Do you bill your labour hours correctly?
During an automotive owner’s business training/coaching session, the coach and trainer challenged us to explain why we don’t charge more labour dollars per tech every day. He showed the average shop only charges enough labour to cover about 60 percent of each technician’s available hours. Then he showed us two invoices from other skilled trade businesses.
The first was from a heating-A/C contractor showing billed hours for travel time to and from the customer, plus every hour technicians were servicing and repairing the client’s system.
The second invoice, from an electrician, also showed billing of every minute the technician was involved in the repair, including travel time to a parts supplier for additional parts.
Question: “Why can these two skilled trades bill labour dollars to cover more than 100 percent of the time their technicians are actually working on the site?”
I angrily answered him by stating that unlike the automotive service industry, electricians and heating-A/C contractors don’t have to compete with businesses in their profession advertising cheap, free, or ridiculously discounted parts and labour prices to consumers. Their customers aren’t enticed by advertisements from competitors offering to do the same job with the same skill level and same number of labour hours at a much lower price!
A few mornings later I noticed, driving within a five-minute circle of our shop, three shops advertising cheap prices and major discounts. One advertised a synthetic oil/ filter change for only $49.95. The second shop’s sign stated they’d beat any competitor’s quote by five percent. The third offered a seasonal tire change, oil change, brake inspection for only $69.95—thus billing and collecting less than 50 percent of a billable hour of technician time.
Here’s another example. A client asked us to look at his vehicle because he was concerned about a noise. His home was over an hour away and was concerned about driving further. We performed a road test, on-hoist inspection, found a front wheel was coming loose, removed the wheel, inspected for damage, tested the other three wheels’ torque, installed and torqued the wheel that was loose, road tested again to verify the repair. The client didn’t tell us his summer tires were installed a few days ago by a shop near his home. We billed this client for .9 of one hour for our services.
He told me he’d called the other shop to tell them about the issue and expected them to reimburse him. I was disappointed to hear the shop owner told him it shouldn’t cost that much to tighten a wheel nor take .9/hr to solve this issue. Here’s another shop owner that doesn’t value my time, his time, the automotive trade’s time or the reputation of his shop. Instead of complaining about the cost of having his shop’s error corrected, he should have been happy this client’s wheel didn’t come off while driving on the highway injuring or killing someone. He should have apologized for the error, agreed to look after the charge, moved on and tried to repair his reputation and professionalism.
To all the shop owners trying to compete with other shops by discounting their services—please stop! Discounting hurts the entire industry!