Dec 2, 2009

The main things you will need to think about are how to accomplish this. How do you do so without getting out of line by pricing yourself out of the ballgame? How do you avoid simply playing into the customer’s favor [and your competition’s] by lowering your prices to the point that you cannot pay your bills, consequently shutting your doors for good?

Let’s take a quick look at some key points to profitability.

Know Your Market

What do I mean here? This simply means you must know what sets your company apart from others. What do you offer than no one else does? Do you have a specialty? Do you cater towards a specific make or brand? Do you have high-end clients, mid-range clients, or budget minded clients?

These questions and answers are keys to understanding your market position. Ask yourself these questions, and you will find an array of answers that will help steer you in the right direction. The more you hone in on what sets you apart and what your shops strengths are, the better off you will be in terms of figuring out how to keep yourself profitable.


There are quite a few things that most shop owners do not pay attention to that tend to have an adverse affect on their bottom lines. If you really stand back and analyze this situation, you will see what I mean.

There are things such as zip ties, wire, water, electricity, paper towels, soaps, carb cleaner and general shop supplies [part of your overhead] that all eat into your bottom line. As someone foots the bill for these items, and yes they are necessary, but you need to account for these items as they will fall into the loss column. It is important to try and keep track of these expenses, and to train your staff in conservation, as we all know that each penny counts and it all adds up.

Price It Right

This is a touchy subject, as there are many trains of thought here. Some option to sell products and services at the lowest price they can get away with, not keeping in mind that they need to turn a real profit.

What I mean here is that if an item-including install-grossed let’s say $100 profit, you need to think about what it took to make that $100 profit. How many times did you speak to the customer? How long did you spend on selling this item, 10 minutes? An hour?

Your time is worth something, same as if your employee sold it. What does he of she make per hour? Now how about the technician who is installing the item? Account for electricity usage, paper needed for the transaction, shop supplies that might be needed. Then, amortize your shop’s rent and general expenses into the mix, and you will come to a stark reality: that $100 just turned into next to nothing.

It is imperative that you price your products and services according to a level that is fair to all parties involved. Make sure it is fair to the shop, its overhead, personnel, etc., and is ultimately fair to your customer. This type of thinking will keep you in business and keep your customers coming back.

Keep Up With The Manufacturers

Make sure you always keep in touch with the manufacturers whom you do business with, as there are times when opportunity will knock. The manufacturers sometimes have items on closeout that you can get a great deal on-which you can pass on to your customers. This is a great way to instill customer loyalty and profitability all at the same time, as there are usually a few bonus points in the deal to help your bottom line.


Make sure you check your local areas to see what your competitors are charging for labor. This will help guide you, but I suggest not to follow suit. Each shop has things that they do that are known as their specialty. I feel it is wise to capitalize on this fact and to become the best you can be at providing your customers with a valued service at an appropriate labor rate.

Make sure you are fair to both the shop as well as your customer. Take the time to explain to your clients what it takes to do a specific job, how it is handled, how their car will be cared for and such. This is an important part of this equation. Also, keep track of hours spent on each vehicle or job process. This will allow for a multitude of things, from accounting to billing.

One way to account accurately is to use a timecard for each job or process, this way you can assure your customers that they are being billed on what I like to call a “fair wage card”-they are only being billed for actual time worked. There are times where you may want to cost a job by the “flag hours,” but this tends to be a bit biased towards the shop at times, and in my opinion, it does not have too much place in the high performance side of this industry.

My feeling is that the fair wage card is the way of the future. This way, your clients know that you are caring for their cars, and they know they are not getting slammed together in hopes of getting paid for flag hours. The fair wage card also allows your technicians to work comfortably, and this usually leads to less mistakes and cleaner workmanship.

Online Auctions vs. Legitimate Store Fronts

This has been a war waged online almost from the day online auctions started doing business. Online-only merchants can afford to sell products at less cost than most retail store fronts due to not having the storefront employees and all the expenses of a retail operation.

Many retail stores have fallen prey to the online auction stores, trying to get down in the dirt with them. Sometime they lose sight of the fact that they actually have more to offer than the online auction store only. The key to success against the online only guys is simple service, knowledge, someone who picks up the phone, somewhere they can walk into if they need help, warranty service or advice.

You need to sell yourself, the company, its service, stability, warranty, etc. This will keep you in the black. Now lots of manufacturers frown on online auction only stores, and they will track serial numbers and not honoring warranty if not accompanied by a receipt from an authorized retail store, this is a huge key.

Whatever the case, it is crucial, to make sure you understand the basic ideas I have set forth, and live by them, as it will become your key to survival of your company in the future.