Reasonable Parts Markup?

[lardy1]

If they're paying ten bucks an hour, you can bet your *** there will be a shortage. That's basically what's at the heart of the bitching in this thread. We want the mechanic to know everything and do everything to our specs and satisfaction then expect him to do it for peanuts.

I was a building contractor for years. I stopped doing free estimates just because someone asked and I learned to read a tight *** cheapskate in about three minutes and how to walk away from them.

 

[2ndGearRubber]

If they're paying ten bucks an hour, you can bet your *** there will be a shortage. That's basically what's at the heart of the bitching in this thread. We want the mechanic to know everything and do everything to our specs and satisfaction then expect him to do it for peanuts.

I was a building contractor for years. I stopped doing free estimates just because someone asked and I learned to read a tight *** cheapskate in about three minutes and how to walk away from them.

Fully agree.


But how can $19.99 LOF/Rotate specials exist when you're paying for someone with a clue to do them? Think of the profit you're loosing from not having the "at-bats" (or other lame sports metaphor) to upsell! I was aghast discussing car count with management a few weeks ago. They were valuing every car that came in the door at $170. Why? Divide total yearly sales by car count, and somehow that makes the LOF/rotate only guy worth $170. It creates a culture of flooding shops (always say YES!) and over staffing. The issue being when it's slow, and you have have 5 guys on the clock, that's a huge payroll liability. So you either pay flat-rate or similar, and shift the pay burden to the employees, or you hire for peanuts and throw bodies at the problem.


I do little for free, aside from my obligation as someone knowledgeable to confirm the car isn't a death trap. IMO I'm required as someone who "knows better" to inform someone if a wheel bearing is ready to fall out, or a tire has cords sticking out, or the engine that holds 5 quarts needed 3 to get to the bottom of the dipstick.

After much pushing, I've implemented a cost structure for diagnostic/inspection time for most common issues, between $20 and $50, not waived upon repairs, nor negotiable. Despite strong push-back from the front counter, I convinced them to use this system. Think no-cranks, no-starts, ABS issues, etc. all of which they wanted to give away. After doing so, we lost zero money on back-outs. Why? Someone who won't pay $20 to inspect won't get it fixed with you.

I recall a story a writer once told me, about his first day on the job. Two kids walked in from a toyota with steam pouring out from under the hood, said they had a coolant leak. "$25 to look at it" said the manager on duty. Well, they two kids didn't have $25, so off they went. Don't chase the bottom of the market. If they don't have $25 to confirm the location of the leak, how are they going to pay for a upper radiator hose? They aren't. It's a litmus test for the person seeking repairs. Most people who want an ABS issue fixed are happy to pay $50 for a definitive answer. Those who aren't, are the same group who aren't going to pay you to fix it anyway.

 

[setfocus]

But how can $19.99 LOF/Rotate specials exist when you're paying for someone with a clue to do them? Think of the profit you're loosing from not having the "at-bats" (or other lame sports metaphor) to upsell! I was aghast discussing car count with management a few weeks ago. They were valuing every car that came in the door at $170. Why? Divide total yearly sales by car count, and somehow that makes the LOF/rotate only guy worth $170. It creates a culture of flooding shops (always say YES!) and over staffing. The issue being when it's slow, and you have have 5 guys on the clock, that's a huge payroll liability. So you either pay flat-rate or similar, and shift the pay burden to the employees, or you hire for peanuts and throw bodies at the problem.

my company is guilty of shifting the burden on the employee on both sides and are all about the free inspections, rotates, and flat repairs because they think they can upsell other work needed. Some people come only because it's free. I'll go to make an estimate and look through the customer history and realize they've been in 10 times, have 5 estimates on file, and never spent a penny. Wasted my time looking over the car

I think I posted earlier that auto techs, who are paid % of parts and labor on the job, are required to have 48 hours at the shop for the week or the store manager gets in trouble and the tech loses already approved vacation pay even when it's stupid slow (forcing you to stand around doing nothing for the majority of the day instead of having a tech leave early). Their rational is that it must be slow because potential work is slipping through the cracks so we'll make sure there are a max amount of auto techs in the shops because they won't loose any money from auto techs standing around but you can bet they won't give out any overtime to hourly tire techs and sales guys who rely on the overtime because their hourly rate is low, that would cost them money

This all comes down from corporate who make the same weather it's slow or not, work less hours, have no idea what it's like working in a shop, and are paid from the profits made by the shops who's employees they shaft The funniest part is that corporate had a town hall type meeting about a year or 2 ago about how the shop employees shouldn't think of corporate as "they" because we're all in it together or some BS Business drops company wide and they play the blame game with shop employees. Actions speak louder than words

big business at it's finest [/rant]

 

[jimindm]

Scott you make a lot of great points

I would agree with your thoughts on training. Although I am glad that you sort of backed that up a little. Noting that the lube tech is not changing oil, then thrown into some sort of a transmission or engine bearing job.

