Parts Profit Margin

[bam]

I am working with my Parts Manager with regards to revamping our Service Menu pricing. Focusing on all the various fluids, is there a target profit margin that we should shoot for when looking at these. At this point in time, we seem to be all over the map. The profit margin varies from 40% to 100%. Any thoughts or ideas would be helpful.

[robc]

Actually you're all over the map answer is the most common. Usually pricing is done with a ceiling in mind, subtracting full retail parts and the left over is service. Not the most profitable way to price.

With the expection of LOFs, most maintenance packages I see try to be price sensitive on the things they need to be (plugs, air filters) and not on the things they don't need to be (gaskets, trans kits, etc.)

But it always all over the board from 25% on extremely competitive items up to 100%

------------------
** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[bigfootlives]

bam, service maintenance items, and i know i will get some heat for this, give away the farm, who really cares how much you make on rear diff fluid, the goal is get the vehicle in the air with the cover off,
upsell is the result of a very well priced special. look at oil changes 9.95 - 19.95
whats the goal , customer comes to you not your neighbor.

[This message has been edited by bigfootlives (edited 04-22-2005).]

[JOHNV44]

No matter what you price your maint items at, you will not make money on maint only. Price shop your competitive dealers and get as close or slightly higher or lower depending on service, so you can attract customers to your dealership. Bigfootlives is right. You will make money on the repair upsells. Just make sure that the repairs are done right, or you will have an unhappy customer.

[PARTICUS]

There is no doubt that competitive maintenance is the key to building service volume and oppurtunity for upsell. But...
A word of caution! Be sure and monitor your technician (and advisor) upsells. Beware of "laundry lists" on every R.O. That can be a slow, painful death for your service business. Word will spread in your waiting room about every service visit turning into a $1000.00 repair.And make sure you handle the customer's initial concerns before you ever try to upsell them.

[This message has been edited by PARTICUS (edited 04-25-2005).]

[This message has been edited by PARTICUS (edited 04-25-2005).]

[Mike Vogel]

20-35% GP on maintenance items such as plugs,filters,brake pads,batteries, ect

[BIG ORANGE]

THE FIRST AND MOST IMPORTANT IS TO PRICE SHOP THE LOCAL AREA ANC CHECK TO SEE WHAT OTHER PLACES CHARGE FOR THE SAME REPAIR. WHEN YOU FIND THIS OUT BACK INTO YOUR PROFIT %. CONSIDER USING AFTER MARKET PRODUCTS AS WELL, SUCH AS AIR AND OIL FILTERS AND WIPER BLADES.

[scotstrong]

BIG ORANGE:

One of the dealership's strongest selling points is that we are better than the independents because we use GENUINE parts. By using aftermarket parts you cannot offer the customer the added protection of a better warranty or a warranty that is honored at any same-manufacturer dealership. Then you are no better than the competition and have lost one of your strongest selling points. If one cannot come up with a "competitive" (not cheapest in town) price using GENUINE parts then maybe you may need to decide not go after that business at all.

Scot Strong

[Bruce Buick]

I have to agree with Scot. Often the reason your customer comes to you in the first place, is the perception that YOU will use OEM parts to repair their vehicle to original (or like new) condition. You have to establish an advantage for the customer to desire to do business with YOU and not Pep Boys, Sears, etc. Aftermarket parts will not set you apart from your competition.