YouTube Q&A featuring Chris Collins (and Brandon) discussing how independent auto repair shops should present and justify higher labor rates. Main advice: stop selling by hourly rate, emphasize quality and value, use competitive low-cost maintenance (e.g., oil change) to drive traffic rather than free diagnostics, and teach staff to communicate the shop’s advantage versus dealers.
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I would say the feedback I get on Instagram from the swag bags we send to people.
They usually tag me in it when they get it. They're pretty impressed. Our office does a good job of.
Presentation, and then they do a good job of setting up the photo. You've seen a lot of these things, right? Like they put the package in the background. Oh, yeah.
That's what I mean.
Like that's them as much as it is us.
They're crazy, but we're sending them something that they feel is worth the photograph.
Which, yes, you know, it's currency in the world.
When I say we do a good job, I mean the office, because I'm not doing.
Much.
You don't do a lot of shipping.
But I'm gonna answer the question just like you are.
Yes, it's a good idea.
Okay, let's go to this week's question.
Hi, my name is Brandon and I'm calling from Southern California. I'm a service manager at an independent repair facility. Our labor rate is $185 an hour, which is higher than all shops in our area. It's not been an issue.
For most clients. A high labor rate opposed to the dealer, which is about $220 an hour in our area, 229 or so. So I was wondering, what can I tell to people on the phone that makes them not see worried about our labor rate? It doesn't really affect much customers, but we do live in an area where incomes are low. I was thinking about offering a free diagnostic or a free break inspection or something of that matter.
Please get back to me. Thank you.
Interesting. So, Brandon, I think you got to kind of think about it a different way. I remember. So I worked at a dealership, and it was a Volkswagen dealership.
And I got a call from somebody talking about their coolant lines on their Vanagon. So Vanagon's back then. And I'm old, so they had this cool. Somehow Volkswagen thought this was good design. They had these coolant lines that would take the coolant from the radiator in the front and take it all the way back to the engine in the back. And they were just plastic and they would leak, like weird.
How would that possibly happen?
And they were. They were at an independent downtown and they called me and they sent me the estimate.
I think by via fax would have been fax. We didn't have email. They sent it by the pony express.
It's way better if you say that.
And I remember the labor rate for that independent was 120 and we were 85. So we were the dealer. The independent was 120. The tax that owned that independent had left our dealership like 10 years before or something. It was, it was a story that was told, but I didn't know. And.
I think you got to get off of labor rates. Like when customers are calling to get a repair. There's so many variables that if you're just quoting a one hour labor rate, you're missing a bunch of things. One is what guide are you using? Because you know, some people are using Mitch. Like it depends on what guide they're using. And also the quality of the work.
You know, what customers are buying is a solution to a problem. So that customer that had those coolant lines really wasn't as much focused on the laboratories. They were the cost of the, of the repair versus their need for it. And so.
What you, what you really want to do is focus on the quality of the work and the, in the overall job. Stop quoting your labor rate. Like if somebody says, well, what's your labor rate? I would say, well, what do you want done? Because on an oil change is different than on a, you know, in a, in a. I doubt you're charging 185 for an oil change.
Highly doubt that.
Right. So.
I would shift your focus off of that and focus on quality. Second thing is, if you want to drive traffic, the easiest way to drive traffic is going to be a competitive oil change. Not free diagnosis.
Free diagnosis gets hairy.
Yeah.
Especially on the independent side.
And yeah, it's just a lot to manage. So if you want to get people in, I would have cheaper entry level maintenance items to drive traffic and advertise those over worrying too much about your labor. So that's my advice.
Yeah, there was a couple of things that were really interesting. One is that he said that. Did you hear him say that the labor hadn't been an issue, but he was like asking the question, like, oh.
He'S talking himself into it.
Yeah, he's talking stuff into an issue. Into an issue.
But the truth was the dealers are. How much more?
40 bucks an hour, Something crazy like that. Right. So I always think about this when it comes to rates or jobs or whatever it is, is, it's like, what's the value what you guys bring to the marketplace? So what if that dealership charges $200 an hour and they're booked out five weeks and you're $185 an hour and you get somebody in the next day and the repair's done really well. Cause you have great technicians. You could make a case that you're way undercharging. So whether or not something's expensive is way more in the eye of the beholder than it is to the customer. The customer doesn't know any better. They just know their car's broken and it needs to get fixed. So if you can fix it and you fix it right the first time, there's more value than you know to that job. So I'm, I'm with Chris that the talking about the labor rates is not the right conversation. What you want to talk about is a competitive advantage you have in your marketplace.
And you can also reference your competition's labor rate as a loss leader. Yeah, like when I, when I was an advisor, I would literally tell customers, you might find it cheaper somewhere else, but you're not going to have me.
Yeah, I'm worth way more. Yeah, I'm worth way more. So I think that maybe teaching, you know, since he's, he's running that shop is teaching the value of self to everybody is a, is a really good lesson. But I wouldn't change the labor rate. I wouldn't offer free diagnosis either. I would offer whatever the competitive advantage you have in the marketplace.
Thanks for the question, Brandon. Hope that helps. Just focus on the value. And if you want to drive, traffic maintenance is probably the quickest way to do that. 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.