While I think training could be better, I would say the customer themselves is a bigger issue in the industry. You sort of hinted that at the end of your last post.

Before everyone melts down about that statement just like anything else there are good ones and bad ones. After dealing with them for so many years, you can usually just tell by talking to them a few minutes whether you want them as a customer.

Unfortunately we all have to sort out the bad ones, to get good one. Several years ago I was at a class, and a guy was telling me he was going to stop taking checks. This was several years ago, when many still wrote checks. Well it seems he took a bad one and could never get it collected. I asked him how he thought that was going to work out for him, business wise. Not everyone had a CC and many never paid cash. You will just run off good business, because of a bad customer.

I could go on about the bad customers I have fired over the years. There are two that stick out. One guy spent about $50 a year with me, and wanted me to drop everything for him. He actually said to me that he was one of my best customers, he deserved it.

The other was a guy had been to the AZ getting his codes read and threw google knew exactly what he wanted fixed. No diagnoses, just switch parts, which he brought with him. We played that game for a few visits.

I think the worst part is that people just do not realize how much a shop or even the tech has invested in working on their car. When I saw that figure of $7-24k in tools. I would agree, they need more.

To the poster that listed low pay as the issue. Here is a link that shows only 19% of the workers in a survey were happy.
http://blog.indeed.com/2018/01/25/salary-report/

You mentioned the guy that borrows the socket from you, and how much one costs. It does sort of surprise me that a tool allowance is not a part of very many benefits packages. Employers spend for uniforms, insurance, 401k, and the list goes on, but will not give $10 a week or $300 a year in a tool allowance.

 

[Downwindtracker 2]

One of the down sides to the flat rate, or more correctly called piece work, is the sorting of the jobs by service manager. His friends get the 4 hour jobs that can be done in 2, where as someone else will get that Volvo 245 heater fan. A book time of 8 hours, closer to 2 hard days.

 

[Shane6377]

Scott you make a lot of great points

I would agree with your thoughts on training. Although I am glad that you sort of backed that up a little. Noting that the lube tech is not changing oil, then thrown into some sort of a transmission or engine bearing job.

While I think training could be better, I would say the customer themselves is a bigger issue in the industry. You sort of hinted that at the end of your last post.

Before everyone melts down about that statement just like anything else there are good ones and bad ones. After dealing with them for so many years, you can usually just tell by talking to them a few minutes whether you want them as a customer.

Unfortunately we all have to sort out the bad ones, to get good one. Several years ago I was at a class, and a guy was telling me he was going to stop taking checks. This was several years ago, when many still wrote checks. Well it seems he took a bad one and could never get it collected. I asked him how he thought that was going to work out for him, business wise. Not everyone had a CC and many never paid cash. You will just run off good business, because of a bad customer.

I could go on about the bad customers I have fired over the years. There are two that stick out. One guy spent about $50 a year with me, and wanted me to drop everything for him. He actually said to me that he was one of my best customers, he deserved it.

The other was a guy had been to the AZ getting his codes read and threw google knew exactly what he wanted fixed. No diagnoses, just switch parts, which he brought with him. We played that game for a few visits.

I think the worst part is that people just do not realize how much a shop or even the tech has invested in working on their car. When I saw that figure of $7-24k in tools. I would agree, they need more.

To the poster that listed low pay as the issue. Here is a link that shows only 19% of the workers in a survey were happy.
http://blog.indeed.com/2018/01/25/salary-report/

You mentioned the guy that borrows the socket from you, and how much one costs. It does sort of surprise me that a tool allowance is not a part of very many benefits packages. Employers spend for uniforms, insurance, 401k, and the list goes on, but will not give $10 a week or $300 a year in a tool allowance.

The issue of bad customers has come up repeatedly. Why do you think there are so many 'bad' customers? Is this actually an issue with the customer or the industry?

In my opinion, the average customer walks into a shop expecting to get scammed. That's the reputation the industry has earned. They are presented with estimates that aren't transparent and probably have had bad experiences in the past.

Of course your customers walk in armed with their smartphone ready to defend against 'unfair' practices. Do you know that organizations such as AARP, Consumer Report and ABC News (among many others) recommend that consumers take the steps you're complaining about to avoid being scammed?

Maybe instead of complaining about customers you should listen to them and make some changes. They are after all the ones paying for your services.


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[protegeV]

One of the down sides to the flat rate, or more correctly called piece work, is the sorting of the jobs by service manager. His friends get the 4 hour jobs that can be done in 2, where as someone else will get that Volvo 245 heater fan. A book time of 8 hours, closer to 2 hard days.

