by Lori » Mon Mar 16, 2009 01:05 pm
Hello Lori,I am an independent glass shop owner and I have to say, the banner waving for the large glass chains is not respectful of family businesses that rely on customer satisfaction. We have to go above and beyond the larger chains because we don't have network dominance and steering to do the relations part of our business. Every customer that we service, we need to satisfy to ensure longevity. I hope you will give your local family businesses the chance to service your clientele and to show you that with the larger chains, you loose some of the personable aspects.
The above was left in my quick message...(maybe in everyones I don't know) by a poster calling themselves 'interested'
In response to this...I don't banner wave any glass company...the company I work for has a price set with safelite...therefore that is where I source the replaced glass..if a shop choses to use another glass company that is their option...I cannot however pay more than the safelite quote...nor will my company warrant that glass...the shop will have to do that thru their chosen vendor.
Posted: Sat Mar 21, 2009 04:05 am Post Subject:
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Lori,
When you want to use a scale to grade, ''this shop is better so they deserve 50 bucks an hour, and this hole in the wall shop pretty much sucks so they only get 25 bucks....
That's not what I'm saying at all.
so who fred makes that determination?
Apparently you have been. :) You just said that you call them all then average them out and that is what you pay. To me that reads like somehow its your place to judge all shops are worth the same amount regardless of their Quality, number of year of experience, skill level, or anything else. Just lump-emm all together and that's what every shop is worth.
If you go into work Monday and the top brass announce that they have decided to add all adjusters pay into one lump sum, divide it by the number of adjusters and that is the amount of Pay each and everyone of you will receive.
Would you accept the new arrangement or give them a piece of your mind and slam the door on your way out?
FK,
Posted: Sat Mar 21, 2009 10:50 am Post Subject:
That's not what I'm saying at all.
sorry Fred but what else could you mean bydo you calculate different rates for different classes of Repairers?
To me that reads like somehow its your place to judge all shops are worth the same amount regardless of their Quality, number of year of experience, skill level, or anything else. Just lump-emm all together and that's what every shop is worth.
again if that's not 'right' then WHO decides WHO is worth more? Is your shop worth 5 more an hour than the dealership shop around the corner? (i'm sure it is but you get the point :wink: ) and who and how is that gauged? Do you ask a shop owner, 'ok PROVE to me how long you've been doing body work..guess your first years W2's will do it, showing you (at age 17) worked at 'billy bob's body and tow' and for every 10 years you get 5 bucks more an hour." ..... do you still have your first pay stub or w2? I sure don't that's be way too many years ago, and time would've surely turned those papers to dust by now :roll: :wink: do you see my point though fred? who decides and are YOU going to be happy when they do?Just lump-emm all together and that's what every shop is worth.
Please remember (or maybe you didn't realize this ) the difference between shops rates on ANY survey that I ever did was about a buck an hour...seriously..maybe saw 2 bucks an hour difference but only one or two per survey...so this really made little to no difference (honestly fred)...and to tell the truth (and I do understand perhaps I'm not typical of 'todays' adjusters) when I would call owners if they were alittle lower, I always said, 'What's that? I didn't hear you? did you say (back then) 35 an hour or did you say 37?" course if they had said 35 it went to 37, and of course i ALWAYS told them i was doing the 'yearly' survey etc...If you go into work Monday and the top brass announce that they have decided to add all adjusters pay into one lump sum, divide it by the number of adjusters and that is the amount of Pay each and everyone of you will receive.
Guess it would depend on if I got more or less money than I do now! :) Assuming it were less, sure it would piss me off, and although at my age I doubt I would stomp out (old enough to KNOW you got's to have your ducks in a row first :wink: )...Would you accept the new arrangement or give them a piece of your mind and slam the door on your way out?
Although, I could site things that are not too unsimilar to this that have happened to me and others in the past 3-5 years..(corp decisions that cost older more experienced adj to lose substantial money-but don't dare post specifics. I'm sure understand)...
