Should garages make money on parts?

[bob 6600]

This is not a dig at how anyone runs their business, just an observation and was curious to what others thought. Most work undertaken involves parts and labour and parts are usually obtained at trade price. There are two local to me who have given me the option to get my own parts or let them supply them as they can get them cheaper (trade price). Obviously I can't match their price from motor factors etc and they don't mark up the parts to a retail price. I didn't think garages did this but I was impressed that they were happy just to make money on their labour (which is well priced). It has made me use them more for even some smaller jobs as the parts are cheaper than what I can get them for and that brings the net cost down.

Do you think all garages should adopt this way of working? Obviously consumers love to save money but I understand there are garages that do mark up from trade to retail on parts and are very very busy and so why change?

 

[Uncle Benz]

It’s normal for garages to sell the parts at retail. We only generally get a discount because of the volume we purchase. It’s nice to offer a competitive labour rate, but it has become eye-wateringly expensive to run a garage these days. The overheads are shocking. For example just my insurance today is seven times what it cost twenty years ago. I only have a small two lift shop and work alone, but if you annualise everything out it costs £1k a week to run it. Where I can I do parts at trade prices for mercedesclub members, those that I like, anyway

 

[Mr Greedy]

I don't mind being charged what I can buy the exact same part for, and if that means there is profit in the parts price for the garage, then I'm okay with that as long as the overall rate is competitive and (most importantly) the service is good.

What really annoys me is when garages have a 'dedicated supplier' and e.g. their SKF or equivalent belt and tensioner set is charged to me at £170 because 'that's the best price they can get', but yet I can order it direct from SKF for £70 with 48 hours delivery, and they don't allow customers to supply their own parts and they won't order it and allegedly don't believe the price I can buy it for. This is not charging at retail in my view; it is price gouging (not saying you do this Uncle Benz as I'm sure 'parts at retail' covers a wide spectrum of prices).

In this situation, it makes me feel ripped off and if I can, I end up doing the work myself.
I would just like to add, that there are a couple of independent Mercedes specialists that I use, and their Mercedes and OEM parts prices are close to what I can buy the parts for (sometimes a bit higher, sometimes a bit lower), so I'm happy for them to get on with ordering the parts and doing the work.

 

[Rory]

I asked both the dealer and the indie I use to strip and clean the brakes on my car - both turned their noses up. They don't just want the labour, they want the profit on the parts too. So what's the multiplier on a job like that for an indie fitting genuine parts - maybe triples the value of the job?

Indie justified their diagnosis charge the other day by saying how much their Star subscription is - think he said £200/mth. OK, we've got more people but our CRM software is £2000/mth and we can't charge anyone for it, it just comes straight off the bottom line.

 

[Tony Dyson]

This is not a dig at how anyone runs their business, just an observation and was curious to what others thought. Most work undertaken involves parts and labour and parts are usually obtained at trade price. There are two local to me who have given me the option to get my own parts or let them supply them as they can get them cheaper (trade price). Obviously I can't match their price from motor factors etc and they don't mark up the parts to a retail price. I didn't think garages did this but I was impressed that they were happy just to make money on their labour (which is well priced). It has made me use them more for even some smaller jobs as the parts are cheaper than what I can get them for and that brings the net cost down.

Do you think all garages should adopt this way of working? Obviously consumers love to save money but I understand there are garages that do mark up from trade to retail on parts and are very very busy and so why change?

The 'Trade Price' and the 'Retail Price' that you refer to are both variable to a great degree between businesses purchasing and selling-on the different products anyway and are totally dependant on the discounts that are negotiated between the Manufacturers -> Wholesalers -> Retailers. In order to establish a level playing field for all concerned (Within the supply chain) the Manufacturers set a 'List Price, MRRP or RRP' where everyone in the supply chain works on these negotiated discount rates, where the system is unfair is in the setting of the Manufacturers 'List Price, MRRP or RRP' as this final figure is, as a bare minimum 400% greater the the cost to produce (Incl O/H costs and profits) to the factory gate. This is why the trade and retail prices that consumers are asked to pay can be so varied and depending on how each business has set up their own charging structures will depend upon whether they would be agreeable to any proposals of carrying out any work on a vehicle with parts supplied by others, I wouldn't! That's a minefield all on it's own

 

[M80]

A part goes faulty,
no profit (or customer supplied) then the customer pays the labour to replace.
Profit taken on parts and the labour is also free.