There are all sorts of dispatch methods. Each has their advantages and disadvantages. I've been exposed to digital dispatch, team system, foreman dispatch, manager dispatch, and a permanent dispatcher. Out of all of them digital is the most equitable.

 

[Volvotechdude]

The issue of bad customers has come up repeatedly. Why do you think there are so many 'bad' customers? Is this actually an issue with the customer or the industry?

In my opinion, the average customer walks into a shop expecting to get scammed. That's the reputation the industry has earned. They are presented with estimates that aren't transparent and probably have had bad experiences in the past.

Of course your customers walk in armed with their smartphone ready to defend against 'unfair' practices. Do you know that organizations such as AARP, Consumer Report and ABC News (among many others) recommend that consumers take the steps you're complaining about to avoid being scammed?

Maybe instead of complaining about customers you should listen to them and make some changes. They are after all the ones paying for your services.


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As you've said, perception isn't always reality. Most GOOD shops want you to come back so they'll do just about anything to keep you coming back because they care. Most GOOD shops will listen and make adjustments if it's a good suggestion but demanding they open their books so you can determine what's a fair charge and fair profit borders on authoritarianism. What right do you have to that?

 

[richfinn]

The issue of bad customers has come up repeatedly. Why do you think there are so many 'bad' customers? Is this actually an issue with the customer or the industry?

In my opinion, the average customer walks into a shop expecting to get scammed. That's the reputation the industry has earned. They are presented with estimates that aren't transparent and probably have had bad experiences in the past.

Of course your customers walk in armed with their smartphone ready to defend against 'unfair' practices. Do you know that organizations such as AARP, Consumer Report and ABC News (among many others) recommend that consumers take the steps you're complaining about to avoid being scammed?

Maybe instead of complaining about customers you should listen to them and make some changes. They are after all the ones paying for your services.


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It's always down to money Shane, some people think the world owes them a living and everyone is a scam artist

Hourly rate is 'x' amount of $$$$$

You charge 30-60 mins to diag/verify the customer complaint, which might include a test drive (if more time is required for a complex diag you ask for authorisation)
This obviously does not apply to service and maintenance jobs where the work required is usually a fixed menu price

You charge the manufacturers book time for a complete repair process

You charge RRP for quality OE parts (you might get a 15-20% discount on the parts)

You add whatever taxes (20% in the UK)

That is transparent!!!!

Tell us exactly what you want from a shop, its not clear what your idea of transparency actually is??

 

[2ndGearRubber]

Scott you make a lot of great points

I would agree with your thoughts on training. Although I am glad that you sort of backed that up a little. Noting that the lube tech is not changing oil, then thrown into some sort of a transmission or engine bearing job.

While I think training could be better, I would say the customer themselves is a bigger issue in the industry. You sort of hinted that at the end of your last post.

Before everyone melts down about that statement just like anything else there are good ones and bad ones. After dealing with them for so many years, you can usually just tell by talking to them a few minutes whether you want them as a customer.

Unfortunately we all have to sort out the bad ones, to get good one. Several years ago I was at a class, and a guy was telling me he was going to stop taking checks. This was several years ago, when many still wrote checks. Well it seems he took a bad one and could never get it collected. I asked him how he thought that was going to work out for him, business wise. Not everyone had a CC and many never paid cash. You will just run off good business, because of a bad customer.

I could go on about the bad customers I have fired over the years. There are two that stick out. One guy spent about $50 a year with me, and wanted me to drop everything for him. He actually said to me that he was one of my best customers, he deserved it.

The other was a guy had been to the AZ getting his codes read and threw google knew exactly what he wanted fixed. No diagnoses, just switch parts, which he brought with him. We played that game for a few visits.

I think the worst part is that people just do not realize how much a shop or even the tech has invested in working on their car. When I saw that figure of $7-24k in tools. I would agree, they need more.

To the poster that listed low pay as the issue. Here is a link that shows only 19% of the workers in a survey were happy.
http://blog.indeed.com/2018/01/25/salary-report/

You mentioned the guy that borrows the socket from you, and how much one costs. It does sort of surprise me that a tool allowance is not a part of very many benefits packages. Employers spend for uniforms, insurance, 401k, and the list goes on, but will not give $10 a week or $300 a year in a tool allowance.

As the shortage increases, business models will have to change. IMO the chain model will be dead within my career, I'm 29 currently. So say I have an active career in the industry until 2055. I also believe I'm the last generation of mechanics that will focus primarily on ICE. Between scanner and information costs, the rise of flashing/updates, the idea of relying on the mechanic to supply 100% of all tooling is going to die. Nobody is going to have thousands out of pocket in OE subscriptions to make 50k a year.

