Pricing Service & Repair
When Retailers price service and repair jobs, one of the difficulties they face
is knowing the actual MARGIN or PROFIT in the job.
Most departments within a Retailer operate autonomously and are almost completely financially
detached from one another, encouraged by the likes of DMS, Budgets and Composite.
Let me give you a real life example where a Retailer promoted a fully fitted Front Brake Pads
replacement price of £89.
Kwik Fit did the same job, using non-genuine parts for £69.
Upon visiting the Retailer's Parts Department I asked how much they paid for Front Brake
Pads on the particular model - they said £10.50.
Knowing it would take no longer than half an hour to fit front pads, I returned to the Service
Department and asked them how much they paid their Technicians per hour - they said £14.00 per hour and so we have a cost of £7.00 for half and hours work.
So if we take the COST of the parts and labour, it only amounts to £17.50 and so you have to ask why is the Retailer displaying an uncompetitive
price of £89?
Well, it's because Retailers always take the RETAIL price of the Pads and the RETAIL price of Labour and
simply add them together.
Most other businesses will look at the COST and then add a 'market
based' MARGIN, so COST + MARGIN. (The Margin should take into account an appropriate
If Retailers knew their MARGIN on any particular job, they would be able to price jobs that are
competitive in the market place and at the same time know exactly what their PROFIT is - this would also make
it easier for the Retailer to negotiate a price with the customer.
Whilst Retailers don't need to 'price match' the likes of Kwik Fit, if they could price work which is
reasonably close to the Kwik Fit price, Retailers would still make a profit and importantly
improve customer retention levels.
Also, the Retailer has the advantage of being able to promote the use of
OEM parts and manufacturer training technicians.
But until Retailers start pricing work at COST + REASONABLE MARGIN - the likes of Kwik
Fit are rubbing their hands with glee!
How do your Retailers price
Author: David Inglis
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