Transmission shop pricing & just general help

grifftrans · September 6, 2013

My husband owns and operates a transmission shop. He is the only one there and we just aren't making it. I think that he doesn't charge enough for the jobs he does, but he thinks he plenty high on pricing. He puts in many more and parts then most shops would, and he return rate is almost none because of that. He is very knowledgeable and honest. I would love for him to be able to hire a couple employees so he isn't at work all the time. I would like to run the office, but my lack of knowledge on the automotive side of things makes it hard. I don't really know where to start to learn everything I need to know about pricing jobs and turning our business into a successful profitable place. PLEASE HELP!

grifftrans · September 6, 2013

Keep in mind that we are in a small town, 12,000. I tried to run the office before, but I just didn't know where to start when it came to pricing on parts. I just feel like he is giving away his parts sometimes.

phynny · September 6, 2013

If he's buying remand or dealer parts they have a suggested resale value. I just ordered a tranny from jasper and cost was 2500-2800 (don't remember exactly) and list is 3500. And if he's going by suggested labor time for the hourly charge he'd be losing money there also. This particular calls for 7.2 hours but on a 10 year old vehicle it will take almost twice that time so we charge for it.

Folks have to realize that we don't get to work on new cars because they are all under warranty so these "suggested times" are really only a starting point. All tranny shops in my area are 95 and up and we are in a small town.

Hope this helps

grifftrans · September 6, 2013

He usually always rebuilds them. Every once and awhile he'll get a Certified transmission for some customers. I know there's a suggested retail, but he doesn't think that he should mark them up that high. He puts in a lot of parts. I understand most rebuilds come with new torque converter, gaskets, clutches, etc. But because he doesn't want that customer to have a problem, he puts in more. He has a great reputation for reliability. His shop hourly rate is 70 and he very rarely takes longer than book time to finish something. Honestly though, I don't see why is would take longer on an older vehicle. Book time gives you plenty of time and if you take longer, that's kind of for you to eat. If it doesn't take as long, do you charge for less time?

ncautoshop · September 6, 2013

He usually always rebuilds them. Every once and awhile he'll get a Certified transmission for some customers. I know there's a suggested retail, but he doesn't think that he should mark them up that high. He puts in a lot of parts. I understand most rebuilds come with new torque converter, gaskets, clutches, etc. But because he doesn't want that customer to have a problem, he puts in more. He has a great reputation for reliability. His shop hourly rate is 70 and he very rarely takes longer than book time to finish something. Honestly though, I don't see why is would take longer on an older vehicle. Book time gives you plenty of time and if you take longer, that's kind of for you to eat. If it doesn't take as long, do you charge for less time?

It can be hard to get over that pricing fear. But its a must to stay in business. Most use a matrix pricing system and use a management system that marks the parts up for you. Bringing pricing up eliminates bottom shoppers which in my opinion do nothing but stress you out. I recently purchased a series of books on eBay that have helped me quite a bit. Its the automotive service management series and its available from zchiltonman on eBay. The members of this site are extremely knowledgeable and helpful. A system such as all data manage may help with controlling the shops paperwork and QuickBooks will help you see you're profitability!

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gary's transmission servic · September 6, 2013

hi I am by . no means an expert but I have struggled in the tranmssion business for many years and know where you are coming from. the first thing I see wrong is 70 is not enough labor rate. I am in a small town of less than 1000 people but have a 50 mile radius that I draw work from. you need to figure out how much the shop needs to break even then figure out how much you need to live on then add on how much profit you want on top of that to invest in new equipment etc. I try to make enough off of my parts markup to cover all shop expenses each month and pay myself half of the labor to live on the rest is for new tools etc. 1 other thing that might help is a good shop management program that moniters profit margins etc. also you might look into a vidieo from George(becky) wit at avi called shop priceing strategies. hope this helps some

grifftrans · September 6, 2013

It can be hard to get over that pricing fear. But its a must to stay in business. Most use a matrix pricing system and use a management system that marks the parts up for you. Bringing pricing up eliminates bottom shoppers which in my opinion do nothing but stress you out. I recently purchased a series of books on eBay that have helped me quite a bit. Its the automotive service management series and its available from zchiltonman on eBay. The members of this site are extremely knowledgeable and helpful. A system such as all data manage may help with controlling the shops paperwork and QuickBooks will help you see you're profitability!