I totally get you about the "but the code said" people. We have basically eliminated any of that over the last year. It just isn't worth the battles to collect .5 for an oxygen sensor that didn't fix the lean code.

Tool allowance would be interesting. I'd like a clause that forced you to use it on amazon. $300 don't go too far on the tool truck.

The issue of bad customers has come up repeatedly. Why do you think there are so many 'bad' customers? Is this actually an issue with the customer or the industry?

In my opinion, the average customer walks into a shop expecting to get scammed. That's the reputation the industry has earned. They are presented with estimates that aren't transparent and probably have had bad experiences in the past.

Of course your customers walk in armed with their smartphone ready to defend against 'unfair' practices. Do you know that organizations such as AARP, Consumer Report and ABC News (among many others) recommend that consumers take the steps you're complaining about to avoid being scammed?

Maybe instead of complaining about customers you should listen to them and make some changes. They are after all the ones paying for your services.


Sent from my iPhone using The Garage Journal mobile app

Bad customers are those who want everything checked for free, and buy nothing. Management caves to this, thinking people make rational decisions. Moat people don't care so much about price. They want it fixed the first time, and honesty. Focus groups tell management to do more for free, more boxes to check on that courtesy inspection! But offering more "for free" just means time wasters cause costs to rise for real customers.

 

[Leevon]

Clearly this thread has diverged between parts margin and technician pay. But I'll wait for anyone in the "parts markup is a ripoff" camp to tell me how they are willing to dictate pricing and also support fair pay.

My lowest-paid, entry level oil changer made $40k last year and has health insurance, paid vacation, tool allowance and other benefits, with a little hustle he'll be at $50k this year. In SW Missouri that's top dollar for an entry level job and a good hand has a lot of growth potential. My "flat rate" technicians don't worry about their hours as much as has been assumed here because we agreed to and predicted a reasonable amount of pay for reasonable production before they ever turned a wrench for me. There is a little up and down from week to week but at the end of the year their W2 tells the story and it doesn't involve ripping anyone off to make a living. Pay is an issue in this industry but most of us have figured out that if you want to be in business for the long haul you take care of people. This is the the more common philosophy at least among the many shop owners I associate with.

You can't have a sustainable healthy balance sheet without taking care of your staff first, at least not in the independent world. When a customer believes we are too expensive what I'm hearing is "I have different beliefs about what is fair and reasonable compensation and for you and your employees". And that's fine, we'll survive without that person but we also have compassion and understanding for their point of view, after all that's basically how we all got into the business (DIY car stuff). The rest of my customers are happy because my staff is happy. It's very obvious to me that almost all repair shops are either in a negative cycle of survival or thriving and I choose the latter. I'll gladly make a line item on an invoice for parts at cost and add another line for "things we need to serve you plus a few percent profit at the end of a month".

Also, for what it's worth price is far less important than customer experience to many many consumers. If that's not your mindset it's okay but it puts you in the minority and will always make it hard to understand the business from our side.

 

[InjectorService]

WOW! What a thread. I couldn't keep reading it. One thing I have taken away from it is that there are a LOT of people here and in the rest of the world that don't have a hot clue how to run a business or what it takes.

My business is a little different because I don't have many parts and my labor is flat rate. But as far as what shops charge should be 100% up to them as far as I'm concerned. I know my shop is not the cheapest, I'm OK with that and I don't want to be. I know the work is done correct, every time, and if something happens I take care of it. Period, regardless of cost to me and the business.

I have a good reputation and the work I put out commands the prices I charge. I think the same goes for auto shops. If they put out great work, stand behind it, have great customer service, those things in combination can command a higher price. Who cares if its labor, parts, shop supplies, a dollar is a dollar. If i wan't something half-assed there's more than enough people out there that do that. If I want the best service and warranty, it has to be paid for.

NOW, gouging is definitely a thing and to me this happens when you get the half-assed work, by the guy that doesn't stand behind it, but have to pay the premium price. That along with replacing parts that don't need to be or deliberately charging for items that are not worn or broken.

 

[pi_guy]

Customers ****, there is no good way to put it.
You need them or some of them with a big filter on the unwanted.
I do custom work at this point and will price based on customer difficulty. But it is not only automotive that looney tune customers, look at the state of officials for sports and the difficulty getting the officials to return after one year. They get so abused they quit.
The parents are customers in paying taxes to school district or paying for travel teams.
I did street cars years ago and I filtered my customers, as we do it my way or go elsewhere.
Currently doing welding and fabrication stuff for marine and I am getting work lined up for spring summer, but not too much or it takes away from my fishing time.
Had a call for some work and told him I was off racing on Thursday but he wants me to come early on Thursday so I can start thinking about the project on my way to the ski hill.. He understands my priorities so I have no problem working with him as a client. If he was demanding as most customer are I would send him away.
Had one guy with lots of work, gave me some said no pressure need it in a week or two, two days later he called all my numbers at least 2 times, suddenly needed it ASAP. Turning **** into good parts takes time and is not worth the pressure he got the parts back and needs to find another welder.

