Return on Investment
Most business decisions come down to ROI. We built ShopController with the primary goal of increasing ROI through productivity, efficiency, and pricing tools. Here are just a few easy to measure tools in ShopController 10 that can increase your ROI immediately. The average small shop can generate enough extra profit to pay for the SC10 subscription (and then some) with just 1 feature – ROUNDING. Then all of the other ROI features like the Smart Part Matrix, Shop Charges, and many more help manage your business more efficiently and profitably.
By using the Rounding feature you can add as much as 50 cents to your average part sale. The calculated price of every part is raised to the next dollar. This feature creates a consumer-friendly amount ending digits you choose, typically 95¢ or 99¢. THIS ISN’T NEW, we just make it automatic. We’ve found when people manually price jobs they rarely include rounding because it doesn’t seem to affect the total price, but the profit shows in the numbers.
- Lets say you calculate the prices for 10 parts and get these amounts: .65, 1.29, 2.43, 3.99, 4.36, 5.12, 6.03, 7.66, 8.23, and 9.03.
- The chart shows the profit gained when you round these ten parts up to the next 99 cents.
- Just by rounding, these 10 parts – all under $10 each, you generate an additional $6.11 in sales. And that is all profit. How many parts do you sell on each ticket? How many parts do you sell in a month?
If you sell just 500 parts a month that could be an additional $250 in profit.
- Don’t underestimate how many small parts you sell.
- An average tune up could include 15 parts or more.
- A simple oil change could include 6 parts or more.
The primary purpose of the Parts Matrix is to RECOUP LOST MARGIN.
Many shops use a simple pricing strategy like doubling the cost to get the sell price. This should give you a 100% margin at the end of the month/quarter. The problem is it never does. You will almost always either lose sales or drop price. The trick is to account for it and make it up where you can.
- It’s harder to get a high margin on high priced parts. Accept it, plan for it, and move forward. Most of the margin gains can be made on low priced parts. For example, there is no reason you can’t mark up a hose clamp 3 or 4 times. As the cost of the part rises, your pricing will come down. That’s OK if you plan for it, because you can use low cost parts that are sold in higher quantities to make up the difference.
- You can set up Dealer, Aftermarket, Tires, and Fluids to use different markups. You know Dealer parts are harder to mark up, so account for it. Because the Parts Matrix accurately follows your pricing strategy, your Service Writers don’t have to adjust prices on every ticket.
- Once your employees trust the pricing model and don’t second guess their quotes they will build confidence and will be less likely to give unnecessary discounts.
Shop charges are necessary in most cases. If you are not charging shop charges you are probably losing jobs or losing profit.
What are Shop Charges for?
- There are many small expenses that are difficult to account for on a ticket. These include silicone, wd40, brake clean, uniforms, software, diagnostic equipment, shop tools, etc.
- Shop charges allow you to add a fixed amount or percentage of parts/labor to every ticket. Many of the shops that use ShopController charge 4% of parts & labor.
- This can be an additional 4% profit on every work order.
How do I lose jobs by not charging shop charges?
- You are not providing an apples to apples quote. Many shops quote customers and send out coupons on jobs without including shop charges. This means they have an additional 4% margin on every work order. Most customers don’t know who charges shop charges and who doesn’t so it is not part of their buying decision.
In some areas, such as California, Shop Charges must be itemized. Verify any laws/guidelines in your area before implementing this feature.