-->

 

Share This Page:
     

TRUTH ABOUT PRICING

Truth in Pricing

 

I read a recent industry article that was about the results of a recent survey of independant repair shops and their buying trends, and since I am an independent business owner whom happens to own a jobber/shop combination business, that also sales to wholesale clients like independent repair shops, dealerships, installers, and fleet companies, I curiosly perused the article. I know a lot of work and effort went into the article, and a lot of time was spent gathering the data, but the information gleaned from the raw data led to conclusions that were based on conjecture. The root cause of the collected data would make for a much more interesting article because it would be the ugly truth, not someones grandiose ideas of themselves or their business. The fact that independent repair shops are buying more and more from retailers is not disputed, but 'price' being the main reason is complete hogwash. Go into any independent repair shop, pick up 5 items, and ask them their cost of those items. In almost every occurance, they will not be able to give you an accurate cost of 4 of them, and the 5th one will be close, but not exact. If they stock tires, they will have no clue as to the replacement cost of those tires. If they stock exhaust, they have no clue what it cost them or even what they have in stock in the way of part numbers. If they sell bulk-oil, they are losing several gallons per month due to 1/10ths over ran when filling a customers vehicle, and have no real clue about where it is going because they do not sell the oil in 10ths of a quart. To say that most independent shops, without modern sales and management techniques let alone computer systems at all, being serviced by the oil, tire, and exhaust industry, has any clue about price and it's implications is like saying a Gigilo only does business with the ugly ones because he is more concerned about keeping his prices low. The article even goes on to say that the independent shop is concerned about quality almost as much as price, implying they buy trusted brands only. Also a snow-job, because price and quality are usually not partners, usually being on opposite colors within the sprectrum. Black and white, if you wil, and where they meet is a shade of gray. A curious contradiction of terms. Here are a few of the real reasons that the independent shop is buying more from retailers.

1. Loss of in-house credit with his local jobber. In-house credit is a personal thing for most jobbers. The retailers 'credit' system is not in-house, it's usually a deal brokered through a credit card clearing house. The retailer gets paid regardless of the credit card company, and the credit card company only makes money if they don't get paid on time. Symbiosis! Why the independant shop will not pay their bill with me with a credit card defies logic in this whole scenario. Too personal, I guess.

2. Warranty. A retailer will warranty anything for any reason. Installation error, improper application, incomplete installation (ie -new pads on old chewed up rotors), or even warranty parts that were not bought from them! In doing this, the shop is relieved of any burden of responsibility.

3. A lot of independant shops want to feel superior over their suppliers and have such misguided 'knowledge' or worse, lack of knowledge, doing business with a jobber store that has 25 years parts experience is not someone they can easily push around. The jobber that considers himself a professional and whom might insist on a VIN number to be able to deliver the correct part will send an independent shop into cardiac arrest if we ask anything questioning what the shop really needs. Ask the tech or the service writer what year 350 they have, and I guarantee you'll hear, "why, they are all the same, just send me the @#$! plugs", followed by the salmming of the phone. The independant shop of this type will not be in business for long, and they will drag your name through the mud to make their indignant selves look better.

4. Sexism. It's alive and well. I have actually lost business to garages or shops because the reatiler hires cute 20 something year old girls to deliver parts. Then, after they can't complete a job, or need additional help, expect me to step in and bail them out. I tell them to call Bambie, or whatever her name is, and she if she can come down, bat her eyes at the distributor, and magically get it in time. I become physically ill when thinking that the owners of these types of shops are even allowed to get a business license. Essentially, they are the reason that the repair industry has such a bad reputation. There's a lot of these types out there , in fact, the majority.

Let's face it. The true professional independent shop is a gem, and we turn back flips for them. But alas, they are a rare breed, if not a dying breed. Instead, the new generation of independent shops, of which make up a large majority of the 1/3 preferring retailers the article eluded to, don't last very long. 95% fail within the first 3 years, and then riddle the entire industry with their debt. The retailers can have them. That's the exact reason I opened my own shop, and the very reason I intend to expand my operation. In my area, they better be concerned about price, because they can't touch me, and I don't miss them. Traditional distribution is broken, and I encourage more auto parts jobbers to get into the service industry. You will be shocked at what you find, and depressed somewhat by the realization that you have been 'duped' by a large number of independent shops and garages throughtout the years. The solution to the growing problem of losing market share to the reatilers is to create a new market of your own. It's a sign of the times, so may as well get in if you're gonna stay. By the way, you'll make a boatload more money with a lot less headache of dealing with marginal clientele.