Many of the customers bring in on themselves. If you think auto is the big rip off try IT and computer repair.

Or in the racing industry paying list plus shipping for a part and have it race prepped for a few hundred dollars more.

 

[four.cycle]

I couldn't keep reading it

I gave up on it last week. I'm surprised that it's still going.

Bottom line: there are some people who want stuff for free. There are some people who clearly have no idea how to run a business. There are some people who believe that anything above the lowest price an item can be purchased for online is "price gouging".

If you want cheap, and no "markup", buy the parts online and install them yourself.

 

[Shane6377]

Many of the customers bring in on themselves. If you think auto is the big rip off try IT and computer repair.

Would love to hear your justification for this. Remember, when people talk about computer scams they're talking about actual criminals... not the professionals in the industry. Lol.


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[Shane6377]

It's pretty obvious why the auto repair industry is in the state it's in judging by the responses here. You all think anyone who suggests an alternative to the way you run your business "just doesn't know how to run a business" but we do run businesses and quite successfully. And we don't have the recruitment, fraud or reputation issues. I suspect it's going to get worse before better.


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[richfinn]

It's pretty obvious why the auto repair industry is in the state it's in judging by the responses here. You all think anyone who suggests an alternative to the way you run your business "just doesn't know how to run a business" but we do run businesses and quite successfully. And we don't have the recruitment, fraud or reputation issues. I suspect it's going to get worse before better.


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You have been repeatedly asked how you would bill out the labour without using manufacturers book times as a guide with no logical response

Your not suggesting any alternatives!!!

 

[Downwindtracker 2]

Book time helps the customer , you don't have the level of rip offs you would get otherwise.

 

[jimindm]

Almost amazed we made it 500 posts and it has not spiraled out of control and shut down.

I think these threads are sort of interesting to read. It really does show how many do not understand what it is like running any kind of business, and also shows what kind of customers and their expectations are, before they ever even enter a repair shop.

No matter how a place is run, and whether you have a shop repair your vehicles or not, shops are getting it done everyday.

Just a little searching done, and in the US there are 275 million vehicles, 175k shops employing 800k employees, with a $115 billion in sales. I am not sure what will ever change.

I have thought about this since the thread started. I think the OP ok'd his vehicle to be fixed. Found out where the part came from and questioned how the shop could sell it for so much over their cost.

I guess I have no problem with someone guessing about what I pay for something. But I can assure you if a customer came in and questioned me knowing exactly how much and where I bought the part, I would have a problem with that. That should be confidential, I would have that store manager in on that conversation. Then I would think a long time before ever buying anything from them again.

 

[kythri]

It really does show how many do not understand what it is like running any kind of business, and also shows what kind of customers and their expectations are, before they ever even enter a repair shop.

Where does this leap of logic keep coming from? Seriously - because someone questions parts markup beyond retail pricing, they don't know how to run a business, or are a horrible customer?

It's time to get a new record, because this one is busted.

I have thought about this since the thread started. I think the OP ok'd his vehicle to be fixed. Found out where the part came from and questioned how the shop could sell it for so much over their cost.

Well, I'm glad you thought this, since I only stated it multiple times. It's far more preferable that folks read what I wrote, and interpret it correctly, rather than read into it their subconscious desire to brag to the world about how they're qualified to run a business, and others aren't.

But I can assure you if a customer came in and questioned me knowing exactly how much and where I bought the part, I would have a problem with that. That should be confidential, I would have that store manager in on that conversation. Then I would think a long time before ever buying anything from them again.

It's unsurprising that most seek to defend and shield shady business practices.

 

[four.cycle]

^ Another thing that not very many people are aware of is what happened to automobile dealerships in 1930, 1931, and 1932: most of them went broke and folded, leaving the Detroit automobile manufacturers without a distribution network for their products.
Prior to that, dealerships were pretty much on their own. When General Motors and Ford realized that they would also go down without their dealers, they built a system by which dealerships (properly managed) would remain profitable and remain in business.
Part of that was markup on parts at every step: the manufacturer, the wholesale distributor, the jobber, and the installer all got their little piece of the pie.
The independent automobile repair industry followed along, albeit not always on quite the same level of profit.

Again, if you don't want to pay the markup, you buy the parts yourself, and you install them yourself. If you want somebody else to install the part, you pay for the labor and the part, and the markup on the part. That's just the way it is.

