June 18, 2024

Effective Language Shift For Shop Owners: From Labor Rate to Service Rate [RR 964]

46 minutes

Thanks to our Partner, NAPA Auto Care

Murray Voth, owner of RPM Training, discusses the importance of language in the automotive industry, advocating for a shift from "labor rate" to "service rate" to better reflect the value provided. He also dives into financial strategies for shops, emphasizing the significance of setting the right service rate and understanding gross profit to ensure business profitability.

Murray Voth, RPM Training. Listen to Murray’s previous episodes HERE. [email protected]

Show Notes

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The breaks for breasts initiative (00:00:13) Discussion about the initiative started by two shop owners to raise funds for breast cancer research. https://brakesforbreasts.com

The rise of the mechanical and technology specialist (00:02:28) A language shift in the industry and the importance of recognizing the rise of mechanical and technology specialists. https://remarkableresults.biz/rise

Transitioning from diagnostics to testing (00:03:04) Discussion about the shift in terminology from diagnostics to testing to improve customer perception and willingness to pay.

Changing terminology from labor rate to service rate (00:04:09) The importance of changing the terminology from labor rate to service rate and its impact on customer perception.

Professionalism and perception in the industry (00:05:26) Discussion about the importance of professionalism and perception in the industry and its impact on customer behavior.

Showing the value of service rates (00:13:24) Strategies for showing the value of service rates to customers, beyond just raising prices.

Analogies for service rate and cost (00:14:25) Using analogies of fast food restaurants and steakhouses to explain the concept of service rate and cost.

NAPA Auto Care Apprentice Program (00:17:05) Information about the NAPA Auto Care apprentice program as a solution to the technician shortage.

Financial calculations and analysis (00:19:26) Murray Voth shares calculations and analysis of a shop's financial data, including occupancy costs, labor rates, and profit margins.

Determining the right service rate (00:22:05) Discussion on adjusting service rates, parts margin, and other expenses to optimize profitability while considering market competition.

Challenges and mindset shift (00:30:14) Exploration of the emotional and intellectual barriers shop owners face when making financial decisions and setting service rates.

Wages and effective proficiency (00:33:40) Analysis of technician wages and the impact of selling work properly on the effective service rate, setting goals for improvement.

Coaching Gross Profit (00:34:52) Murray discusses coaching gross profit, creating net profit, and making changes to increase revenue.

Back-End Sales Impact (00:35:48) The impact of service improvements on parts purchases, revenue, and margin.

Behavior Coaching (00:37:09) Murray talks about coaching to behavior, raising inspections, and the 100% rule for vehicle inspections.

Facility Service Rate Calculator (00:39:02) Murray offers a facility service rate calculator and discusses how to obtain it.

Odd Numbers and Service Rates (00:40:52) Murray explains the significance of odd numbers in service rates and how to use the calculator effectively.

Profit in the Estimate (00:44:39) Murray emphasizes the importance of the estimate in generating gross profit and providing value to clients.

Thanks to our Partner, NAPA Auto Care

Learn more about NAPA Auto Care and the benefits of being part of the NAPA family by visiting https://www.napaonline.com/en/auto-care

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By Carm Capriotto, AAP

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