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  • Is it Time to do Away with Parts and Labor?

    Posted by Site Administrator on January 7, 2018 at 5:04 pm

    Increasingly often invoices from many better repair shops no longer list parts and labor separately (except to the extent that it is required by law in some areas for taxes or other reasons).

    Invoices like this eliminate time wasted picking apart details of a repair such as individual parts prices.

    In many other shops the only reason their invoices are not like this is lack of software capability (or they are not aware that they can do so with their software).

    Could it be time to change the default way of doing things from parts and labor to simply a price for an oil change or a brake repair or a timing belt service?

    More and more software companies include this ability. Most others would make the change if the demand from their customers was there.

    Your thoughts?

    For more on pricing issues, click here

    #autorepairshoppricing

    larrybloodworth replied 6 years ago 11 Members · 27 Replies
  • 27 Replies
  • jbrenn77

    Member
    January 9, 2018 at 10:05 am

    Yes.  It is time we stop treating our service as a commodity.  Pricing out labor and parts separately causes unnecessary objections during the presentation regarding parts prices.  This is because the customer can get parts for our cost, which didn’t used to be the case.  It used to be that we could mark up our parts, make a profit on them, show the sell price of these parts to the customer, and they would still be less than what the customer would pay at a parts store.  That was a long time ago.

    The amount of gross profit needed from each job can be more easily earned on labor than parts.  I am eagerly awaiting the time when we stop marking up our parts and figure out how to make the profit needed on labor.  After all, we don’t make parts.  We do sell our labor though, and that is unique to our particular shop.  You can’t buy it online (usually, yet) and it’s not the same as the labor down the street.

    I’m not sure how to implement this change but I’d be willing to do it if I could get together with a group of owners who wanted to collaborate on this.

  • Bob Ward

    Member
    January 9, 2018 at 10:37 am

    A potential problem I see by doing this is future warranty claims on product that is not shown on the invoice. All suppliers require proof of installation which would not appear on this type of invoice format. Do you not think you may be opening a can of worms by not showing labour as well?

  • jbrenn77

    Member
    January 9, 2018 at 10:49 am

    We’re not talking about not listing the parts, just not separating out the parts and labor prices individually.

  • rayrippey

    Member
    January 9, 2018 at 3:12 pm

    As a software company, I can tell you I’ve had NO requests to eliminate parts or labor from the invoice detail. We have dozens of invoice printouts to choose from because everyone has their own idea of what they want printed out. Many do not like to print out the part# because they do not want their customers comparing the part prices. Some don’t even want the labor hours or rate to be printed, just the total of the labor.

    I think if a generic type of invoice was ok, more would just use QB’s instead of going to a special program for repair.

    For me personally, I like having a detail of what parts are replaced in my car.

  • Bob Ward

    Member
    January 9, 2018 at 4:34 pm

    The type of customer who tries to play the price shopping game is not the type of customer most premiere shops want. They are only loyal to price because they do not understand the business. With that being said this is an opportunity to sell yourself and the benefits of purchasing from you. You are the professional here. Come across as one and you may end up with a loyal customer. Transparency on the invoice is very important. People will perceive you are hiding something and not trust you. Trust is paramount.

  • Joseph Van syoc

    Member
    January 9, 2018 at 7:13 pm

    Moot point for me, because Iowa law requires an itemized invoice, to include parts, parts cost, and labor.  I do not see this changing any time soon, and trying to do so may cause more problems than it is worth, such as cries of what are you trying to hide?

  • jbrenn77

    Member
    January 10, 2018 at 9:11 am

    Well, if there’s a law preventing you prom not itemizing parts and labor separately then you’d better abide by that.  I’m not sure what Il law says, I’ll have to look into that.  I can tell you I’ve been doing it this way for over 15 yrs and I can count on one hand the amount of times I’ve gotten asked how much the parts were.  Before that I had much more criticism regarding parts prices due to the fact that I had to mark them up more than the customer could buy them down the street.  When asked, I will always gladly give a breakdown, but I don’t see the need to create unnecessary objections by adding complexity to the invoice.  When you go to a restaurant do they give you a breakdown of how much they are charging you for the steak, and how much the labor was to cook it, and how much you are paying for the gas to fire the oven, etc etc…  ?  Nope, ’cause nobody cares.  The same holds true for our business as well.  We create these problems ourselves.

  • Randy Lucyk

    Member
    January 11, 2018 at 5:55 am

    Michigan law is a little fuzzy and there is a distinction in the language between estimates(which are required to be presented and signed). The law definitely calls for itemized parts and prices on estimates. Requirements on final invoices has much more grey in it, although i suspect an inspector will take exception to no parts prices on final invoices. Kind of moot point if you are following the letter of the law, since all customers should have a signed estimate copy anyway. (with parts prices).