Those who object(ed) to that sort of system are what created the "DIY" market, without which the independent auto parts retailer would never have existed.

You don't get to have it both ways.

 

[lardy1]

From Eppy's FB page:

 

[yahh]

I've been in the industry for about 6 years and I'll lay out some comparisons.

I'm sure everyone here has had at least a beer at the nicer mom and pop bar downtown. Let's take a general beer that everyone knows, bud light or miller lite. You can go to Walmart and get a 24 pack of miller lite for somewhere around $12 or so. Now Let's go to the bar down the street, that same beer is $4, maybe $5 when not on happy hour PLUS tip. Nobody complains about that mark up right? What are the odds that beer is bad or fails in some way? Maybe .1%. Now you're hungry and you want a NY Strip and potatoes, perfect. At Walmart that 10oz steak is $7-8 and a potato is like 30 cents but you gladly pay $16-18 + tip while out.

What does a chef cost? Maybe $50k and the waiter/waitress is on $3 per hour. The dish washer, maybe $10 per hour. A GOOD BMW or Mercedes tech costs 90-140k unloaded. That's not including benefits like healthcare, vacay time, IRA, etc. Now lets add in that service advisor that you love so much, he/she also costs 50-70k a year unloaded. How about that loaner car that you love so much? Factory scan tools? Quarterly training? This can go on and on. There are a million different things that people don't even consider when they complain about price.

 

[kythri]

I've been in the industry for about 6 years and I'll lay out some comparisons.

I'm sure everyone here has had at least a beer at the nicer mom and pop bar downtown. Let's take a general beer that everyone knows, bud light or miller lite. You can go to Walmart and get a 24 pack of miller lite for somewhere around $12 or so. Now Let's go to the bar down the street, that same beer is $4, maybe $5 when not on happy hour PLUS tip. Nobody complains about that mark up right? What are the odds that beer is bad or fails in some way? Maybe .1%. Now you're hungry and you want a NY Strip and potatoes, perfect. At Walmart that 10oz steak is $7-8 and a potato is like 30 cents but you gladly pay $16-18 + tip while out.

Your descriptions above regarding beer or steak? Those are value-added services.

There's no value-added service with a ridiculous parts markup.

What does a chef cost? Maybe $50k and the waiter/waitress is on $3 per hour. A GOOD BMW or Mercedes tech costs 90-140k unloaded. That's not including benefits like healthcare, vacay time, IRA, etc. Now lets add in that service advisor that you love so much, he/she also costs 50-70k a year unloaded. How about that loaner car that you love so much? Factory scan tools? Quarterly training? This can go on and on. There are a million different things that people don't even consider when they complain about price.

The rest of this jibberish doesn't apply.

I'm not complaining about service rates, I'm not complaining that I was charged for a job that I could have done cheaper. I'm complaining about a ridiculous parts markup, well above retail for the part, which the place didn't pay anything close to retail.

 

[yahh]

Your descriptions above regarding beer or steak? Those are value-added services.

There's no value-added service with a ridiculous parts markup.


The rest of this jibberish doesn't apply.

I'm not complaining about service rates, I'm not complaining that I was charged for a job that I could have done cheaper. I'm complaining about a ridiculous parts markup, well above retail for the part, which the place didn't pay anything close to retail.

How is there no value added? It's literally the same thing. You drive to the location, the "waiter" takes your car from you, takes your "order" and passes it on to the "chef". He then sets you up in a loaner car so you can continue on with our day.

Buying the part and installing it yourself = buying a steak and going home and cooking it yourself. You can't bring a steak to the restaurant and ask them to cook it, can you? Even then, most people have a stove and a pan. Most people don't have a lift and $80,000 in tools.

The money has to come from somewhere. Whether its parts or labor or fees. Would you be comfortable with us charging $250 per hour instead of marking up parts because that would be the alternative.

The problem stems from how little people understand about how much time and money it takes to become a quality technician and SA. The education required to perform the job well is on par with most college degrees AND they have to have more tools than most professions require.

 

[kythri]

How is there no value added? So you would be comfortable with us charging $250 per hour instead of marking up parts?

Thank you for demonstrating you didn't read the thread before deciding to contribute your words of wisdom.

There's no value-add to marking up parts, because the part wasn't materially changed by it's acquisition, in order to add value to the part.

Considering how they don't allow customers to supply their own parts, and all they did was walk across the street and procure it, zero value added.

I've also answered your other question multiple times in this thread: Yes, I would be comfortable with higher hourly raters instead of marking up parts.

Marking up parts is a shady practice, done as a way to obfuscate actual repair costs, and allows shops to say "oh, we only charge $**/hour for labor!" instead of their true costs.

It scams the customer, it scams the tech who's making a fraction of that inaccurate hourly rate.