Sent from my DROID RAZR using Tapatalk 2

Thank you! He uses Alldata for his invoices and estimating program. He tells me that if he marks all his parts up to the suggested retail he'd double some estimates and that would be ridiculous. I'll look into the series on ebay. I'm just hoping I can work and convince him to change a few things.

grifftrans · September 6, 2013

hi I am by . no means an expert but I have struggled in the tranmssion business for many years and know where you are coming from. the first thing I see wrong is 70 is not enough labor rate. I am in a small town of less than 1000 people but have a 50 mile radius that I draw work from. you need to figure out how much the shop needs to break even then figure out how much you need to live on then add on how much profit you want on top of that to invest in new equipment etc. I try to make enough off of my parts markup to cover all shop expenses each month and pay myself half of the labor to live on the rest is for new tools etc. 1 other thing that might help is a good shop management program that moniters profit margins etc. also you might look into a vidieo from George(becky) wit at avi called shop priceing strategies. hope this helps some

He was at $55, and I convinced him to bump up to $70. A lot of general mechanic shops around are at $55-60. He's been bad about not separating business with personal, and I understand it's hard when you're a sole proprietor. Thank you for your advice.

HarrytheCarGeek · September 6, 2013

Sounds like your husband is an excellent tech, but has not had business training.

If you guys have a chance, step out of the shop and go visit your competition, that should help to open your eyes to what you could be charging.

If your husband is really as caring as you say, he really has no competition and may be leaving a lot of money on the table to his detriment.

HarrytheCarGeek · September 6, 2013

Don't worry about not knowing about cars to run the office, most of what you need to know and do has to do with dealing with people.

Smile and welcome the customers, have him do the diagnostics and troubleshooting and give you a list of stuff that he may need to make the repairs, the you can call the vendors and requests them to fax you the quote for the things you will need, from there you can quote out the jobs to the customers.

The important thing is for you to be in the shop to learn and be happy helping out.

grifftrans · September 6, 2013

Sounds like your husband is an excellent tech, but has not had business training.

If you guys have a chance, step out of the shop and go visit your competition, that should help to open your eyes to what you could be charging.

If your husband is really as caring as you say, he really has no competition and may be leaving a lot of money on the table to his detriment.

Yes! He is a great tech and he really loves it, except the fact that he feels he is working and working and not getting anywhere. I have an associate's degree in accounting, and planned on continuing for my BA, but we had a baby and then a second not to long after the first. My husband has no business knowledge, but trying to explain or change things is tough with him.

I've always wanted to go to other transmission businesses to see how they price out and work things, but I just thought that was something that wasn't done? How would I go about it?

nmikmik · September 6, 2013

My husband owns and operates a transmission shop. He is the only one there and we just aren't making it. I think that he doesn't charge enough for the jobs he does, but he thinks he plenty high on pricing. He puts in many more and parts then most shops would, and he return rate is almost none because of that. He is very knowledgeable and honest. I would love for him to be able to hire a couple employees so he isn't at work all the time. I would like to run the office, but my lack of knowledge on the automotive side of things makes it hard. I don't really know where to start to learn everything I need to know about pricing jobs and turning our business into a successful profitable place. PLEASE HELP!

