Two speakers work through whether paying techs extra for warranty work kills your margins. If a tech earns $30/hour and warranty pays 150%, they make $45/hour, which cuts profit unless you adjust pricing or labor rates. The tradeoff: better pay helps recruit and keep good people.
$30 per hour.
150% of warranty (customer pays 150%).
$45 per hour.
8333 Ask SDR.
offers.chriscollinsinc.com
So then if the question is, should.
You pay.
Technicians, Customer pay time on warranty work, so you're gonna. Your cost of labor is gonna go up dramatically. Right. So let's do the math here. If something. If a technician is making $30 an hour and warranty is a hundred or customer pays 150% of warranty. So what is a technician going to make for that warranty?
Essentially 45 bucks for every hour.
So you're going to. You're going to be paying $15 more that you're not. Your cost isn't. Your cost is going up, but you're collecting the same amount, so your gross profit is going to go down.
You could technically say that's unapplied labor.
Oh, that's interesting. I wouldn't do that. But you could. Yeah, we could. And so if 30% of your labor is warranty, you're. You would be increasing your cost of labor BY what, like 30% or something?
Oh, I don't know if I can do the math in my head, but yeah, I think that's probably fair.
Yeah. Okay. The thing that I would say is the customers pay for that and you set what your ELR is. So it's relative. If there's demand, you set the pricing. Even the manufacturer eventually has to catch up with customer pay. So there might be a delay, but you control your elr. So really, at the end of the day, it's an. It's a easy thing to overcome.
Right. It just. That it can be done.
Yeah.
Is a possibility. I want everyone to know that, that, that can be a tool. Easy. Agreed.
If that's the thing that gets you technicians, it's easy. You just have to figure out your, your what your effective labor needs to be. And that's it.
Yeah.
Pretty simple.
That's right.
So I'm for it. I think I am too, but it's not my, it's not my original go to.
Yeah. Yours is very successful.
Yeah. I don't. I would try to stay away from having to do a lot of that stuff just because it's complicated. It gets complicated, the math. But you can do it.
Yeah, I think so, too.
Cool.
I just think it's a. I mean, it's a good tech ad headline. Maybe not as strong as 410s, but I definitely think about it as, like, if I'm trying to recruit. And then I'm also thinking about morale internally. Like if I went out and said, hey, guys, I know that these warranty times have been rough. Here's what we're going to do for you that's good for retention and recruiting at the same time.
So I don't know. There's lots of ways to make it work.
Yeah, it's easy, really, if you understand pricing, effective labor rate and how to get there. It's you're just reverse engineering an outcome. It's easy.
Exactly.
Thanks so much for watching this clip of Service Driving Revolution. 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.