"Book rate" keeps getting defended as a way to keep shops honest, and a way for the customer to compare shops. I'd argue that system is undermined by shops displaying what amounts to fraudulent hourly rates, since they make it up on parts markups, supplies and other fees outside of the actual hourly rate.

 

[kythri]

How is there no value added? It's literally the same thing. You drive to the location, the "waiter" takes your car from you, takes your "order" and passes it on to the "chef". He then sets you up in a loaner car so you can continue on with our day.

You've significantly edited your post, so I'll reply to this one as well.

It is *NOT* the same thing at all.

First, what world do you live in where shops provide a loaner car?

Buying the part and installing it yourself = buying a steak and going home and cooking it yourself. You can't bring a steak to the restaurant and ask them to cook it can you?

And right there is the value add. The "part" that I'm buying (the steak) is being materially transformed, creating the value-added service. I don't have to prepare it, cook it, clean up afterwards.

These are all value-added services.

When a shop buys a part, they're not materially changing it. Their acquisition of the part is not a value-added service.

Certainly, their labor on repairing the vehicle and installing the part is a service that has value. I'm not disputing that.

At the end of the day, however, they haven't changed the part. Their labor didn't do anything to the part. The part doesn't work better for their installation vs. mine or another's. The part doesn't last longer for their labor.

The part is still the same part.

The money has to come from somewhere. Whether its parts or labor or fees. Would you be comfortable with us charging $250 per hour instead of marking up parts because that would be the alternative.

Then be honest and do that!

The problem stems from how little people understand about how much time and money it takes to become a quality technician and SA. The education required to perform the job well is on par with most college degrees AND they have to have more tools than most professions require.

I'm sorry, but tacking on a markup on parts has absolutely nothing to do with the time and moiney it takes to "become a quality technician and service advisor" - neither one of those individuals is getting a cut of the parts markup.

I guarantee that your employer bases your wages on the shop's hourly rate, so every other charge over shop rate is gravy for the business, but not the employee.

 

[yahh]

Thank you for demonstrating you didn't read the thread before deciding to contribute your words of wisdom.

There's no value-add to marking up parts, because the part wasn't materially changed by it's acquisition, in order to add value to the part.

Considering how they don't allow customers to supply their own parts, and all they did was walk across the street and procure it, zero value added.

I've also answered your other question multiple times in this thread: Yes, I would be comfortable with higher hourly raters instead of marking up parts.

Marking up parts is a shady practice, done as a way to obfuscate actual repair costs, and allows shops to say "oh, we only charge $**/hour for labor!" instead of their true costs.

It scams the customer, it scams the tech who's making a fraction of that inaccurate hourly rate.

"Book rate" keeps getting defended as a way to keep shops honest, and a way for the customer to compare shops. I'd argue that system is undermined by shops displaying what amounts to fraudulent hourly rates, since they make it up on parts markups, supplies and other fees outside of the actual hourly rate.

No, I didn't read the 20 pages of this thread. However, our techs aren't flat rate and they don't deserve to be so they aren't being taken advantage of in any way. We need to make money to pay the technicians what they need to make to pay off their schooling, their tools, and most importantly their knowledge. It doesn't matter where the profit comes from, but it has to be there for us to stay open and parts is the best way to do it as it is the thing that changes the most. We use parts margin as there is a correlation of how much we need to charge based on the part cost to make profit as a business and to be able to warranty that part if it fails. Let's say we put in a used motor for cost ~4000 and 30 hours of labor. That motor fails after 2 years. Now we're out 30 hours plus the motor cost at no fault of ours.

There is absolutely value added from us sourcing the parts. Based on our experience (once again, high end BMW / Mercedes) we know what parts are junk and quality. Not even 1% of our parts come from advanced auto or autozone. We order that part, we inspect the part to make sure its up to standards, we install the part and then we warranty it for 3 years or 36k miles.

 

[four.cycle]

You always have the option of buying the parts at a parts store or online and installing them yourself.

 

[kythri]

You always have the option of buying the parts at a parts store or online and installing them yourself.

Really? You can do that? That's legal?

 

[kythri]

No, I didn't read the 20 pages of this thread.

Then, please, don't bother contributing.

Your arguments have already been brought up countless times. Along with your pointless restaurant analogy that has also been brought up multiple times.

It's as if you just plagiarized earlier posts.

Thank you for that.

There is absolutely value added from us sourcing the parts.

No, there isn't. You can delude yourself that whatever you're doing is providing a value-add, but it isn't.

Further, a shop's refusal to allow customer-supplied parts (and I'm not particularly arguing this practice) negates any and all arguments that a shop has expenses involved in procuring the parts.

That's 100% on them, due to their policies.

