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I thought Mitchell did do a labor matrix. My daughter's shop uses Mitchell, I'll have to ask her. I know it doesn't do the linear labor matrix. If it does do it, it's a stepped affair where you can get an unusual looking jump in the labor charge for just a few ticks.

I'm using RO Writer. The glitch happened when we changed our labor rate. There's a table of various labor rates like most management systems have. Retail, wholesale, fleet, etc. If you change all of the rates at once, and we did, it sometimes has a problem keeping this setting. When adding labor to a job, the labor rate displayed matches the new rate that you put in, but then as you finalize the labor job the rate flips back to the old rate. Since we also use the linear labor matrix feature, the labor charge can be all over the board, so my guys didn't notice that it happened. If you've ever played with relational databases you know they can get extremely complex. I'm sure the rate has to be written in more than one table on the database, or possibly on multiple databases. We just got unlucky enough for the rate to be updated where we could see it, but not where it counted. It took ROW support about 37 seconds to fix it. It took us 8 months to figure out what was happening. I had been pounding my guys about ELR all year, and we just couldn't figure it out. We figured it had to do with canned jobs as they are usually done at a lower rate to be competitive, but it was software all along.

Harry is mixing a bit of apples and oranges because he failed to note that I said I've been doing the cheap oil changes for almost 5 years, and the first year I did it I had 37% growth. Then I said that I currently have 13 employees. I increased my sales from 900K to 1.2M the first year doing the cheap LOF with 6 employees. I'm sure I added staff along the way that year, but the timing of exactly when is a little fuzzy and I don't feel like digging through employment records for this. Last years sales were right at 2 Million. Bottom line net was 251K. For those of you playing along at home, that's 12.5%. Pretty soft. We actually found a software glitch in January that literally cost me 100K at the bottom line last year. Since correcting it my ELR improved by over $10 per billed hour. Current year profitability, my net ran just short of 16% through the end of February. January was a little soft, and we had extra high training expenses in February due to sending everyone to training for a weekend. The Net Profit % will bounce up a couple percent through the summer. Not sure I'll hit 20% this year, but we're working on it. YTD this year (as of yesterday) we're at $440,479 in sales @ 61.56% GP. We're about 6% ahead of last years sales, with a 5% improvement on GP% (due to the software fix). Gross profit dollars are up 10%, car count is up 9%. We've got a little HPRO problem as it has slipped by 0.15 hours vs last year. It's always something. If cheap oil changes weren't good for business, you either didn't have the facility to service them, or you were doing it wrong. Listen to they guys at Aspen. Implement it. It will work, and you'll make a fortune.

One of the worst things you can do for your business is to drive people to the front door, only to turn them away. Not only did you waste your marketing dollars, but very few of those customers will come back even if referred by a friend. I'm very fortunate (or more likely, just stupid enough to buy a giant building) that when I see a sustained busy period, I don't throttle back the marketing, I just start pricing racks. The local BMW dealer has 25-ish bays, not really sure exactly how many. They run one bay per tech. 25 bays, 25 techs. I can't imagine how organized things have to be to do this, but talk about an efficient use of their building. If they can do it, you can do it. I have no idea how, but I know there are guys out there who can help you figure it out. Then you could potentially dedicate one bay to the lube dude, and run 6 techs. Then you'll have to get a bigger parking lot for all your car count.

I was thinking about this thread, and trying to figure out how it is that some guys could be so opposed to a method of growing their business that has worked so well for me. How could they not understand the value in it? Then it occurred to me. We have different problems to solve. Both Total Auto Care and Harry's service are two bay shops with as much office as shop space. Shop space is at an absolute premium and can't be wasted on cars that might be profitable a few visits from now. Every new customer must be the creme-de-la-creme, which we all know is the word of mouth referral customer. They buy the first time they're in, and buy more than non-referral customers. Since space is at a premium, discounting to attract customers is probably the dumbest thing they could do. I have a different set of problems. Different problems mean different solutions. Problems like how do you pull in enough customers to feed 13 employees? So far this year we've written almost 1100 repair orders, while carrying over a $420 ARO including the damn near free oil changes. Fortunately I've hired well, and my guys just knock it out of the park almost every day with very little input from me. I certainly wouldn't want to have the problems associated with a two bay shop. While many people say they'd like to have my problems, trust me, they're still problems.

