Unlike other trades and professions (i.e. plumbing and accounting), our trade does not charge for every minute we pay our technicians.
On average, we collect only 55 percent of our labour time. Many technicians and shop owners are confused by this number—they feel like they are busy and working hard all day. The challenge for our industry is that if we began to charge by the hour for everything we did, we could put ourselves out of business. If we decided to charge our going labour rate for the proper time it takes to perform an oil change plus the oil and filter, shop supplies, and hazardous waste disposal, we would more than double what we are charging currently. The consumer will not accept a doubling in price.
A different approach
Because our industry has evolved very differently from other trades, we need to take a different approach to improving how we charge for our time. The first step is to take a quick measurement of how all of our technicians’ time is being used. At this point I’m not talking about a full-fledged time tracking system. For one week, take the time to watch and jot down how technicians’ time is being used.
For example, at the beginning of the day, do they have billable work to do right when they start, or are they waiting for 15 minutes before they get their first assignment? Three technicians waiting for 15 minutes is 45 minutes—that’s almost an hour lost there.
Now watch what happens after they all complete their first work order. Do they have to stand in line and wait to tell the advisor what they found on that car, or do they have to wait for their next job assignment because the service advisor is busy on the phone? Let’s say all three technicians lose 15 minutes each in one of those scenarios—that’s another 45 minutes. We’re now at 90 minutes of lost time.
Here’s the ‘scene’
Imagine technician number one gets a wrong part because of a mistake by the service advisor. Rather than wait for the advisor, the technician will call the parts store and sort out the issue herself. Technician number two has diagnosed a client’s concern and is now waiting for authorization to proceed on the repair, but the advisor is unable to reach the client. The technician now waits, because it seems like a waste to put the car outside and start a new job. Technician number three has a bolt break in the process of a repair and goes ahead and drills out the bolt and proceeds with the repair without authorization. Each of these three instances could easily take 30 minutes. That’s another 90 minutes lost.
Our total so far today is three hours, and I’m just getting warmed up. That’s one hour per tech per day, not billed. Yet the owner, advisor and technicians don’t really notice because they are so busy scrambling to solve these problems—they feel they are working hard the whole day. Once you identify these leaks, you‘ll be able to implement systems that will allow you to capture all of the lost time. Awareness is the beginning of the solution.