    I have been toying with the idea of going to a “Shop Rate” in place of a parts margin  and putting it in a renamed “shop supply” field. Same dollar amount as parts margin, just moved to a different heading. This approach will likely be frowned upon as well.

    Maybe we are asking the wrong question. Is it past time for the industry to decides how to be fair to our best customers by standing up and educating our occasional customers. I recorded the following video with examples for my staff. It demonstrates how we will be moving forward with our charges to customers. This is not just about educating our retail customers but also industry customers, as well.

    Nothing changes for my best customers, only my occasional customers.

    Onedrive link below:

    https://1drv.ms/v/s!Ap7ibKYluQae7U92DsXcH49Ch9v7

     

     

     

  • rsautospecialties

    Member
    January 24, 2018 at 2:31 pm

    If you are worried about customers checking you prices after they leave…finding it cheaper on fleabay, does give them a sour taste in their mouth.  You can explain to them that YOU warranty your part AND labor to replace the part if/when it fails within the warranty time period. How much is THEIR time worth, waiting for warrantied parts to get shipped to them…In the meantime, they have to, Uber, Lyft, rent a car, etc… (How much is their time worth) is usually my best selling closer.

    You can also inhibit their ability to look up your parts numbers by reversing a few numbers, OR entering the part number backwards…example, 06J-115-403 (oil filter), enter it as 06J-115-304, OR 06J-511-304, they will NEVER find it.  Or you can put half of the part number… 06J-115, which would only send them in the general direction

  • jbrenn77

    Member
    January 24, 2018 at 5:46 pm

    If you are worried about customers checking you prices after they leave…finding it cheaper on fleabay, does give them a sour taste in their mouth. You can explain to them that YOU warranty your part AND labor to replace the part if/when it fails within the warranty time period. How much is THEIR time worth, waiting for warrantied parts to get shipped to them…In the meantime, they have to, Uber, Lyft, rent a car, etc… (How much is their time worth) is usually my best selling closer. You can also inhibit their ability to look up your parts numbers by reversing a few numbers, OR entering the part number backwards…example, 06J-115-403 (oil filter), enter it as 06J-115-304, OR 06J-511-304, they will NEVER find it. Or you can put half of the part number… 06J-115, which would only send them in the general direction

    Yes, We could and have had to do that…  or we could just avoid all that and stop creating objections ourselves and quite breaking it out separately.   I choose the latter.  It takes a LOT less time and customers leave with a smile on their face, amazed at how simple and easy it was.

  • SSF

    Member
    February 14, 2018 at 10:08 am

    When you go to a restaurant do they give you a breakdown of how much they are charging you for the steak, and how much the labor was to cook it, and how much you are paying for the gas to fire the oven, etc etc… ? Nope, ’cause nobody cares. The same holds true for our business as well. We create these problems ourselves.

    Totally agree on this one. Never thought about this issue from the restaurant perspective. The difference about the restaurant and repair shop is the trust level. In most cases customers are not thinking that restaurants will put some crappy ingredients into their food or will skip couple of eggs in “omelet du fromage”. On the other hand it’s easy to feel when something is wrong with the food your ordered. As for the repair shops we have this “magical” reputation of doing things wrong because everyone in their lives had this story about bad repair or stolen parts or something similar. So these invoice breakdowns are compensating this lack of trust. Anyway I won’t use breakdowns for at least a month and see what will be the reactions of my customers.

  • jbrenn77

    Member
    February 14, 2018 at 12:44 pm

    When you go to a restaurant do they give you a breakdown of how much they are charging you for the steak, and how much the labor was to cook it, and how much you are paying for the gas to fire the oven, etc etc… ? Nope, ’cause nobody cares. The same holds true for our business as well. We create these problems ourselves.

    Totally agree on this one. Never thought about this issue from the restaurant perspective. The difference about the restaurant and repair shop is the trust level. In most cases customers are not thinking that restaurants will put some crappy ingredients into their food or will skip couple of eggs in “omelet du fromage”. On the other hand it’s easy to feel when something is wrong with the food your ordered. As for the repair shops we have this “magical” reputation of doing things wrong because everyone in their lives had this story about bad repair or stolen parts or something similar. So these invoice breakdowns are compensating this lack of trust. Anyway I won’t use breakdowns for at least a month and see what will be the reactions of my customers.

