Auto Service World
News   September 15, 2022   by Adam Malik

Why shops need to change how they charge for diag work

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A shop coach doesn’t want to hear about shops doing diagnostics at the shop labour rate. It’s a slippery slope, he warned.

If you sell one hour of work for diagnostics, you better stop when the timer’s up, he said.

“You got to quit doing it at your labour rate. And you got to quit doing it in one hour,” urged Bill Haas, owner of Haas Performance Consulting LLC, dedicated to the automotive service and repair industry. “You cannot, you must not. You have to stop selling an hour or an hour and a half’s worth of time.”

Shops should charge a standard rate for testing. And sell more of it. “Because that’s the only way you’ll be effective, efficient and more profitable,” he said during his presentation Systems and Process Drive Operational Excellence at the recent Midwest Auto Care Alliance Vision Hi-Tech Training & Expo in Kansas City.

“And by the way, you never have that discussion with a guest,” he added. “All they know is what they’re spending, not how long it’s taking.”

The core of the issue is giving a technician an hour to run diagnostics may not be enough time. They may need to do additional testing. The time limit essentially imposed doesn’t do them — or your bottom line — any favours. Because if a technician goes beyond the time limit, Haas questions who now becomes the customer.

“What happens to the effective labour rate when you allow the technician more time than what you’re getting paid by the customer? Effective labour rate goes into the toilet. It stinks. Is the technician still getting paid? Yes. If you have a good pay plan, they’re still getting paid. But they’re now being paid by you. You have now become the customer. This store is the customer,” he said.

“Who went into business to be the customer of automotive repair service? I thought you went into business to make money. Make a few friends and make a lot of money. I don’t care how you look at it. But we did this to make money. Stop doing things that are getting in your way of making money.”

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1 Comment » for Why shops need to change how they charge for diag work
  1. George Stringam says:

    Diagnostics was a thorn in my side for over 50 years. And most of that was when systems were mostly mechanical and analog. I remember the DSM telling me that he wished they could pay for diagnostics but there wasn’t a way to do it accurately. Being hamstrung with warranty diagnostics, I did my best to make up for it by charging diagnostic time after the warranty was finished. And I charged straight time. Most of that was electrical so it managed to balance out. But still, under warranty, it was a bugger…

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