GROSS PROFIT

[Tom H.]

MY GM IS LOOKING FOR A GROSS PROFIT OF 65% ON CUSTOMER PAY LABOR. MY QUESTION DO ANY OF YOU SPLIT UP RO'S AS THE GO THROUGHT YOUR SHOP. SUCH AS IF A RO COMES IN WITH A LOF, TIRE ROTATION, COOLANT FLUSH, AND A SES LIGHT WOULD OR DO ANY OF YOU RECOMEND HAVING THE MAINTAINANCE WORK DONE BY A LOWER PAID TECH THEN FINISHING UP THE SES LIGHT WITH THE MASTER TECH.

[Michael White]

You must be a flat rate shop.In a hourly shop, if you had 65% or lower gross C/P labor you would be out of a job. It is always best to have multiple skill levels with your techs. It is a wase of time to have a highely skilled and trained tech do LOF's. We have 3 levels of techs: lube techs doing any fluid chnages and tire rotations, etc, installers doing PDI,used car work, brake jobs, accessaries, general maintenance, and technicians who can or should be able to do anything.
Mike White

[JERRYC]

Tom,
I have a service dept with 15 techs of different skill levels of course. My g/p%
on cust labor runs about 70%. I dont always
give gravy work to the lowest tech to keep up my g/p %. My higher skilled techs seem to do a much better job of upselling needed work
than a lube oil and filter man.This works for me but may not work for you.
When calculating g/p% you must include all
c/p repair orders including lof's otherwise you don't have an accurate assesment g/p%.

[Doug]

Our GP on labor is running about 73%. it is essential to have different skill/pay levels. Also, remember this --- we all give up GP on competitive/maintenence work, right ? To offset that you gotta charge more (way more) for actual "repair" work and proprietary work. I reviewed 150 ro's a couple months ago and our average charge per hour on competetive work is about $45. On actual repair work we are averaging almost $80. I pay advisors a bonus on labor GP percentages. And no, I don't get complaints about price gouging !

[pmterry]

Tom,
65%? That should not be too tough. We run between 71% and 74% depending on the mix. The only "lower" skilled techs I have are LOF guys which get $8.00 per hour for straight lof's. they get $12.00 per hour for anything else they do (tire rotation, coolant flushes, engine flushes etc.) this keeps them upselling. This is how I keep the GP up. You need to take a weighted average of your tech pay (cost of sale for shop for 3 months divided out to come up with ave tech flatrate and make sure it is not more than 28% of your effective labor rate. If it is you need to think about variable pricing for your shop. If you determin you need this, I would recommend raising your Line/Trans rate accordingly. This will get the least notice from your customers..
Good Luck

------------------
Terry Tucker
Plaza Motors
Palm Springs, Ca

[WR]

Could someone define service "selling gross".

[This message has been edited by WR (edited 09-16-2007).]

[robc]

Selling gross is gross less the variable and semi fixed expenses.

[GMFXDOPSMGR]

We run 75.19% customer cars and 76.67% customer trucks and 85.67% Quick Service. These are YTD #'s.
I run grid to offset the discounted work and have our dispatch system set with the techs skill levels so they can pull work to their skills. I distribute PDI work equally with all techs. UCD work is kept with 3 of the techs that perform the inspections honestly. Our Quick service gets the lof's, rotates, light non-technical work. The only warranty work they get is batteries, bulbs, etc.

[Old Irish]

What sort of work do you include in "Quick Service" tabulations ?

Good work, by the way

DD

[DRCROMER]

OUR SERVICE CP GROSS RUNS 71.2%
OVERALL SREVICE LABOR GROSS IS 79.63%