    I agree with trying it out.  Can’t hurt I don’t think.  These invoice breakdowns may compensate for a lack of trust, but here’s the question:  Who said they don’t trust us?  That’s our perception, which may become true the more we dwell on it, compensate for it, etc.  I go in to every transaction with my customer with the assumption that they trust me or they wouldn’t bring their car here.  I believe we also all know that if somebody wanted to they could still cheat the customer even while giving this breakdown, and I think customers know that too, so I question even the validity of whether providing that really serves any purose at all in the trust department.

  • rayrippey

    Member
    February 14, 2018 at 2:02 pm

    One question I have… if you were to NOT give the customer a breakdown of parts and labor, wouldn’t you want to do it for yourself? That way you have much more information if the vehicle comes back.

  • jbrenn77

    Member
    February 14, 2018 at 2:36 pm

    One question I have… if you were to NOT give the customer a breakdown of parts and labor, wouldn’t you want to do it for yourself? That way you have much more information if the vehicle comes back.

    Yes, we would want all of that tracking information of course, we simply have different formats we can choose from for how it prints.

  • rayrippey

    Member
    February 14, 2018 at 2:43 pm

    I guess we’ll have to add another invoice printout if this catches on. I think we probably have about 50 invoice printouts now. So far, no shops have requested this kind of an invoice… we’ll see.

  • jbrenn77

    Member
    February 14, 2018 at 3:12 pm

    I guess we’ll have to add another invoice printout if this catches on. I think we probably have about 50 invoice printouts now. So far, no shops have requested this kind of an invoice… we’ll see.

    I chose the management system we currently have now based on the fact that it could do this.  I called and researched a lot of companies and many said the same thing, no one had asked for it.  I ended up buying the one that said they would do if for me.  To date between support and the purchase I’ve spent about $19,800 with them, so I’d say it was probably worth their time.  Food for thought.

  • rsautospecialties

    Member
    February 14, 2018 at 3:19 pm

    WOW “jbrenn77”  what management system that cost so damn much? Hell, I’m still using quickbooks 2011 Pro… its simple additions and subtractions, add “items” etc…

  • rayrippey

    Member
    February 14, 2018 at 3:20 pm

    Yes, we do custom invoices all the time. We have a report writer for our invoices so either us or the customer can modify the invoice. Usually they will go through our invoices and find the closest one they like, then have us modify it or the customer can modify. I know without this feature we would not sell as many programs as we do.

    Perhaps we should put that in bigger print on our website 🙂

  • jbrenn77

    Member
    February 14, 2018 at 3:32 pm

    WOW “jbrenn77” what management system that cost so damn much? Hell, I’m still using quickbooks 2011 Pro… its simple additions and subtractions, add “items” etc…

    We use the YES system.  I believe it might cost less to buy now as there are scaled down versions, but when I bought it it was $5500 I believe for the system and $99.00 per month for support, which is optional but I do use it so we choose to pay that, it’s always been worth it.  Bought it in ’06 so that adds up!

  • SSF

    Member
    February 14, 2018 at 3:55 pm

    One question I have… if you were to NOT give the customer a breakdown of parts and labor, wouldn’t you want to do it for yourself? That way you have much more information if the vehicle comes back.

    We will still keep everything in our management system as we always do. Detailed labor and parts information. The only thing we will change is the template for customer invoice (no breakdown included). If the customer will be willing to see everything in details we will have an option to print detailed report/invoice.

    Another option is to give a minimal breakdown and provide only total:

    Service:
    Front brakes repair
    Parts changed:
    Front brake pads
    Front rotors

    Total: $$$

    One more thing that helps me is the online service book I created. It populates all the repair history for each customer. They can access it easily on our website by entering their license plate number and 5 digits from their VIN number. Service book history shows: date of repair, mileage, detailed labor list and detailed parts list. No prices or parts codes included.

     

  • John Shanderuk

    Member
    February 21, 2018 at 9:49 am

    I have been menu pricing for 10 years with Service Shop. each job is subtotaled, parts have the item number, not the part number, no labor hours

    I don’t charge shop supplies cuz I got tired of having to explain it to customers that get bent out of shape about it so I just bumped my labor by 8% now nobody asks me what shop supplies are and it more than covers the supplies.

    The invoice just shows a subtotal, tax and the total. Each job shows the total without tax.

    Some customers want to see the itemized bill so  I turn those features on then off again for them but I still do not show part numbers just item numbers (by item number I mean the sequential number of the part when it was entered into the database), but the people that want to see it are very very few between like maybe one or two a year!

    When I give an estimate it’s for the total job I never say parts, labor, tax to the customer. If they ask for my labor rate, I tell them we do it by job so there is no labor rate.

