This episode of Service Drive Revolution (host Chris Collins, with Don and Jeremy) answers viewer questions about running an automotive repair shop when technician labor is constrained and about diagnostic-fee policies. Key points: the industry is losing techs faster than they are hired; Collins recommends training/hiring programs ("Technician Tree"). They state technicians typically generate $10,000–$15,000 gross profit per month; desired technician wages discussed are $40–$60/hour. Jeremy stresses raising effective labor rate (targets mentioned: $150–$225) when demand outstrips technician supply and using pricing to balance backlog (example: 68 active cars on two techs). On diagnostic fees, Jeremy argues against waiving diagnostics (treat as earned work); Collins admits sometimes waiving a small diagnostic fee can retain a job in competitive markets. The episode closes with distribution links and subscribe call-to-action.
68 active cars (one month's worth of work) with two technicians.
Chapters
What's the. You got some good questions?
Oh yeah, we got two really good ones this week. Let me get to them.
This one comes From Brandon on YouTube. I just recently discovered your content. Really appreciate someone experience putting out this knowledge.
Welcome to the party.
Brandon, do you have any recommendations for a shop limited by technician load? This is an opportunity out the wazoo, but with only 4 techs and 6 bays, I'm not sure how to seize it.
Yeah, so the industry is losing two techs for every new one coming in.
Are you serious?
Yeah, it's. And it's not going to get better.
No, it's not.
What I would suggest is go to Chris CollinsInc.com and sign up for our on demand. And in there there's a module that's called Technician Tree and it's how to grow your own technicians, how to hire the top technicians and how to maintain the ones you have. It's kind of three different parts and so there's some tools in there how you can hire. But the thing that you want to get good at, Brandon, is hiring techs. Because the future is whoever has the techs wins. The other thing that I see oftentimes is when you struggle hiring techs, your culture in the shop is terrible because you need the text more than they need you. So you have a bunch of terrible techs with terrible attitudes that don't want to work driving the culture in your shop.
Damn. You just described my shop.
So Technician Tree, bro, get in there, buy it. You know, every technician usually is worth between 10 and 15,000 in gross profit a month. So if you can't afford the on demand, you probably might want to get into another industry.
Absolutely. Can we talk about the supply and demand factor on this as well? So when you are.
You heard it first here, what does that mean? Supply and demand.
Supply and demand. Right. So as demand increases and supply decreases, what happens to pricing? I. I don't think we're aggressive enough on our pricing right now as an industry.
So what, what you mean by pricing is what we pay the tax?
No, I'm talking retail pricing.
Oh, to afford to pay the tax.
Yes.
So your effective labor rate.
Yes.
Should be higher.
Yes.
So then I'm going to translate for you guys what Jeremy's saying. What he's saying is you should get your effective labor rate up, so you should teach your advisors how to sell. You need to learn pricing strategies, how to create a menu, all that. Because as things go forward, the cost of a technician is going to go up.
Yeah.
And I want to get ahead of that curve, right now, I want to be able to afford paying a technician 40 to 50 to $60 an hour to get in that range. I've got to have my effective labor rate at 150, 175, 200, 225 if I have the demand and I'm backlogged. Like for instance, in my shop, I just did this yesterday. Cleaned all the old ros over. My work in progress is clean. We have 68.
Push some cars out in the street.
Yes. And we let the city of Hispanic come pick them up. 68 active cars that are actually working in our shop right now with two technicians. That's a month's worth of work. And we do. Absolutely. But if I can't find the text, then I increase my pricing till the car count drops and find that happy medium. So instead of maybe having 68 cars, I go to 28. But if I increase my pricing by 60, 70%, what's gonna happen to my net?
It's gonna go up.
And could I then afford to pay a tech 50 bucks an hour? Yes, I could. And then I could attract the top talent to my shop and then balance it out. So that's kind of the balance that I'm talking about.
That's how Jeremy's mind works. That is all that. I hope you guys followed that, because he went around the culdesac and then through the back.
Crystal clear in my mind. I don't know how confusing that was.
No, it's a good. It's a very good point.
That's a supply and demand economics of America.
Nope.
Well, can I get you a drink?
We.
We'll.
We'll circle back to that. Sounds like Don's already had.
Sounds like I need to start looking for a new podcast. Work on what?
