Menu Pricing

[eric the red]

My dealer really wants to start pursuing menu pricing in the service drive. I am at a loss as to how to accomplish this when I deal in a product without a common price. Valve cover gaskets, for example, vary in dealer price from $6.00 to over $35.00. I don't feel comfortable with just adding the tag line "for most cars," and the work involved in deciding averages and not worrying about the exceptions seems cavalier on one hand and not at all certain on the other. Can you imagine what would be said if you were to propose--extreme idea--that all cars on the lot be average priced. I'm wondering how the mechanics of a successful program work.

[Robert a Bamert jr]

Eric, when asked to come up with fix for this one there isn't one unless you take the higher of the v/c gaskets and use this to base your est. At least this way you don't hurt your dept., and if you choose to come in cheeper you wouldn't upset anyone.

[cwalden]

Eric
Keep the menu simple,dont include to many items.

[RICHLOWE]

ERIC

MOST COMPUTER SYSTEM VENDORS HAVE A METHOD FOR MENU PRICING, OR PRICE AVERAGING FOR SERVICE AND PARTS. BUT BEWARE, THEY WILL CHARGE YOU DEARLY FOR THE LABOR TO DO THE WORK FOR YOU.

IN GENERAL, PRICE AVERAGING SEEMS TO WORK BEST FOR MAINTENANCE ITEMS. AS SOON AS YOU INCLUDE REPAIR WORK (i.e., ALTERNATORS, STARTERS, VALVE COVER GASKETS, etc.) THE PRICE VARIANCE IS TOO WIDE TO DO IT EFFECTIVELY.

WHENEVER PRICE AVERAGING IS INVOLVED, YOU HAVE TO BE WILLING TO TAKE LESS PROFIT ON SOME PARTS KNOWING THAT YOU WILL MAKE IT UP ON OTHER PARTS. ITS LIKE INVESTING IN A VARIETY OF STOCKS. YOU HAVE TO BE PATIENT WHEN WATCHING PRICES ON A DAILY BASIS. SOME WILL LOSE BUT THE HOPE IS THAT THE OTHERS WILL MAKE UP THE DIFFERENCE.

[Gary J. Naples]

Hi Eric,

The objective of menu pricing is to offer the customer a convenience, sell your products and your services, or both. In any event, its a marketing tool. You mention that the dealer really wants to start pushing menu pricing in the service drive. Why? Does it mean that you are using menu pricing to some degree or you don't use it at all and want to start a program?

If you haven't already done so, I suggest the first step, before deciding what to include and how to price, would be to sit down with the dealer principal (or GM) and service manager, and decide what is to be accomplished with the menu pricing. The next step would be to shop the competition. If the dealer wants a successful menu program planning is essential.

Your concern about pricing is valid. But, it is possible to successfully price average without a whole lot of anxiety or aggrivation. You have to be prudent with your prices. I'll use your valve cover gasket prices. You say they range in price from $6.00 to over $35.00. Is the price spread among 4 cyl., 6 cyl., and 8 cyl. engines? If so, the price averaging would be based on the most common gaskets sold for each engine group. And, for any odd ball, instead of saying "for most," you might be specific and state "for XYZ model add $20.00.
Moreover, its not possible to cost average a part with a price range as stated in your example. There are sure to be instances where customers are overcharged and instances when you will be shorting yourself. As I said you must be prudent, and also logical.

If you would like to discuss this further feel free to contact me at (570) 824-1528 or e-mail me at gss83@aol.com.

Gary J. Naples
GNA

[warr_wiz]

I would not think that menu pricing certain jobs is possible given the range of parts and labor pricing. Things like valve cover gaskets cannot possibly have a menu price. Do you want to charge, or advertise, a price on valve covers for a 4 cylinder when you also service 8 cylinder turbo charged diesel vans? Menu pricing to me would be lof's, tune-ups, transmission services, etc. If in fact valve cover gaskets and like services are to be included in your menu pricing, the world famous "some vehicles may be higher" will have to be added.

[johnny o]

At our dealership we compare our various computer programs to a mechanics tool chest. Each program and option has a specific task and has its own purpose.(each tool in the tool box has its specific job to do ..try using a mechanics impact tool as a screwdriver it just does not fly). On occasion we forget that computers use "rules of thumb" and not laws. If your dealer wishes to use menu pricing then thats great, but , it does not work for every aspect or job. Like any tool it has its own specific purpose. You could try to cut a tree down using a hammer but a saw would likley work better. Menu pricing is really effective for L.O.F.s and some brake jobs some tune ups but cannot be all things and work every aspect. As long as the dealer realizes that this is a very specific tool that can be used effectivly for some applications you will have success. Otherwise you will be trying to use a tool for something it was not designed to do. Hope you can achieve balance in your use of this valuable asset.

[Robert a Bamert jr]

JOHNNY O ,You said it man!