A great one is Influence by Robert Cialdini. In it he discusses the perceived value influence to buying. Kohl's is probably the best example of using this very effectively. Every "original" price is a number none of us would ever consider paying for the item. But subconsciously, the perceived value is planted. Then they "mark down" the item to exactly what everyone else sells the item for. Every single customer knows this, but who sells more clothes? Kohl's does.

That's ok, you can hate it. I don't mind. Define "hurting myself" for me. If by hurting myself, you mean years of double digit growth, fine by me. The first year I started the cheap oil change coupons, my business went up by 37%. My net for the two businesses (the shop and the LLC that owns the building) was 317K last year, plus the 78K that's on my W2, plus the shop bought me a BMW 650 Gran Coupe for a company car. This year I'm on track to clear about another 50-60K on top of that. The painful part is writing the check to Uncle Sam in a few weeks. That's gonna hurt. Bragging? ok sure. But here's the thing. You can either see my marketing strategy as a gimmick and that I'm hurting myself and other shops by cheapening the perception of our value, or you can see it for what it is. It's a means for bringing customers into my building so they can spend money. Period. I feel sorry for shop owners who allow their prejudices about coupons to get in the way of making great money. It is after all the whole point of having a business, to make money. It's time to detach yourself from the emotions of what you think is the right way and just do things that make money. It doesn't matter what that method is, as long as it's ethical and honest. If it's "low life" coupon clippers that make you rich, then fine. You're still rich, right? Coupons work when done right. If you have any doubts, look at Kohl's. They used to advertise much like Macy's. Beautiful models wandering aimlessly through their commercials in the latest high fashion, and the Kohl's logo on a white background at the end. You know, lifting the image of the department store, promoting their value over price. 🙄 Then in the late 90's they switched gears and started doing coupons, % off scratchers, and Kohl's cash.Their ads feature the discounts as much as the clothes. They're now the second largest department store in the US. They're not the cheapest on everything, and everyone knows it, but the coupons bring their target market in the door to spend money. Isn't that the goal? BTW Harry, I scanned through the article you linked to, and at the bottom it includes an "About the author". In it, you'll find this line: "He provides an inexpensive, easy to use, website based marketing system that is designed from the ground up for automotive repair shops." It seems the author knows how to attract his target audience, but then advocates a different approach for everyone else.

As I've said in another thread, I've been advertising the absolute cheapest Full Synthetic oil change in town. $29.95 for a domestic/asian 5 quart synthetic LOF. No one in town can touch it. In fact, that's a pretty good price for a non synthetic oil change. As a marketing piece, it's working great. I used to do $19.95 coupon oil changes with great success, but there was always a few people who were in it for the cheap oil and that's all. Way more upside to the program than downside, so I put up with them. We made the change to full synthetic and $29.95 at the first of the year. We had a guy in today who informed us that we had lost his business for good due to us raising the price on the coupon oil change. $29.95 was clearly out of line. He's been a customer here for 4 years, and brings us 2 cars. The ONLY work he's ever done with us is the oil change, in four friggin' years! I was heartbroken to say the least. 😀

One of the bigger differences between an auto shop and many other businesses is how labor is accounted for. Technicians go under Labor COGS vs expenses. An accountant will want to make labor and expense line because they don't know how an auto shop works. When you calculate what you're charging the customer based on billable hours, you want to be able to track your labor as part of the cost of goods, that's what makes labor a COGS item. Anything that you have a sales line for, like sublet or towing, need to have a corresponding COGS account. Other than that, you just want to create broad categories (AKA accounts) for your expenses, then create subcategories within those main categories. For example, you might have an "insurance" account, and "liability" as a sub-account and "work comp" as another sub-account. This is not to say that all insurance belongs under the insurance account. Health insurance for instance would go under "employee benefits". These are the sort of things that you have to consider as you're building your chart of accounts. I have a rule with my bookkeeper. We don't create any new sub-accounts without discussing it first, and creating a new main account is to be avoided if at all possible. The goal is to have a very simple and easy to read P&L.