Hi grifftrans & sorry we have to welcome you on a not so upbeat note, but believe me there is only way up from her

The fact that you are not technical is an advantage imo, in actually been able to run the shop like a business and not as a hobby, that I suspect your husband and probably 85-90% of us are treating this business like. I'd highly recommend attending one of the Auto Shop Management one-two day seminars, i don't want to endorse any specific one, just google it.... I would not sign up for their coaching though, at least not yet. You guys need to bring your bottom line up first, then spend the money on marketing and then on coaching, again imo. The fact that you can run the shop and let the hubby turn the wrenches is another benefit (who is going to stay with kids though?) , because you can look any customer/neighbor whoever, straight in the eyes and say – “this is how much it is going to take” If they ask why, you say “this is what it takes for us to stay in business and feed our family” Coming from you, I suspect it has a different weight…

And please, do yourself a favor and take this lexicon out of your vocabulary and thinking:

“ He's been bad about not separating business with personal, and I understand it's hard when you're a sole proprietor.” How about NO - I don't understand.

If his clients really appreciate his honest work they HAVE to PAY him ACCORDINGLY.

Sorry for shouting, but I really want to drive this point to you.

If you need out support with him, have him join our weekly chat and someone will slap him around a bit to get his "checkup from the neckup" :rolleyes:

GL

ATLAuto · September 6, 2013

I worked at a Mr. Transmission for awhile and never really understood how we could turn a profit. Almost an entire day was spent rebuilding a transmission plus the remove/replace time to get it into and out of the vehicle. Then, add test driving and possibly removing/replacing it again if there are any issues.

This shop would NEVER upsell anything that was unrelated to tranmissions. I once had a vehicle in that had every single dash light on possible. I'm talking headlight warnings, TPMS, oil pressure ... you name it, it was on. I wrote this all up and recommended to the service adviser that we take a look at it. "Nope, that's another shop's issue. We do transmissions here. That's all we do."

If this shop made more than 10% net profit, I would be surprised.

Additionally, I did not know that a town of 12k could support a dedicated transmission shop. Maybe it can ... I do not know small markets too well, but it seems like a stretch.

Personally, I would do the following to increase revenue:

Start doing all vehicle repairs, not just transmission. Do a full courtesy check on each car. Recommend what you can, even tires. Heck, the car is going to be in there for a day or two anyway, so you can easily keep no inventory and wait on the parts/tires you need.
It may be more efficient to just buy a Jasper transmission off the shelf and send the core back ... rather than rebuilding every single one. This really depends on your volume, though.
It sounds like you are in a rural area. Have you looked into doing the big stuff? Tractor transmissions, Caterpillar work, etc? Lots of money to be made here, especially if nobody else is doing it.

Just throwing some ideas out for you. I wish you the absolute best.

grifftrans · September 6, 2013

I worked at a Mr. Transmission for awhile and never really understood how we could turn a profit. Almost an entire day was spent rebuilding a transmission plus the remove/replace time to get it into and out of the vehicle. Then, add test driving and possibly removing/replacing it again if there are any issues.

This shop would NEVER upsell anything that was unrelated to tranmissions. I once had a vehicle in that had every single dash light on possible. I'm talking headlight warnings, TPMS, oil pressure ... you name it, it was on. I wrote this all up and recommended to the service adviser that we take a look at it. "Nope, that's another shop's issue. We do transmissions here. That's all we do."

If this shop made more than 10% net profit, I would be surprised.

Additionally, I did not know that a town of 12k could support a dedicated transmission shop. Maybe it can ... I do not know small markets too well, but it seems like a stretch.

Personally, I would do the following to increase revenue:

Start doing all vehicle repairs, not just transmission. Do a full courtesy check on each car. Recommend what you can, even tires. Heck, the car is going to be in there for a day or two anyway, so you can easily keep no inventory and wait on the parts/tires you need.

It may be more efficient to just buy a Jasper transmission off the shelf and send the core back ... rather than rebuilding every single one. This really depends on your volume, though.

It sounds like you are in a rural area. Have you looked into doing the big stuff? Tractor transmissions, Caterpillar work, etc? Lots of money to be made here, especially if nobody else is doing it.

Just throwing some ideas out for you. I wish you the absolute best.