I view that there is risk on carrying, and possibly replacing parts.
There is also an admin element.

Imho.

 

[Tony Dyson]

I asked both the dealer and the indie I use to strip and clean the brakes on my car - both turned their noses up. They don't just want the labour, they want the profit on the parts too. So what's the multiplier on a job like that for an indie fitting genuine parts - maybe triples the value of the job?

Indie justified their diagnosis charge the other day by saying how much their Star subscription is - think he said £200/mth. OK, we've got more people but our CRM software is £2000/mth and we can't charge anyone for it, it just comes straight off the bottom line.

Those costs should be included in your overhead running cost charges and incorporated into your finance module for billing inclusion, I suggest you procure and implement an ERP solution alongside your CRM if you don't have it?

 

[AnthonyUK]

My local indie is usually more than happy for me to get the parts beforehand as it means he can crack on without worrying about waiting on parts to be delivered.
I guess it will depend to a degree on where the garage is making their money.
Mine would normally turn away the majority of the jobs I ask then to do except I am a long standing customer who doesn't cause them any problems.

 

[Rory]

Those costs should be included in your overhead running cost charges and incorporated into your finance module for billing inclusion, I suggest you procure and implement an ERP solution alongside your CRM if you don't have it?

It's a slightly odd business - we don't bill anyone! We get issued with money but the amount isn't in our direct control.

 

[Uncle Benz]

I generally don’t have a problem with the customer supplying their own parts, as long as they understand that in the event of the part being faulty I will have no obligation to do the work again for free. Obviously if I supply and fit a faulty part the problem will be rectified at no cost to the customer. To be fair, it’s rare, and I will usually advise if the parts supplied by the customer are of poor quality.
To describe a recent incident at my shop, a customer presented an audi a3 with an abs unit fault. Quite common, I use Actronics to repair them, very reliably. The customer elected to send the unit for repair themselves, using a cheaper repairer. I was asked to remove the unit so he could post it out and bring the repaired unit back to me. A week later I refitted and bled the unit (not easy) and the car was fine. A month later it was back, same fault. The customers repairer was happy to look at the unit again for free, but it had to be removed and refitted again. The repairer wouldn’t pay for that, and the customer was upset that I wouldn’t do it for free. Why would I??

 

[Oldspanners]

I generally don’t have a problem with the customer supplying their own parts, as long as they understand that in the event of the part being faulty I will have no obligation to do the work again for free. Obviously if I supply and fit a faulty part the problem will be rectified at no cost to the customer. To be fair, it’s rare, and I will usually advise if the parts supplied by the customer are of poor quality.
To describe a recent incident at my shop, a customer presented an audi a3 with an abs unit fault. Quite common, I use Actronics to repair them, very reliably. The customer elected to send the unit for repair themselves, using a cheaper repairer. I was asked to remove the unit so he could post it out and bring the repaired unit back to me. A week later I refitted and bled the unit (not easy) and the car was fine. A month later it was back, same fault. The customers repairer was happy to look at the unit again for free, but it had to be removed and refitted again. The repairer wouldn’t pay for that, and the customer was upset that I wouldn’t do it for free. Why would I??

