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I just got off a meeting with one of my clients where they were questioning their pricing. It seems that their front brake job is higher than many of the other shops in town. They wondered if they needed to reduce their price to match the other shops. As a business management coach, I’m often consulted on pricing for automotive shops and get that common question; “Is my price too high?”
Photo by Annie Spratt on Unsplash
My answer is almost always no.
In fact, just thinking that your price is too high is probably not good for your business and questioning it with your staff could cost you sales and profits. One of the most important things for you, your staff, and your business is that you understand and believe that you give your clients a great service for their money. You must understand your value in order to share that value with your staff and clients.
In an industry that stereotypically lacks customer service and is probably 30% behind other industries in what they charge, I always felt that my clients were getting a great deal. Sure, we were one of the higher-priced shops in town, but we provided top notch customer service and value that our lower-priced competitors did not. That is obviously from my own personal experience, other shops may differ in their experiences.
So, back to the meeting with my client and whether their pricing is too high. The shop in question is one of the nicest shops that I have been in. Modern, bright, clean – it’s honestly head and shoulders better than the other shops where they are. Out of the thousands of shops I’ve visited, this client’s facilities are well within the top five. They have an amazing service department, technicians that care about doing the job right, a three year 36,000-mile warranty, and they only use top tier parts on their client’s vehicles. The owner cares about his people and his clients.
Their people are paid in the top 10% and the business is currently earning about 30% more than they did before we met them.
While other shops may not be doing this, I know that this business has invested a large sum of money. That money has been spent not only on making sure the shop looks good, but learning how to run the business properly, educating themselves to remain relevant with new vehicles models, and purchasing the most up-to-date tools and equipment to raise their efficiency and effectiveness. In addition, this shop works hard to never sell something that the vehicle doesn’t need. They know that they’re only putting parts on the vehicles that truly solve their client’s problem, not add to their bottom line. What shops or dealerships in your town can you say are also putting in that time, work, and money?
Photo by Mike Petrucci on Unsplash
Another thing to note is that this business is currently booked out more than two weeks. So why are they questioning their prices? Their clients are not complaining, and the shop has been busy, busy, busy.
Our industry is so ingrained to offer discounts and low prices that we easily start second-guessing our prices, even when we know the value we are offering.
But, if you suspect that you are losing good clients due to higher prices – and we mean good top-tier clients, not the bottom 5% that you typically want to lose – then take a good look at your business and what it’s offering. How is your customer service? Do you bring enough value to your clients that your salespeople can really talk about what you do and express that same value to them? If clients are leaving, it’s more likely due to a customer service or perception issue that you can identify and work on before you ever lower your prices.
So no, your price likely isn’t too high. It more likely needs to be raised to support the inflation and growth that our industry is currently seeing. You can join our Gearheads Network to talk with other shop owners who are working on their pricing right now, too. Or send me an email at cecil@wearetheinstitute.com so The Institute can help you put together a road map to bettering your business in 2021 and beyond.