He probably works on average 65 hour weeks. Then on there are some weekends and late nights. He has been extremely busy, but with him being the only one there to work, talk to customers, answer the phone, make tickets, test drive, diagnose, etc....he doesn't have a quick turnover. He will do mechanical work if there is something broken that will cause a problem with the transmission or if the vehicle is unsafe to be on the road. He is plenty busy with transmission work that he doesn't have time for other mechanical fixes. We live in a farming area, so we get mainly trucks. If we were to hire 1-2 employees then we would look at doing more then just transmissions. Another problem is the building we are in isn't that big and he is out of room. He only has two hoists. He'll usually tear the trans out of the vehicle roll it out and pull another truck in and do the same thing. Then he can tear them all down, order parts and rebuild them. So he'll have multiple jobs going at once.

He uses Certified Transmission for some vehicles, but he likes to go through them and honestly, he does a better job.

phynny · September 7, 2013

I don't understand some of your comments, first being if you know nothing about cars yet you say older cars shouldn't take more than book time? That logic is severly flawed and can/will serioulsy affect the bottom line. Bolts rust/break, things are brittle, dirty etc, all this take time and time is money. Unless you specialize and only do one type of transmission, book time is hardly ever going to be met. If your husband puts in 65 hours/week and your labor rate is $70/hour you should be easily doing over $200k/year. Heck, even if only 40 hours of that is repairing vehicles that is $140k/year.

A hard fact is that it is a very rare ability/skill to be able to manage a business, especially when not trained and schooled on such matters. It takes time and a lot of work to remove your personal thoughts/opinions out of the business. An example would be lowering the price instead of charging List price for fear of customer backlash.

Hope some of this helps, sounds like your husband isn't really open to running a profitable business by the things you've said.

Quick question, does he charge diagnostic time (including test drive time)?

xrac · September 7, 2013

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ncautoshop · September 7, 2013

I don't understand some of your comments, first being if you know nothing about cars yet you say ? That logic is severly flawed and can/will serioulsy affect the bottom line. Bolts rust/break, things are brittle, dirty etc, all this take time and time is money. Unless you specialize and only do one type of transmission, book time is hardly ever going to be met. If your husband puts in 65 hours/week and your labor rate is $70/hour you should be easily doing over $200k/year. Heck, even if only 40 hours of that is repairing vehicles that is $140k/year.

A hard fact is that it is a very rare ability/skill to be able to manage a business, especially when not trained and schooled on such matters. It takes time and a lot of work to remove your personal thoughts/opinions out of the business. An example would be lowering the price instead of charging List price for fear of customer backlash.

Hope some of this helps, sounds like your husband isn't really open to running a profitable business by the things you've said.

Quick question, does he charge diagnostic time (including test drive time)?

"older cars shouldn't take more than book time" this is my struggle every day!!!! Its hard to overcome but you must over come this and the parts pricing before doing anything else oe you'll be spinning wheels. These are the two of the top three (third being charging for diag time) that will make a HUGE financial impacts. Its much easier when you actually can breathe and pay you're bills to make business improvements. Morale can be a huge road block, atleast for.me!

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grifftrans · September 7, 2013

I do not want to come across as harsh but these are some of the thoughts I am having:

Yes does he charge diagnostic time?

Does he charge for shop supplies: rags, floor dry, parts cleaners, etc. He probably should charge 5-10% extra on each job.

Does he use a parts matrix mark up?

Does he charge for all of the fluids used? Does it include extra for the cost of synthetic fluids or special fluids like Honda?

If he has to have any outside work done on a job does he mark those cost up?

Since you are in a small community you may have to do a lot of driving to pickup parts. If so have you figured extra time or markup on a job to cover this cost?

Can you tell me how many book hours did your husband get paid on last week and the week before? He work 60 hours plus but how many hours did he get paid for?

If your husband is CHEAP on his work he will literally be worked to the point of being broke, exhaust, and burnout and will have nothing to show for it. He will be no good to you as a husband because he is exhausted and you will have no money to do anything together because you are broke.

Is your husband taking home as much money now as he could working on a job for someone else? If not this is not a business it is just a job and not a very good one. If you figure the hours being put in what is being made per hour?

I do not post this to either anger you are to belittle. My goal is just to challenge and stir sincerely thought and focus. It is times like this that we can refine a business and become better.

