Shop coaches: Raise prices to improve business

LAS VEGAS — If the current rate of inflation has taught the automotive aftermarket anything, it's that consumers will continue to buy food and gasoline despite the higher prices.

So why aren't tire dealerships and auto repair shops increasing their prices to offset rising business expenses?

That was the question on the minds of four "shop coaches" during two Shop Coach sessions at the AAPEX 2021 in Las Vegas. Shop coaches advise repair shop owners on how to better run their businesses and improve profits and sales.

The shop coaches noted that consumers are accepting — and paying — higher prices for food, gasoline, hotels and more due to inflation.

"And yet we have shop owners that still, this year, haven't raised their prices in two to three years," Cecil Bullard, CEO of The Institute for Automotive Business Excellence, said.

"We've seen inflation and our bills have gone up. So where are they getting the money from if they haven't raised their prices at this point? And if they don't raise their prices, where are they going to be?

"If you can't raise your prices right now, then you'll never raise your prices."

Subscribe to Tire Business for more award-winning news and insight.

Bullard said a shop doesn't need to advertise that it raised prices, just as grocery stores or gas stations don't announce increases in their prices.

Everybody in this business should be making money, Vic Tarasik, founder and managing partner of Shop Owner Coach, said. He added that value, convenience and trust are more important to customers than price increases.

Dealers with low prices usually attract price-conscious customers, Bullard said, but that's not the type of customer who will sustain a shop.

"When you become known as a shop of quality, that's the kind of customers you're going to draw," Bullard said, noting that customers who abuse their vehicles will eventually go to another less-expensive shop.

When a shop builds relationships and trust with its customers, price becomes less important to the customer.

Shops need to consider the importance of generating profits to pay higher wages and better benefits for technicians, who can literally write their own ticket amid low unemployment and worker shortages.

Shops can retain and attract quality technicians by paying them what they are worth, offering benefits packages, providing training and updated equipment, Maylan Newton, CEO of Educational Seminars Institute, said.

To get there, Newton said, owners need to get their financial house in order.

"We need to get out of this idea that we're the bottom-feeders of our industry and start charging what we're worth," Newton said. "Gasoline goes up every 12 minutes, but most of you haven't changed your pricing in a year or more."

Charging the right price for what the work is worth is a mental hang-up for many auto shop owners.

"I have yet to meet that shop owner who got into business because they want to make a bunch of money," Greg Bunch, CEO of Transformers Institute, said.

He said they get into the business for a love of cars or helping people, and while admirable, it will cause problems if it drives your business decisions.

"You got to get paid what you deserve," Bullard said. "How are you going to pay to have the best talent out there? You've got to be willing to charge for it."

Customer cost really shouldn't be an issue for the shop owner, he added, because ultimately it's the customer's decision whether to spend the money once they understand why a service is recommended.

"But a lot of shop owners and service advisors have this 'Oh my god, that's too high. Let me bring the price down,'" he said. "I think it's dishonest to tell the customer about a $1,000 worth of work because you think they're going to buy that when the car needs $5,000 and not tell them the whole story."

At that point, Bullard said a shop owner really should question if they are doing what is best for their customer.

"It's the customer's vehicle, it should be their decision," Tarasik added.