Effective Labor Rate

[srvmanrick]

need some help moving from the 70's to present time.... i am looking for info on pricing grids.. any info would be greatly appreciated.

[THE FIXED GUY]

Grid pricing has been the ticket for my store.

[asekevin]

If needed, I have really nice Grid Price (matrix) set up in excel. It is a plug and play sheet and you are welcome to use it. Just email me and I will send.
Kevin

[JOHNV44]

The easiest way that I have found to maintain a high effective labor rate and still sell maint at a lower level is to make sure that your advisors are selling add'l repairs at the posted door rate or if you are on a grid, that they arte paying attention to the grid. Maintanence is a necessity to keep customers. If you increase the labor rate on your maint, customers will start to shop. I was not a believer in the grid pricing, but I have managed to increase our effective labor rate almost 6.00 per hour.

[robc]

I believe maintenance should always be the highest rate activity in a shop. That doesn't mean it is competitive for the customer. The days of paying techs 5 hours for a 60K that we are only billing at $50/hour are over. Bill $100/hour and pay the tech 2.5 hours. I'd rather save my competitive rates for things we really need to cut to get- brakes, alignments, etc.

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

[bam]

I'm a little confused as to how you keep your ELR at 95-99% of door rate. Are you including all your oil changes and such?

I'd also like some further explanation on "grid pricing." Is that just another name for variable rate pricing. In other words, having one rate for run of the mill repairs and a higher rate for repairs that require more expertise?

[robc]

Variable pricing usually bases off the skill or job. Grid pricing is based off the labor time required.

ELR close to door rate is accomplished by having a solid repair rate policy (no overrides), reasonable competitive services, and higher than door rate mainentance packages.

Gosh, when I started in this business back when it was all pen and clipboard, it never even occured to me that our labor rate was anything but what was printed on our sign. I guess I was just too stupid to reduce the labor rate to appease a customer.

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

[This message has been edited by robc (edited 04-21-2005).]

[bam]

"Higher than door rate maintenance packages"

I don't want to sound too stupid because that seems to be a pretty clear statement but I've always heard that generally your repair rate (door rate) is higher than your maintenance (flushes, etc.) job rate and that your maintenance job rate is higher than your competetive (LOF's etc.) job rate. Are you saying to raise your maintenance job labor rate ABOVE your door rate?

[robc]

Exactly,

Competitive = $60
Door/repair = $70
Maintenance = $80

Again, nearly store I've seen can boost the heck out of their maintenance packages if they just looked at it a profit center for them and not the tech. I mean it is crazy to charge $60 an hour for something the tech is 300% efficient at. How about $90/hour and the tech is 200% efficient? Oh, and keep in mind LOFs are generally competitive. And unless you're doing some super crazy LOF rate, they usually do not on their own can drop you ELR by a substancial amount. More than likely a low ELR is from discounting repair work and a maintenance menu that enriches the techs at the expense of the shop.

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

[ViCar]

I'm 100% agree with Rob, anyway on a maintenance package nobody can tell ELR except who made it.
Also having a written policy signed by Service Advisors, prevent the discount bad habits.