Mark Sarine, Engine Rebuilders Warehouse, asked machine shop owners why he sees so many machine shops failing to capitalize on opportunities for profit from parts sales.
Too many machine shops, he says, don’t factor in their ability to boost profits in slower-moving parts categories and applications.
“Machine shops need to enhance their parts sales. I really believe that there has been a bit of decline over the past five to eight years of machine shops’ enthusiasm for parts sales.” He says that, despite the appearance of greater competition, that machine shops have assets not present at other parts sellers. “And that is that machine shop that you work at every day. You have that block, that head in your shop. You have the customer’s attention and it is really your transaction on parts to make or break. I don’t know if enough emphasis is being placed on the profitability of selling engine parts and related parts with an engine job.”
He put together a spreadsheet highlighting some of the issues surrounding the sale of parts, which may seem basic to some but are nonetheless worth repeating, and accompanied it with a memorable example.
Taking a toilet plunger, he surveyed attending shop owners what it is worth. Answers came back between two and five dollars. “But how much would you pay for one when it’s Thanksgiving Day and the relatives are over and you’ve got a toilet overflowing?” Behind the laughter was a lesson: that when the customer is in need of parts, the need to be the lowest price on the block is not so critical.
“Some parts you have to price competitively. We sell Chevy 350 pistons for $5. This piston doesn’t look much different, but it fits a Cadillac and we sell it for $35. There are different values for items.” He said that a particularly noticeable profit opportunity exists with items in the dollar-or-two range, like frost plugs, fasteners, and small accessory items.
“To just automatically plug a figure in because you have a standard markup just costs you profit.”