Short promotional/transcript excerpt from a Chris Collins video arguing auto industry messaging is misleading: industry equates ‘gross’ with fixed absorption. Collins claims focusing on gross leads to chasing traffic and discounting, which reduces profit per labor hour. He promotes a longer explanatory video on ChrisCollinsInc.com that critiques fixed absorption.
So you have been lied to in our industry that gross is how you get fixed absorption. And I have a video up on ChrisCollinsInc.com if you go to ChrisCollinsInc.com and wait for like 30 seconds, there'll be a pop up. Opt into that and I'll send you a video explaining why fixed absorption is a house of cards. But for you to understand it right now is most of the time what happens is you're chasing gross, and to chase gross you chase traffic, and to chase traffic, you discount. And so you end up making less per hour of labor that you sell. And the secret is to understand how much profit you make for every hour of labor you sell, not to just have gross.