You got another one?
Yeah, we got another question.
This one also comes from YouTube from Pete. Thanks, Pete. Do you guys like the idea of waiving diagnostic fees in order to capture the repair? Curious about your response. If we lose the job to another shop, he only gets the diagnostic. If I sell the job. I can potentially get them a better chance at more hours. Plus, sometimes you don't lose anything and get both time and diagnostic. Just curious how most others perceive it. Plus wanted Chris's feedback.
Pete is short for Peter.
You imagine I would probably.
Peter. Yes.
What? You say yes to that?
Yeah, I've done it before.
I say no to that.
What do you mean?
Totally on the other side of the fence on that. That's just weak sales. Skills is all that is. So go to our on demand platform. You've got total training. Get a coach to help you deal with this. Now, here's my point on this. If your shop is skilled enough to diagnose the problem and the customer is going to go to another shop to have them repair it, I've got a very big issue with that. Why didn't you go to the other shop in the first place? Okay, you're at the right shop. Our testing fees pay for themselves. When you consider how much time and money is wasted by doing any repairs that we don't know the root of the problem. So I'm not a fan of waiving diagnostic charges. And it's a shell game, right? It's tough. It's an invoicing thing. Well, we zero out the diag line and then we put the hour labor or two hours labor down in the repair line. So then we artificially inflate our repair price and then the customer takes that and goes and shops it and finds a cheaper price. But it's not about that, especially now. We just talked about the shortage of technicians, right? So I'm a fan of setting up your diagnostic testing fees properly the first time. Charge a fair price for them and don't waive them. If the testing's been completed, you've earned it. Leave it on the ticket and charge properly for the repair as well.
So you're telling me that if a customer brings their car in for diagnosis and let's say you're half an hour into the diagnosis and the repair is a thousand bucks, you would let them leave for the thousand bucks and not do the repair?
That's not what I said.
Oh, what did you say?
I would tell you that the total to fix your car today is 1150. Would you like me to proceed?
But in a situation where the customer perceives that their other shop that can't diagnose it correct but can fix it for less correct. You would let them take it there if it came to that?
No, they wouldn't leave. You're missing the point. The that's just a sales objection. He's got to get over. He's not skilled at dealing with the sales objection. You know, it's like we've got dumb things that advisors say or do. When a customer says no, that's coming up. But it's simply a sales objection. We should close that sale. You have the car. You've got the diagnostic test completed. You've got the right technician. If you didn't take it to them to diagnose it. How are they going to properly verify the repair? It's simply a point of closing the sale. At that point, you've got to close it. You can't let that go.
So I don't. I don't disagree with what you're like.
All these millennials that don't, you know, they hop in and out of relationships and Tinder and all that stuff just because I see it happen.
What about Tinder?
Well, I don't know anything about Tinder. I'm just saying that sounds like you.
Know a lot about Tinder.
I don't know anything about Tinder, actually. What is it?
No, what I was gonna say before you brought up Tinder was that.
I've. A couple times I've had those. So four. Ford had a bunch of my clients open these, like, express, right. Service departments, like, five miles away from their dealership. And they would lose money, you know, and one of the marketing campaigns I would do over and over again that would work was check engine lights free and that sort of thing.
Right.
So, I don't know, like, I agree with what you're saying, but in every situation, I could. I could raise my labor rate up my effective and be okay. Riding off a little diagnosis sometimes to keep a job is what I'm saying. You're. What you're saying is right. I'm just taking the counterpoint that in some situations I've done that and it's worked.
So then there's not a black and white answer to this question.
No. But your answer is more right than mine.
No, it's. It's not about being right. It's about helping our viewers and, you know, help him close more of those jobs. You know, he might be in a very competitive market.
It's about being right. You're more right.
Thank you.
Another one, Don, or is that it for this week?
That's it for this week, Chris.
Thanks, Don.
Thank you.
Thank you so much for watching this clip of Service Drive Revolution. Now you can catch the full episode on YouTube, iTunes, or Spotify or wherever you consume your podcast. If you have any questions, go ahead and post them in the comments below. Make sure you subscribe and hit the bell icon so you're notified when you when we post new episodes. I'm Chris Collins and you can find me on Facebook and Instagram at Chris Bulldog Collins, and I'll see you again on the next episode.