Comments




  • I did not lump everyone together, just the 1/3 of independant repair shops that say they prefer retailiers due to 'price'.  If I have insulted you or any(except the 1/3 that took the survey), I am sorry and please accept my sincere apologies.  The real point of the blog/'rant' eludes to the possibility that 1/3 of independant shops that prefer retailers due to 'price' is misleading, if not totally unrealistic. There are many other mitigating reasons why 1/3 are leaving traditional distribution (jobbers) and shifting to retailers,  My comment about shops never really knowing what their cost is on any given product further illustrates my point of 'price' not being the real reason they are leaving.  By the way, your comments about 'pricing' and 'key principles' along with your own comments about the tire market backs up my argument that most of the 1/3 purporting retailers provide better pricing have no clue what the true and real acquisition cost of their own products really is.  It is true that I advocate jobbers opening their own shops, and the rationale behind that is clearly stated.


    It is also true that opening a shop will result in a decrease of jobber sales.  But I must also point out that the shop business  you add will triple what we used to sell those marginal installers, and at a much larger gross profit perecentage.  I still have a large number of loyal professional installers that buy a great deal from me, and they are treated like 'rock stars', as they well should be.  My pricing to them is exceptional, as is my service. 


    My blog was for the jobber that is struggling with a client base of the 1/3 Retailer Groupies that say they are leaving because of price.  It's just not the case, and I say let'em go, it's just what my competetion needs, and it's good for my bottom line.


    A true professional shop exhibits none of the 4 characteristic traits that I mentioned in the blog, as I am sure you fully appreciate.  Again, my sincere apologies for offending you, but your response indicates that of which I'm blogging about.  It's not easy for a jobber to open his own shop, but in many cases it is warrantied.  For that matter, you could open your own parts store.  I've done both, and guess which one is far-far easier!  It sure ain't the parts store!  Best of luck, and I appreciate the comments.  Go hug your jobber, she/he needs to know you stil love and appreciate her/him. 


    PS - the 'Gigilo" reference was two fold.  A blatant illustration of sexism, and also, the lurking illustration of a double standard, another level of sexism, that men get away with a lot more than women, just so you know...Mark

    WAP, 2 years ago | Flag
  • how truely unfair to "lump" everyone together with words like "most, alot, any all, majority".  Sounds real Prefessional to me coming from someone bashing professionalism from others.   You say walk into any shop and ask what there cost is on a product.   Why?  The items you listed are usually inventoried.  Set in the POS by key principles.  So who do you suggest we ask?   This rant of yours over pricing was truely started by the jobbers and wholesalers in the first place.  In the tire world(I have been a tire dealer for 24 years)the Jobber or wharehouse no longer commits to the independent dealer.  They will say you are a "key" dealer or have a "program" to give you free promo items to hang on the wall.  When all along they will sell any tire to any shop for nearly the same price.  Essentially they have whored up the market(since that seems to be a term you would be familiar with from your gigilo comment)  And by the way, Sexism exists in many forms.  Using prostition to prove your point is one of them.   


    Any way, this type of behavior has now trickled into the jobber/wharehouse business.   they now sell to everyone at nearly the same price regardless of the purchasers volume.  The loyalty is no longer there to protect the very shop that faithfully supprted the jobber.  The best example of this is just what you did and now what you advocate.  You now became competition.   So why would I now support you?  You may win short term but your jobber sales will suffer because of it.  Unless you start to lose expense.  Cheaper help, less runs through town, less service to the clients, etc.  a slow death of the jobber.   Oh wait isnt that what you accuse the shops of doing?


    Get over yourself, suck it up and commit to the "good" shops, underpromise and over deliver to them.


    Jack up your pricing for the shops you dont want and move on.  It's simple, find the customers you want and keep them.  Lose those that you don't.  


    We independents have had to do this for years with our clients.  


    Now we are doing it with our suppliers as well!


    Good Luck.


     


     

    ertamike, 2 years ago | Flag

Uploaded By: WAP
2 years ago
Tags:

Inappropriate Flag

Flagging notifies the AutoPro Workshop webmaster of inappropriate content. Please flag any messages that violate the Terms of Service. Please include a short explanation why you're flagging this message. Thank you!

If you believe this content violates the Terms of Service, please write a short description why. Thank you.

Inappropriate Comment Flag

Flagging notifies the AutoPro Workshop webmaster of inappropriate content. Please flag any messages that violate the Terms of Service. Please include a short explanation why you're flagging this message. Thank you!

Email Friends

Your First Name (optional)

Email Addresses (comma separated)

Import friends

Message to Friends (optional)

Are you human?

Or, you can forward this blog with your own email application.

Terms of Service