In my last column, I stressed that a smart service manager charges for what technicians know, not just for what they do. This means charging fees that are commensurate with the skill, experience and equipment needed to do the job correctly the first time.
This time, I'll provide additional perspective on charging more appropriate labor fees, including applying the law of supply and demand. I'll also recommend establishing a more effective structure or guideline for getting paid for the time your techs actually spend on the tougher diagnostic and repair jobs.
As I previously explained, many bosses who begin measuring tech efficiency in earnest are stunned to find that their sharpest techs are turning the lowest efficiency numbers. In a nutshell, this realization usually indicates these techs are handling the toughest jobs, but the boss just isn't charging enough for their time and talent.
In many instances, this startling revelation-best techs appearing to have the worst efficiency-is the thing that finally convinces the boss to ditch his or her single labor-rate approach. In my opinion, entirely too many tire dealerships and service shops are struggling or underperforming because they're tied to the old-school belief in one labor rate. For years, doctors and lawyers have used multiple labor rates successfully and effectively. To them, it's a foregone conclusion that the more skill and experience the task requires, the more it costs to perform that medical or legal operation.
Guess what? They have no trouble getting paid accordingly!
It's a tough transition for some tire dealers and shop operators, but those who embrace multiple labor rates agree they should have made the change long ago.
Let's get back to the issue of supply and demand. Examine any other service industry and you'll see that the most talented workers/technicians/repair persons are always in the greatest demand. The greater the demand for their skills, the more their services cost. The more difficult it is to find a skilled person to fix a particular problem with a computer, copier, wheel aligner-heck, pick a piece of sophisticated equipment or machinery-and the more the repair specialist charges.
Provided he or she fixes the problem correctly the first time, no one complains. People may not like paying the bill, but deep inside they're thrilled to be up and running again.
I'm baffled as to why more automotive service managers don't treat their technicians the same way. I have been reporting on the auto repair industry for more than 30 years, and I can't count the number of times I've witnessed this scenario. A savvy and persistent tech has solved a tough problem, saving the motorist untold dollars by fixing the vehicle correctly the first time.
Solving this electrical, emissions or driveability problem took some time, and rather than proudly charging what the tech's time is really worth, the boss apologizes for the tech's talent and charges only a fraction of what he should have invoiced.
Then to add insult to injury, the customer reinforces the law of supply and demand by admitting that other repair shops in town couldn't diagnose that same problem. After the motorist departs with his bargain-priced diagnosis and repair, I politely ask the boss why he gave the job away. The typical response is, ``Oh, I couldn't charge that woman seven hours labor for that job.''
Please tell me why you can't charge for solving a tough problem. If someone values the privilege of operating a motor vehicle, then he or she must pay for that privilege. This includes the cost of keeping this vehicle in good working order.
If someone doesn't care to pay your diagnostic fees, he or she can walk, bike, rollerblade, hitchhike-or take public transportation-to work.
Managers should work with their techs to develop prudent, stepped or staged approaches to the tougher, more time-consuming diagnoses. For example, develop basic or routine diagnostic fees for checking emission failures, intermittent driveability problems, electrical failures, etc. Then create a sliding scale of fees for successive hours spent on the job.
Politely but firmly explain to motorists that your techs will spend only as many hours on a particular problem as the vehicle owner is willing to pay-period.