How Much To Pay Your Technicians

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Welcome everybody to Service Drive Revolution and your Friday drive by. This is where we answer your questions. And remember, if you call in and your question is played on the big show, we will send you a swag bag. And the phone number. Get something to write with. The Phone number is 8333-Ask-SDR. That's 8333-Ask-SDR. Okay, let's go right to the question.

I'd like to ask you a question about a local dealer group, a big dealer group that is offering four day work weeks and they are paying customer paid time on warranty work. I've run the math and for a shop our size to do that for six months was going to cost us an additional $61,000. I'd like to know from.

A profit perspective, financial perspective.

How that would work or your ideas, because that could be an industry game changer. Let me know. Thanks.

Thank you, Dwayne. So I think that that might be our client, actually. I know we have clients doing that. And so it's great that you figured out that it'll cost you 61,000 in a, you know, specific period of time. But I would, I would encourage you to think about it a different way and think about, you can pass that along to the customer and it doesn't cost you anything. So in a world where we need technicians, the customer ultimately is going to pay for that. So you don't have to think of it as coming out of your bottom line. You could raise the top right, the, your effective labor rate or your, your sales in a, in a sense, then the other thing I would think about is a lot of times what's happening is.

Groups or stores are adapting. They would rather pay the technicians retail for warranty work and eat that, then have technicians be hourly. So you still would rather, if you could keep the technicians flat rate instead of guaranteeing them and having them flag, you know, let's say 30 hours in a week and paying them for 40 because you actually will have a higher cost of labor being 75% efficient than you would paying the other time. Or, you know, you, you could be, I guess, in, in a sense. So if you're keeping the technicians flat rate, they're still vested in how many hours they flag, but you're just on warranty doing that. And then the other thing to consider too is the mix of warranty. Like a lot of, a lot of manufacturers don't have a lot of warranty. In a sense, it's like 25% of their labor mix. So in the scope it's really not that big of a deal. Right. I'd be curious, the 61,000 number that you came up with in the scope of how much labor you're actually billing, where does that lie? Right. Because if you're, if you're doing 75% customer pay versus warranty, it isn't going to make that much of a difference.

If you're recruiting very, very efficient technicians that you know are more on the talented side. So. Yeah. And I would encourage you to get used to the idea of people getting creative and how important it is that you have a system in place that you can obtain an effective labor rate while retaining your customers and advisors that can sell more of the work with a higher effective labor rate.

And the work that's more efficient for the shop, really. But people are going to be getting more and more creative and we're just seeing the beginning of it. Yeah. So I would embrace it, but great question. I mean, I, I, I'm a fan of that personally. The technicians are the most important part of our business and they're, they're, the good ones are in high demand. They, they can kind of dictate what they want. So. Thank you, Dwayne. Next question.

We're talking about putting in a mobile service van into, into place in our business and sending it out to do repairs, lot repairs, maintenance, oil changes, etc. But I didn't know if you had any experience on how to pay a tech. Do you pay them for a full, do you pay them flat rate or do you pay them to drive the van? Do you pay him a salary? How do, how do most people begin to work in that? I know that many years ago this was a thing and it kind of has begun to roll back in, but I've not had any experience with it. So I'm looking for some ideas on how to navigate in that field. Again, appreciate you reach all you do and to help us. I love service.

Drive revolution.

Well, thanks, thanks for the question, Chris. It's interesting here at Kris Kohn's Inc.

I think we probably have 27,320. Chris's working for us. Half the people are Chris. And then we have Christian, which is basically Chris.

So good name is my point. Okay. So mobile service.

There'S, there's nuances to what the brand is that, that you're working with. So, you know, if you're, if it's Honda versus GM or, you know, there are nuances to that. So we're going to, we're going to kind of have to do some generalizations here for that, but some of them might not apply to you, you know, depending on where you're at. The thing that I, that I would do in the beginning is I would not put my most expensive techs in, in the mobile truck. I would have somebody, you know, middle, like I'd be tech. So if my highest paid tech was making 35 and my entry level techs are making 18, I'd probably have somebody in the mid 20s doing it. I would, I would guarantee them in the beginning. You know, let's say we guarantee them 35 hours, but if they make more, they, they can get paid more. So there's a little bit of a carrot there for them to be efficient, but enough of a net for them that they're, you know, they're not going to go broke if you can, you know, find somebody like that. Actually, that's kind of the idea. Now the key really is to.

Charge travel time. That's. So you're gonna, you know, the job pays what it pays. So whatever it is they're doing, that's what we're going to be putting on the ro. But either the customer or the warranty, whatever it is, should be paying travel time. Now I know like, you know, Honda stores or whatever, when they have a lot of recalls might put people out to do that. You're going to be subsidizing that. You're not going to run a hundred percent efficient in that, but you are going to.

Improve customer satisfaction, keep your drive from overflowing in that sense. But travel time is kind of the key. So there are manufacturers that pay travel time for roadside or mobile tax and there are fleet customers that will pay that also. So that's why I say the nuances of what brand and kind of the application matter. But I would do some sort of of floor with the possibility of the tech flagging more and then feel it out, you know, look at it every 30 days, track the hours every day, really pay attention to it and then navigate it from there. But great question. I know we have clients on the truck side that will have over 20 mobile techs out on the road. But the fleets pay for travel time, the cities do, the school systems do. So it's, you know, it's very lucrative in that sense. And also when you're in heavy duty truck, like you might be selling outside of your market, like say a school buys a bunch of school buses or you know, a company has a bunch of trucks, they, they might order them from you, but they might be 50 miles away and it's not convenient for them to come in to the service department. It's way more efficient to send somebody to them. And they're happy to pay for that because what they're worried about is the trucks being on the road.

And, you know, avoiding any unpredictable surprises of breakdowns. So great question. Thanks so much, Chris. Remember, everybody, the phone number is 8333-ASK SDR. I hope you have a great weekend and we'll see you next time on Service Drive revolution. Thanks for watching this week's Drive By. I hope we gave you something to think about over the weekend. We're uploading new stuff every day, so make sure you subscribe and click the Bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins, and I'll see you in the next video.