivering store or warehouse close you are a FOOL to waste shelf space on items you can have in an hour or two, delivered to your door!

On the other hand, there are things you MUST stock,
Oil, Filters, Ect.
There is just no way around it!
.................................

Keep an eye on the 'Consumables' also!,
Shop supplies will KILL your profit margin if they are wasted or walking out the door!

For example,
Buying disposable gloves cut WAY down on the 'hand washing' time, and all the expenses that goes with someone washing greasy hands 20 times a day...
Soap, solvents, water, heating, time loss, ect.
AND,
It protects the employees against chemicals and waste products that can present problems with long time exposure...

Saved a BUNCH on greasy finger prints on all the paperwork and manuals also!
I don't know how many $300 sets of manuals I've gone through because they weren't legible anymore!
.................................................. ..

Clock your techs in on a JOB... they get paid when they are producing BILLABLE RESULTS...

This puts them on Percentage instead of salary or hourly where there is no incentive to stay busy.

The easiest way I found was to staple a time card right to the service contract/work order.
The tech picks up his next job, clocks in, and does as much work as he can, then clocks out, and clocks back in on something else until his parts arrive, stuff gets done in machining, ect., then he can clock back in on the first job and you have an absloute record of how much time that tech and his production!

You will be AMAZED at what some techs will produce... and not look busy,
While others won't pay garage bay rent and be running around like a chicken without a head all day!

And if the tech that is producing more for himself, and the shop needs a raise... Well, you do the math!

Also lets you decide which should stay and are working out,
and which should seek employment with a dealership!
................................

I think the best profit margin I had was industrial electronics...
Heavy equipment starters, alternators, batteries, wiring, cables, switches, ect.
To mines, construction companies, trucking companies, farm supply places...
Anywhere a nation wide warranty wasn't needed...

That stuff FLEW off the shelfs, had about a 110% markup, and made about a 45% profit margin!
Delivery to the heavy equipment places was a snap, and special orders were $$GRAVY$$!
Mines and other places want it RIGHT NOW, and aren't bashful about paying hefty premiums for expedited repair and delivery!

It's not GLAMOROUS like building racing engines was,
but it was a good, solid, steadily increasing income stream...
And I have to admit, now that my 'No Compete' contract has expired, I'm SERIOUSLY thinking about doing that again here!
---------------------------------------------

Watch your pennies, but don't let small change get in the way of making real bucks!
Some guys sweat the small stuff to the point of insanity...

That's what DELEGATION is for!
Your shop guy should be on the job for stopping waste and getting jobs IN- & Back out the door!
....................................

Your bookkeeper should be on top of the invoices, billing, and receipts...

ALWAYS SIGN YOUR OWN CHECKS!
ALWAYS BE THE PERSON TO PICK UP THE CANCELED CHECKS!
(I learned that one the hard way!)
If you do those two simple things, no one can ever walk away with any substantial amount of your CASH!
...................................

Make up your mind if you are...

A. A Service/Mechanic Shop.
I know you MUST stock some things, but keep the inventory to a MINIMUM, and do the same with the machine shop.

B. A Machine Shop.
Machine shops are EXPENSIVE to start up, and they are EXPENSIVE to operate, they are EXPENSIVE to supply!

Machine tools and bits/cutting tools/parts are EXPENSIVE,
And you MUST stock them since there usually isn't a local machine tool supply shop handy in most areas!

Skilled, Qualified Machinists, what you need for a REAL machine shop,
Are a dying breed, and they come at a PREMIUM!

C. A Parts warehouse or retailer.
With the advent of the 'Discount Sore' places that sell cheap 'Import' crap, it's VERY HARD to compete with them, and it's impossible to keep up with the nation wide media campaigns...
VERY long hours, VERY little profit margin, VERY large investment for buildings, stock, sales help, ect.

D. A 'Speed' shop...
Everyone thinks they would like to make a 'Killing' owning a 'Speed Shop' that only does work on CLEAN HOT RODS, and deals in new, shiny parts...

Again, the online retailers will KILL your profit margin,
There probably won't be enough local HOT RODDERS that DO NOT do the work themselves,
(Whitness all the 'Import Tuner' shops that have popped up, and been gone in just a few months,
Or the 'Low Rider' shops that deal with Mini-trucks and such that have come in gone in a flash...)