I haven't looked at an invoice lately, but last I knew he didn't charge for diagnostic.

Yes, there is a $15 charge on every ticket for shop supplies.

No, he doesn't use a parts matrix, he just adds a certain percentage. But if he thinks it looks to high or the customer might be upset he'll lower it.

He'll charge extra for synthetic or specialty fluids, but doesn't physically keep track of what is used.

Typically he'll mark up sublet work that is done.

He has a few part stores that will deliver but he does run around a lot. The biggest thing is he doesn't physically keep track of actual time on anything. He'll estimate when he makes invoices.

I don't know how many hours he actually billed out. He spends most of his day talking to customers. He'll have some that will just stop in and talk for an hour, and he's not getting anything done. That's why he works nights so often, he's basically doing his work for the day without the interruptions.

You aren't coming across harsh to me, because these are concerns and questions I ask him all the time. It's hard for me as his wife to try and bring these points to him because I imagine it comes across as belittling him and he becomes angry. I'm trying to get as much info from others in the industry to show and talk to him about. Right now he uses Alldata, I personally don't like the program. I tested out ProfitBoost and I liked that better, but I don't know if it would be better in the long run to switch.

phynny · September 7, 2013

Not sure what else we can do honestly :/. Many on here are very successful in business and it sounds like your transmission business breaks every successful business rule. If I took 30minutes to speak to every customer that wanted to talk I'd be doing a serious disservice to myself and my family. I'd be losing money and taking time away from my kids and wife by working at night and on my weekends. If I'm at my house and a buddy stops by while on working on my race car but having a customer take my time and money, never going to happen.

Where are you located? I firmly believe that we as shop owners should work together and be more of a support net when needed. After all there is plenty if work to go around. If you are anywhere near me you are more than welcome to come see the inner workings of our business. I know anytime I find something that helps efficiency I pass it on to the other honest shops in my area.

We are located in Morgantown WV.

Edited September 7, 2013 by phynny

nmikmik · September 7, 2013

Don't know if you had a chance to read my previous post, not that I think it's any more important or informative than any other advise you already received

I think you both need to change your mental state first, then you will be receptive to what others are telling you.

Try to have your husband complete the "black hole" test, just doing that should help him realize at least 50% of what he is doing wrong.

here i googled it for you:

http://www.managementsuccess.com/Intro-Services/Black-Hole-Test/index.asp

Edited September 7, 2013 by nmikmik

ATLAuto · September 9, 2013

Don't know if you had a chance to read my previous post, not that I think it's any more important or informative than any other advise you already received

I think you both need to change your mental state first, then you will be receptive to what others are telling you.

Try to have your husband complete the "black hole" test, just doing that should help him realize at least 50% of what he is doing wrong.

here i googled it for you:

http://www.managementsuccess.com/Intro-Services/Black-Hole-Test/index.asp

I do not recommend completing the contact information at the bottom of this test, unless interested in talking with Management Success weekly until you sign up. The test does not give you the results after pressing submit. Their salesperson will contact you to discuss the results...

mspecperformance · September 9, 2013

I can't say first hand how the business of a transmission shop works. Most of the customers you see are 1 or 2 times customers at best since how often does one need transmission work? I was actually speaking to a guy who owns a transmission shop not too far from my shop and he was telling me that the transmission business has definitely been a struggle for him (2 man operation, 1 lift, small 1500sqft shop at best). They did start to do some more general repair work.

If I can offer any advice it would be to speak to a trade organization or a parts supplier that you guys work with. A lot of times they will have some sort of financial management or business classes/seminars that are somewhat subsidized by the parts supplier. I would suggest for you and your husband to go together. It can be enlightening, informational and empowering on what you could actually turn your business into with the right management techniques. I would suggest to do this through your parts suppliers since a lot of stand alone seminars are really just lead ins into their coaching services which can cost thousands upon thousands of dollars. I can't comment on their effectiveness however I know I would be hard pressed to spend that kind of money if my shop was already struggling.