    Hope this helps!!

     

  • jbrenn77

    Member
    February 21, 2018 at 10:13 am

    I have been menu pricing for 10 years with Service Shop. each job is subtotaled, parts have the item number, not the part number, no labor hours I don’t charge shop supplies cuz I got tired of having to explain it to customers that get bent out of shape about it so I just bumped my labor by 8% now nobody asks me what shop supplies are and it more than covers the supplies. The invoice just shows a subtotal, tax and the total. Each job shows the total without tax. Some customers want to see the itemized bill so I turn those features on then off again for them but I still do not show part numbers just item numbers (by item number I mean the sequential number of the part when it was entered into the database), but the people that want to see it are very very few between like maybe one or two a year! When I give an estimate it’s for the total job I never say parts, labor, tax to the customer. If they ask for my labor rate, I tell them we do it by job so there is no labor rate. Hope this helps!!

    ..So I’m assuming your experience has been the same as mine, don’t create reasons for objections and you’ll have many less objections!  I’m no sales genius, but I’d bet this would be part of sales 101 in some kind of sales training.  As far as the breakdown, we do provide if requested, including part #’s upon request.l   Heck, we’ll even tell them where we bought the parts, the name of the person we placed the order through, and how much we paid for the parts if they want.  I don’t have a problem explaining why we have to make money on parts and labor, what shop supplies are used for, or any other reason why we do things the way we do, because we have good reasons for what we do.

     

    I think the main point is do whatever makes your customer happy.  That’s what we are here for, to provide a service to our customers that they think is fair and they can easily understand.  In my experience adding more complexity to the invoice makes customers confused, and therefore unhappy.  Good for you for thinking outside the box and graduating from the 50’s!

  • sanfordsauto

    Member
    February 23, 2018 at 10:37 am

    So if you are not itemizing the parts how are state sales taxes paid on the parts sold.

    South Carolina has an 8% sales tax. So parts do need to be itemized as I don’t pay

    sales tax when I purchase at X amount But when I sell it at Y amount.

     

  • Bob Ward

    Member
    February 23, 2018 at 10:59 am

    I understand that certain states or provinces are mandated to break everything down. I have two questions for those who menu price to hide parts.
    1. How do you handle a warranty if they ask for a customer invoice?
    2. What do you do in an audit situation when the invoice is not broken down?

  • jbrenn77

    Member
    February 23, 2018 at 4:11 pm

    I understand that certain states or provinces are mandated to break everything down. I have two questions for those who menu price to hide parts. 1. How do you handle a warranty if they ask for a customer invoice? 2. What do you do in an audit situation when the invoice is not broken down?

    1.  -I am assuming you are referring to a vendor asking for a customer invoice?  We have a good enough relationship with our vendors that they never do, however, if we were asked to provide this we would print it for them, in that format, from history in our POS system.

    2. – In an audit situation, I assume you are referring to IRS, we would refer them to Quickbooks, where we store all financials.  If they needed more detail we would print them whatever they wanted from our POS system, in whatever format they would like.

    We don’t store any paper copies of RO’s any more anyway, so it wouldn’t matter what format they were in if/when they were printed since they all get scanned to the cloud, and then shredded.

  • jbrenn77

    Member
    February 23, 2018 at 4:13 pm

    So if you are not itemizing the parts how are state sales taxes paid on the parts sold. South Carolina has an 8% sales tax. So parts do need to be itemized as I don’t pay sales tax when I purchase at X amount But when I sell it at Y amount.

    We still charge and pay sales tax on the parts.  The parts just aren’t itemized, or broken down separately.  The parts total, however, is listed on the bottom of the invoice, along with tax, labor, and shop supplies, in the totals section.

  • larrybloodworth

    Member
    March 1, 2018 at 10:01 am

    WOW “jbrenn77” what management system that cost so damn much? Hell, I’m still using quickbooks 2011 Pro… its simple additions and subtractions, add “items” etc…

    I agree with RS.  We created our own invoice within QuickBooks and use it for EVERYTHING, invoicing, accounting, inventory, paying taxes, online banking, etc.  We’ve been doing this since 2001.  It avoids double data entry, i.e. entering data into the SMS and then into QB.

    Within a few keystrokes or mouse clicks we have an up to the minute P&L, balance sheet, or reconciled bank statement.  The checking account is automatically  reconciled in real time.  No guesswork.

    IMHO, QB Premier Pro is the best business software on the planet.

    Check out:

    https://docs.google.com/document/d/1JlO7axYlEv06DoUvQZqQZeMdAYX4zRV241acMizbrIU/edit?usp=sharing

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