Some people trying to get a job done "cheaply" can't see the risk of it not getting done and think that the cost should be borne by someone else when things don't turn out cheap.
I wouldn't like to be in the situation of trying to do business with the complexity of modern cars and customers

 

[Uncle Benz]

Some people trying to get a job done "cheaply" can't see the risk of it not getting done and think that the cost should be borne by someone else when things don't turn out cheap.
I wouldn't like to be in the situation of trying to do business with the complexity of modern cars and customers

All you can do is advise. If you appear too forceful they think you’re holding a gun to their head. The reality is we’ve been down a lot of roads over the years, and driven through plenty of potholes on the way. Enough to know where to steer round them

 

[Wighty]

we’ve been down a lot of roads over the years, and driven through plenty of potholes on the way. Enough to know where to steer round them

You should put that lot on a “Chinese fortune cookie “

 

[T5R+]

Know garages that mark up retail prices versus others that allow me to supply my own parts. Latter is perfect - generally order whilst driving/commuting and receive double digit discount, the garage gets the parts directly from MB to their door even before my car goes in.

This approach works because the garage get zero hassle (paperwork, time, money outlay, parts late, car only submitted when parts on site, wasting time on the phone etc). The garage and I are sometimes amazed at discount plus how I get hold of EIS key. (I will save my rant over parts prices for a different thread).

Hate having to book car into the main dealer as is a a massive rigmarole whilst indie is a 5minute conversation. I am a massive fan of good indies and have not begrudged occasions where they have bought direct and make "a profit".

 

[bob 6600]

I generally don’t have a problem with the customer supplying their own parts, as long as they understand that in the event of the part being faulty I will have no obligation to do the work again for free. Obviously if I supply and fit a faulty part the problem will be rectified at no cost to the customer. To be fair, it’s rare, and I will usually advise if the parts supplied by the customer are of poor quality.
To describe a recent incident at my shop, a customer presented an audi a3 with an abs unit fault. Quite common, I use Actronics to repair them, very reliably. The customer elected to send the unit for repair themselves, using a cheaper repairer. I was asked to remove the unit so he could post it out and bring the repaired unit back to me. A week later I refitted and bled the unit (not easy) and the car was fine. A month later it was back, same fault. The customers repairer was happy to look at the unit again for free, but it had to be removed and refitted again. The repairer wouldn’t pay for that, and the customer was upset that I wouldn’t do it for free. Why would I??

Unfortunately I have a friend who would would probably do this. He sometimes asks me what brand of part he should buy (from a list) and then asks if he should get the cheaper one. If it was to fail, he would probably expect the garage to fit it again for free but I've told him on several occasions that it doesn't work that way. He certainly wouldn't do a job for free in his profession!

 

[Vintage Racer]

The whole point of a garage buying at trade prices and charging at retail, is to make money. They also have to spend a lot of money with a supplier to achieve that price.

All garages have overheads to cover and anyone who is not making a profit, is not running a business........they are running an expensive hobby!

Would you take your Sunday lunch to a pub and expect them to let you sit at a table to eat it? - Profit, is not a dirty word.

 

[Uncle Benz]

Know garages that mark up retail prices versus others that allow me to supply my own parts. Latter is perfect - generally order whilst driving/commuting and receive double digit discount, the garage gets the parts directly from MB to their door even before my car goes in.

This approach works because the garage get zero hassle (paperwork, time, money outlay, parts late, car only submitted when parts on site, wasting time on the phone etc). The garage and I are sometimes amazed at discount plus how I get hold of EIS key. (I will save my rant over parts prices for a different thread).

Hate having to book car into the main dealer as is a a massive rigmarole whilst indie is a 5minute conversation. I am a massive fan of good indies and have not begrudged occasions where they have bought direct and make "a profit".

There was a time, actually not that many years ago, where I could ring Mercedes Parts and order an EIS, green key, or even a new car key just with the chassis number dictated over the phone. Thankfully they have tightened this up quite a lot now. Rightly so, it astounded me how lax it was.

 

[star]

The viability of a garage comes from a small profit from all departments.
If I purchased a steak from the local market and took to a Michelin stared Resturant and said cook that, I’m sure I’d get told where to go.
Yes I will fit customers parts but like above, it’s the customers parts warrantee not mine.

 

[AnthonyUK]

If all you are paying for is the labour then surely that is all that is warranted?
I would only ever expect this.

 

[stevegbr]

noticed on ebay that there is a car for sale with a admin charge of £250 to be added to sale. i dont get it.