Raising labor rates is not just about increasing prices. It's about finding more value in the industry and positioning ourselves as professionals.
Join our panel as they highlight the need for understanding the concept of effective labor rate, ensuring services are charged appropriately, viewing the business as a professional entity, providing a positive customer experience and addressing core business problems before raising labor rates. Our panelists encourage shop owners to take a comprehensive approach to their business strategy, considering all factors and not just focusing on raising labor rates.
Aaron Woods, X-tra Mile Auto Care, Stillwater, OK. Institute for Automotive Business Excellence. Listen to Aaron’s previous episodes HERE
Brent Fleischman, Yocum Automotive, Republic, MO. AutoFix Auto Shop Coaching. Listen to Brent's previous episodes HERE
Jennifer Hulbert, Service Plus Automotive, Calcium, NY. Institute for Automotive Business Excellence. Listen to Jennifer's previous episodes HERE
Raising Labor Rates: Importance and Impact (00:00:01) Discussion on the reasons to raise labor rates, the impact it can have on a business, and the need for a long-term strategy.
Factors to Consider Besides Labor Rate (00:04:14) Exploration of other factors that contribute to a business's success, such as overall business strategy and addressing pain points.
Calculating Effective Labor Rate (00:07:34) Importance of understanding and calculating effective labor rate, including the need to charge appropriately for all services provided.
The mindset shift and the need to raise labor rates (00:08:33) Discussion on the importance of raising labor rates and positioning the industry as valuable and professional.
The impact of undervaluing the industry (00:09:52) The negative effects of undervaluing the automotive industry, including difficulty in attracting technicians and obtaining loans.
The bottom line and approaching the business as a business (00:12:10) The importance of considering the bottom line and treating the automotive business as a professional enterprise rather than a hobby.
The importance of customer experience (00:17:59) Discussion on how people buy feelings and the need to focus on providing a positive experience in the automotive industry.
Sharing new labor rates with the team (00:18:39) Importance of communicating labor rate changes to the team and how it helps maintain profit structure and make investments.
Effective labor rate and its impact (00:19:03) Exploration of effective labor rate, its calculation, and the need to consider menu jobs and their effect on gross profit dollars per hour.
The importance of personnel and procedural issues (00:27:40) Discussion on identifying whether the problem lies with personnel or procedural issues in a shop and the need to align the shop's mission and vision statements with its culture.
Addressing cultural issues and offering training (00:28:50) Exploration of the top-down approach in addressing cultural issues, identifying personalities, offering training, and monitoring staff to create long-term relationships with customers.
Considerations before raising labor rates (00:30:07) Importance of analyzing gross profit percentages, solving core problems, and focusing on profitability and core processes before considering raising labor rates.