It's the oil changes, brake jobs, water pumps from 'Average Joe' that keep most independent service shops in business, and unless you have a HUGE potential client pool,
The chances of getting the "Hot Rod 15%" to notice you will be VERY HARD,
And out of that 15%, you are only going to get service work from about 15% of that narrow slice of the population...

Most 'Hot Rod' types do their OWN work at home, and most 'Hot Rod Shops' or 'Speed Shop' start-up's forget that part!
--------------------------------

One 'Niche' in the market that has been a stead stream of income for me is Magnetos and ignitions from old farm tractors...
You would be surprised what some of the Mag and distributor work for those old antique tractors goes for!

And stupid me, I was actually going to throw away my magnetizer for magnetos and permanent magnet starters a when I sold the shop because I though it would never be used again!

I have units in here on a 6 month waiting list, and the owners are more than HAPPY to have someone that will dink with them at all!

I tell them I'll call or Email them to send when their turn comes up close, but most just send the units to me anyway, so they sit around here for 5 or 6 months with the work order laying in their boxes...

Just something to think about for extra work...
Look for the Niches in life, you never know where they are going to pop up!
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post #15 of (permalink) Old 05-20-2009, 04:23 PM Thread Starter
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No, my example is a definite screwing.

It's not $800 vs 1800, it's about $60 vs. $1800!

Maybe $25 for the pulley, $30 for 15 minutes to put it on.

The idler pulley was bad, but they wanted to replace EVERYTHING! - the entire system.

It's NOT a simple case of misdiagnosing - THEY ARE AN EXPERIENCED SHOP.

They knew they were screwing him.

And - "internally exploded?" What's that?

And - why did they want to replace EVERYTHING? I can understand one or 2 parts, but not EVERYTHING!

I called the BAR and told an old time friend about it. He promised they'll take in one of their "undercover cars." People like that shouldn't be in business, they should be in jail!
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post #16 of (permalink) Old 05-22-2009, 10:32 AM
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Quote:
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No, my example is a definite screwing.

It's not $800 vs 1800, it's about $60 vs. $1800!
I agree.

I was saying, around here, *EVEN IF* you had to change the entire system, it should only run about $800 to $1,000!
Motor time guide usually says about 3 to 4 hours for entire flush and compressor R&R...

Now, if you had to change the condenser or heat exchanger, that would be a different story!
Some of the newer vehicles you have to take the entire front end off to get to the condensers! WHAT A PAIN!
-----------------------------------------

Idler pulley should have been a $100 to $150 job at the MOST...
Some of those idler and tensioner pulleys can be pretty darn hard to get to,
So the labor can drive things up some,
but generally, the parts are cheap, accessible, and fairly easy to replace without problems...

You can add in another few bucks, because I won't let a used belt go out if we have to take it off for some reason...

ANY cracks, frazzles, cord rub throughs and it gets changed!

I don't want my customers paying me to work on the 'Belt Thingy' and then have a belt failure!
Guess who gets blamed!
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post #17 of (permalink) Old 05-22-2009, 01:50 PM Thread Starter
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When they told him EVERYTHING they meant EVERYTHING! The entire system.
According to him it was "the thingy in front of the radiator, the compressor, that round thing (dryer), and the cold coils inside, and all the hoses. He did not specify if the blower motor or not.

It "Exploded Internally," so the pieces circulated through the system, ruining everything. "At least $1800, or more."

"Don't try to use it - it could do more damage."


He took it to the dealer day before yesterday - they replaced the belt and idler pulley - they showed him the pulley - the bearing was self destructing. When he turned the bearing, rust and pieces fell out. Seems likely that was the squeel.


Total cost, belt, pulley, and labor, about $120 -- AT THE DEALER! It obviously didn't take very long.
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post #18 of (permalink) Old 02-10-2010, 10:02 PM
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Well, that's definitely unlawful! they should be sued for doing that. I also agree that it's the idler pulley that should be changed. In a shop, 4-Seasons accessory Belt Idler Pulley costs just around $15. If that is the case, then it shows that their labor costs about $1785!That's extremely awful and saddening.
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