After we dive with the sharks, we feed them any fish carcass that's left over after we filet them, or any undesirable fish we catch like Barracuda. Last year we learned the lesson that we need to make sure the swim ladder and all extra lines are out of the water first.

Here's a little video from a few years ago. Sorry about the lousy camera work.

What does everyone do for fun? I like to sail and scuba dive. Preferably, I like to sail to a great dive location, burn a tank or two, then sail to a little island and drop the hook for the night.

Yes.

I don't have bays set up as quick lube only. I have so many racks available that finding the space is not usually a problem. My lube dude uses the 4 post drive on most of the time, but if I have a truck that needs it, the truck gets it. Technician efficiency can be fixed. There's no better manager than a proper pay plan. Plus if you can start tracking their time they'll magically become more efficient. Finding good people is another matter. I don't know anyone who's having much luck lately. We've been hearing about the coming technician shortage for years. I think it's here.

Still liquid, but pretty heavy. I've made coffee for my friends a few times, and the response is always the same. FANTASTIC!! They can't believe how tasty it is, and they're full until lunch.

I can't begin to tell you how much better my life is than it was 6 years ago. 6 years ago I had been in business almost 15 years. I was very much in the same school of thought as you are regarding oil changes and discounts. The shop was working for me well enough to be able to buy my new building (I did own my old building too). With the new building came a lot of expenses, and I had a lot of bays I needed to fill FAST. I tried a few things that were not too successful. I was growing, but not nearly fast enough. Money got tight really fast. A year after moving into my new building, I bit the bullet and actually went into a little debt to launch my mailer campaign. I joined my 20 group 3 months later, and my facilitator tried to get me to lease a portion of my building to reduce my rent factor, and told me to cut down on the marketing expense. I said no, and no. He also said I should consider removing current customers from my mailer list. Again, no. I got bitched at constantly because my expenses were too high. I don't think my facilitator or other members could see how I was going to become profitable. I told them I was going to sell my way out of it. Impossible they said. Challenge accepted. My biggest regret in business is not marketing my old location as much as I'm marketing now. It was something I thought I couldn't afford. Now I see that I can't afford not to. For every dollar I spend on my mailers, which is my lowest ROI piece, my customers give me $6.80. I'll take that all day long, and I'm not going to judge the people handing me money as being "cheap" for using a coupon.

Again, I apologize for my tone yesterday. Phones going up and down for hours and sitting at my computer while tech support does little to nothing about it made me more than a little irritable. I probably shouldn't have been on a forum of any kind. No, I don't intend to make money on the oil change. You're right, it's a very small GP on the coupon oil change, and no net. But that's not the point of the discount coupon. The point is to get people in my door, and to make sure that I'm the facility that takes care of ALL their automotive needs. I never want them to have a reason to go elsewhere. Not even for an oil change. Giving the new customer a list of needed service on their car when they come in for a coupon oil change can be a negative or a positive. It's all about setting their expectations. Consider these two scenarios: 1. The new customer comes in for an oil change, coupon in hand. You tell them you'll get right on it. You write the repair order and move the car in to your lube dude. You either have a competent lube dude do a good inspection, or have one of your techs do it. 30 minutes later, the RO makes it's way back to the service desk with a $1000 list of needed repairs. You bid the jobs, taking another 15 minutes, and present them to the customer. The customer is shocked, and feels like it was all a bait and switch. He's also impatient because he believes you should be done by now. The customer declines all repairs and you never see that customer again. 2. The new customer comes in for an oil change, coupon in hand. You tell them you'll get right on it, and "while your car is here, I'll have my technician look the car over and make sure everything else is OK for you." The customer replies "Thank you, that would be great." The next few pieces of scenario 2 plays out exactly like scenario 1, except that you've now set the expectation with the customer that you're going to inspect the vehicle, and present your findings to them. In other words, you have permission from the customer. Also, by using the words "... make sure everything else is OK for you" you've set yourself up as their assistant, not just someone looking for a sale. Now instead of the customer being irritated that it's taking so long, they know you're doing more than just the LOF. They all know there are things wrong with their car, and aren't surprised when you find them. It's getting permission to find them that makes all the difference. To conclude scenario 2, the customer approves 50-60% of the recommended repairs. You tell him the car will be done this afternoon, and offer him a ride home. Try using those exact words (I can't stress this enough) for a week or so, and do great inspections. I bet you'll change your mind about oil changes in general, and maybe see why I like giving them away for no net. Psychology is important, but it's as easy to make it work for you as against you.

