Shops have to stop allowing customers to haggle over prices when coming in for service and repairs, says a shop coach.
The price of a job should never waver — the price is the price is the price, said Cecil Bullard, chief executive officer of the Institute for Automotive Business Excellence and RLO Training.
Your shop has to maintain its margins to be profitable, he said during STX 2022, the Supplier and Training Expo in Orlando hosted by Advance Auto Parts and its wholly-owned subsidiary Worldpac.
“More profit can be made in your business by the pen than by any tool that you have in the shop,” Bullard said.
Holding firm on parts margins is one of the easiest things a shop owner can do, he added.
“Stick to the matrix. Do not get emotional about the parts price,” Bullard recommended. “The price of the job is what it costs.”
With his tongue in his cheek, he asked everyone in his session, Diagnosing and Repairing Your Business – Finding and Fixing Your Biggest Problems, to go to their local grocery store on their way home, pick up a carton of milk, walk to the register and make the following case to the cashier: Because you always shop at this store and are a good customer, you should only pay $3 for the carton instead of $5 as displayed on the shelf.
What will happen? Of course, the cashier will call the manager who will then explain that the milk is $5 and you will indeed need to pay $5 for it or it can go back in the fridge and you can go on your way.
“They will not discount the milk because you spent a bunch of money in their grocery store or you put pressure on them,” Bullard said. “They do not even have the authority to do that. So they won’t do it.”
But that’s not how it works in the automotive aftermarket.
“So why in the automotive industry will we not do this? Why do we think that because the customers are having hard times or they’re telling us they have a hard time [that they should get a deal]?” Bullard asked.
“So don’t get emotional about it. Do not allow your staff to get emotional about it. This is what the price is.”
And customers know there’s wiggle room on prices. That’s why they call around to see who is starting off at the lowest point.
“Everyone in this room knows when you put a price on the phone, other than like an oil change or a service or something, you’re never going to stick to that price,” Bullard said. “It’s never going to be that when the car leaves your shop. So why did we do this? Why do we shoot ourselves in the foot?”
So he reiterated a key piece of advice: Don’t get emotional about price.
“I am not taking out my wallet and paying for this stuff. The customers taking their wallet out and paying for it,” Bullard said. “So don’t get emotional about it. Do not allow your staff to get emotional about it. This is what the price is.”
And if you do have to drop the price for some reason, do it carefully. “Make sure you do so as a part of a well-thought-out pricing plan,” Bullard said. “You have balance — always balance. If I’m lowering the prices for this stuff, I’m raising the prices over here.”
Price it right and price it once. Its the same philosophy we have on used cars.
If you start wavering on price, it implies that your margins were too great to begin with, and every interaction you have with that customer from then on they will be under that impression.
And as we all know, we all lose in a race to the bottom.