Buy a part at a discount (all legitimate shops get discounts), mark it up to retail, and move on.

If that had been done, this thread never would have been created.

 

[Shane6377]

You always have the option of buying the parts at a parts store or online and installing them yourself.

This is such a tired excuse. You're basically saying "I know it's wrong but you can't stop me."

You could live on a farm and produce your own food but just because you don't doesn't give the grocer the liberty to take advantage of you. You still expect them to operate with some integrity.


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[protegeV]

This is such a tired excuse. You're basically saying "I know it's wrong but you can't stop me."

You could live on a farm and produce your own food but just because you don't doesn't give the grocer the liberty to take advantage of you. You still expect them to operate with some integrity.


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No, but it does give you the opportunity to take your business elsewhere. Save for a small town with monopolized retail businesses you always have to option to spend your money somewhere else. The market will speak and the businesses you feel are taking advantage of you with exorbitant markup should go out of business.

 

[M6erfan]

I'm not complaining about service rates, I'm not complaining that I was charged for a job that I could have done cheaper. I'm complaining about a ridiculous parts markup, well above retail for the part, which the place didn't pay anything close to retail.

I share the same sentiment, to some extent. On one hand, indy shops can't stock every single part for every car that might come through the door. So they have to order the part, usually locally (to get it quickly) and probably pay a higher price because they're not shopping around for the best price. And if they did shop around, there's the time cost of that to be added. Dealerships parts are high, always have been. No way around it. Mopar charges like $12 for their branded oil filter. The exact equivalent aftermarket costs half that. WE all know that. Just the way it is. What irks me is the example I used earlier in this thread where the discrepancy between say Toyota & Lexus parts (for the exact same part) is ridiculous. But I guess in that example your paying for the nice Lexus dealership waiting room with complimentary high end coffee and food, with private business rooms.

I mean, I can spend an hour, or more, shopping around on the internet for the best price for a part and wait 2-3 days until it arrives. I have a local indy BMW shop that will install my parts, if needed, but warranty is up to me, not the shop.

It is what it is.

 

[four.cycle]

You're basically saying "I know it's wrong but you can't stop me."

no, what I'm saying is: if you don't want to pay the fare, walk.

buy the parts and fix it yourself.

why is that so difficult to understand?

 

[Shane6377]

no, what I'm saying is: if you don't want to pay the fare, walk.



buy the parts and fix it yourself.



why is that so difficult to understand?

Which is what I've done.

Not everyone has that option (just like you don't have the option to grow your own food). Are you saying that because someone can't fix their own car that's justification to exploit them?


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[2ndGearRubber]

Your descriptions above regarding beer or steak? Those are value-added services.

There's no value-added service with a ridiculous parts markup.



The rest of this jibberish doesn't apply.

I'm not complaining about service rates, I'm not complaining that I was charged for a job that I could have done cheaper. I'm complaining about a ridiculous parts markup, well above retail for the part, which the place didn't pay anything close to retail.

Zero value is added by a waiter carrying my food, for 15% of the bill. They're doing even less than procuring parts. I can fill a cup, walk to a line to pickup food, and tell a cook my order.

Worst of all the business expects the customers to carry the payroll expense via tipping. "But tipping insures good service". Just another thing management is pushing onto the consumer, to literally manage their employees and decide if they are doing a reasonable job.

 

[u2slow]

The ethics of what places charge or markup doesn't matter. It's legal, and you have the choice to participate or not.

It's not my obligation to keep anyone's business open.

 

[nh_yota]

TLDR most of this thread but some of you are comparing apples to oranges. There's a difference between a business that sells goods and business that sells services. A mechanic is different from an auto parts retailer because a mechanic is selling the service of repairing your car whereas the auto parts store is selling parts. A restaurant is different from a grocery store even though they involve similar goods, so trying to compare margins between the two is pointless.

If you are a business that sells a service, you should mark up your parts to cover the overhead associated with use of the such parts, but you should derive your profit from the service (labor) rather than the parts needed to provide the service.

 

[Shane6377]

TLDR most of this thread but some of you are comparing apples to oranges. There's a difference between a business that sells goods and business that sells services. A mechanic is different from an auto parts retailer because a mechanic is selling the service of repairing your car whereas the auto parts store is selling parts. A restaurant is different from a grocery store even though they involve similar goods, so trying to compare margins between the two is pointless.

If you are a business that sells a service, you should mark up your parts to cover the overhead associated with use of the such parts, but you should derive your profit from the service (labor) rather than the parts needed to provide the service.

Exactly. This has been said over and over in this thread but some still don't get it.

When a service business has to markup parts to make a profit what their really saying is "our service isn't good enough to turn a profit so we have to sneak in costs other places." It's a big red flag and I choose to take my business elsewhere.


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