It is one location. I bought my building in 2011 when the commercial real estate bust caught up to the residential bust. It was on sale to say the least. I was looking to build an 8 bay shop down the street from where I am now, but instead I got 21 bays for $100K less. We only use one side of the shop (11 bays) but we keep inching toward having to put lifts in the other side as well. We're spoiled with so much space, and all my guys know it. That said, I've seen some shop owners manage to pull off some incredible numbers from a tiny location. It takes better organization skills than I possess, but it's possible. The most efficient shops I've seen run one bay per tech. I have no idea how they manage to do it day in and day out.

Sorry guys if my responses have been a little on edge. Phones have been going up and down for the last 3 hours and tech support has been less than helpful.

But could you do $1500 a week at a proper GP? What if the salaried tech doesn't produce? I pay my master techs $32 a flag hour with absolutely no guarantee. That will likely go up shortly, but as a reference point that's where we are.

That spreadsheet is on the bookkeeper's computer and she's shut it down and gone for the day. I can tell you what I average, and that's about 30 new customers on the LOF coupon monthly. The spreadsheet doesn't break down new customer sales vs existing on the coupon, so I'd have to go through it. I do know that new customer average RO tends to be pretty good since we've not seen and inspected their car before, so there's more wrong with it. I really don't care much about new customer sales vs existing on the coupon. I care about how many people have been incentivized to come into my shop, and what marketing piece did the job. I don't know how many times I've heard people say that once you've marketed to someone and got them as a customer, then you can remove them from your marketing. They say once you've "built up your customer base" you can stop the marketing all together and save the money. I call BS on that. Do you know one single human being over the age of 5 who has never had a Coca Cola? Ever seen a Coke ad? I mean, they've built up their customer base haven't they? Why do you suppose they still spend so much as a dime one marketing, much less millions?

To your first point, I'm not losing money at 29.95. Unless you know my costs, you can't say whether I'm losing money or not. What differentiates me from anyone else offering the cheap oil change is the full inspection on the vehicle, and knowing that the service was done correctly by qualified technicians. Most of my oil changes are done by my lube dude (to keep costs down) but 4 of my 6 techs are ASE masters. You don't get that at Jiffy Lube. I also track all my new customers, and I track my existing customers. They're not cheap. My average RO last year was $428. That's every single repair order including oil changes, and even including $0 tickets. Everything. I agree with you that there's value in washing a customer's car after a big repair, and we do that on big jobs like engines and transmissions. I would do it more if I had a wash bay in house. But the premise is bringing in new customers. Potential new customers can't feel good about a car wash until after they've been to your shop. I agree that I've trained my customers to look for the discounted oil change. I'm happy about it too. They look for my LOF coupon, act on it, and spend $428 on average. So I make a very small profit on the LOF, and since the average car we see is 10 years old with 150K on the clock, we sell them an average of $400 in additional repairs at 62% GP. My sales have grown from 770K six years ago to 2 Million last year. How's your growth doing?

So far, exactly the same. Time will tell, but so far so good. February had just over 90 coupons and 33K in sales after discount. I'll take it. I have used the coupon price to "throttle" the response in the past. If I was too busy with oil change customers, I simply raised coupon price $5. But that was before I had fully staffed my shop, and I haven't had to do that in quite a while.

I just started with the full synthetic only oil changes in January, so I haven't tried other (higher) price points. But why would I? The point of a cheap oil change is to bring customers in the door. I want my offer to be so good that they can't possibly pass it up. For most people, oil is oil. They have almost no understanding of the difference between full synthetic and a blend. If my coupon oil change can be almost $20 less than Jiffy Lube, then I'm good. If the price is similar, even if I'm offering better oil, the average customer can't tell the difference. If my sale price is close to what an oil change "should" cost (in their mind) the automatic assumption is that I'm overpriced in general and would overcharge them (again, in their mind) for a brake job etc.