Those competative oil changes

[kenpratt]

We are a Volkswagen dealer and we are trying to come up with a way to do oil changes competatively. Parts pricing at retail is just over $15.00. Oil and Labor make up the difference. We have been charging everything out at retail and the splitting the difference between retail and the actual sale price ($22.95) between parts and service as an advertising expense. Do any of you have a better idea?

[Ronc925]

I would have the parts and labor billed out the market's competitive price. Why go through the hassle of adjusting all of those RO's only to write it down. I feel it further shows a dealer is high priced. All you are going is faking what your true gross profit is and inflating your advertising account expenses.

Further, when I checked with an accountant, your type of charge to advertising is not really advertising as it appears this is your regular price. My accountant said if you always sell at a particular price then no discount to advertising should be shown; however, if it's a true "special offer", like a $9.95 oil change when the regular selling price is $22.95, and it runs for a relative short time, it could be considered advertising.

[Doug]

Ronc925 is 100% correct as far as I'm concerned.

Interestingly, the "charge full price and charge off discount to advertsing" was standard of the industry years ago.

Then, for reasons Ronc mentioned, many dealers started swinging the other way....edit the selling prices of parts and labor as needed, and don't show a discount (the "correct" method, in my opinion).

Now I'm getting pressure from our 20 group to go BACK to the "old way" and show full-charge prices and then a discount at the bottom.

I just can't understand this compulsion to show inflated grosses in one area only to write off losses in another. Grrrr! It all goes back to the much ballyhooed principle of "management by percentages" where attractive percentages are seemingly more important than actual dollars-and-cents profit. The only problem is, with so many different dealers doing things differently, the value of comparing your operation to another is lost. Why compare apples to oranges ?

Mini-rant over

Cheers
Doug