Back to the crux of this...you DO apparently per this most recent post seem to be saying just what I thought your were saying...the 'better' shops deserve to be paid more. so I ask you once again..WHO makes that determination and how much? 1-2-20 more an hour? Body shops are no different in this aspect than say a hair salon...most will charge pretty close to the same thing for a hair cut regardless of experience of the 'cutter'..(i personally haven't been in one in more than ten years so i have no idea what the charge is :shock: ) yes there are some/few that only deal with high priced high profile clients...but they have limited their market to those that can afford them...there too are body shops like that not many in my area, but bigger citys (few in the KC area) that consider themselves elite amoung body shops and charge 10-20 bucks more an hour (mostly they ONLY repair high end vehicles)...that's I suppose some of the beauty of yours or any other independent business...YOU decide what market you want to be in...Dealership body shops always (in my area anyway) charge way more than other body shops...and why? is there quality better? I can tell you in my area (200 mile sweep/circle) it's quite the opposite, and I can think of one dealership body shop that isn't just awful...they suck...i mean their quality sucks...but they charge more..why?
If I decided to turn myself into an independent or public adjuster..I would have to decide if I wanted to remain competitive with the others around me or only wanted a few customers that could pay me that 100 bucks an hour I'm worth...(and still waiting on)
So 'splain it to me Lucy' WHO and HOW is that determination made?
Posted: Sat Mar 21, 2009 02:53 pm Post Subject:
I just received a survey from Farmers. It asks what my current labor rates are. This isn't a true survey they are just reinforcing documentation on what they are willing to pay. The question on the survey should read, what is your posted door rate if you are charging by the hour. Your posted rate should be an amount that a shop has determined that it must charge to remain profitable and not the current rate you use in your estimating program that any insurer has determined is the prevailing rate.
Any rate less than your posted rate is a discounted rate given to an insurer or customer because that is what the insurer has determined is the prevailing rate and that is all they believe they must pay.
Truth be known, most shops do not know their costs of doing business and are willing to accept a price increase every two years of two dollars an hour. Notice I said accept because most shops believe it is the insurer who controls the rates by what they are willing to pay based on an informal inacurate survey.
This game has been played for 20 years. A survey comes out and shops add two dollars an hour to their current labor rates that are set on their estimating systems and hope that they get one. Materials like wise go up one to two dollars an hour. If the average cost increase of materials is 7% per year (last year dupont increased twice) and the material calculator method of ref hours times x dollars is 30, then your cost went up 14 percent (over two years) since the last increase, which would be 4.20 not 2.00.
If a shop does not use a materials invoicing program on a typical 20 hours of refinishing at 32.00 per hour they arrive at 640.00. If a true invoicing program is used with a profit margin built in of at least 20 percent , the actual materials charge would be closer to 850 to 1000.00 depending on color of refinish product and amount of primers used to bring substrate up to the refinish hours allowed. Refinish times in guides are for new undamaged panels; just try to collect for prime and block and additional primers and fillers in refinish and supplies and watch the typical adjuster howl and bark , we don't pay for that.
Truth is some shops could do just fine on current labor rates and others need huge increases to compensate for costs of doing business and to recover all those concessions on labor and materials that they annually give to their insurance partners through private agreements in exchange to have customers steered to their business because they choose not to market theirselves.
Just found 30 minutes after posting the above.
Rising Costs
Despite all the rising costs of business and declining margins, shops aren’t able to raise their rates due to insurer control and have fallen far behind those rising costs. According to the Bureau of Labor Statistics, for the last three years, the cost of living for common goods and services went up 18 percent, with the Consumer Price Index increasing 11.1 percent. During that time, the cost of electricity went up 27 percent, natural gas rose 24 percent and gasoline jumped 146 percent. Producer prices increased 15 percent. Closer to home, technician compensation rose 14.5 percent (according to the I-CAR Ed Foundation Snapshot 2004–2007). During this same time, the cost of refinish materials rose 23 percent. Yet collision industry studies show that shop labor rates only increased 7 to 8 percent and materials rates increased only 5.5 percent. In many markets, these rates haven’t gone up at all!
Entire article in Bodyshop business Magazine online
www.bodyshopbusiness.com/Article/46080/march_cover_story_rally_for_retail.aspx
Posted: Sat Mar 21, 2009 04:47 pm Post Subject:
This isn't a true survey they are just reinforcing documentation on what they are willing to pay
I don't understand what you mean by not a 'true' survey...what is your posted door rate if your are charging by the hour.
Mike that's what everyone/shop I know gives on any shop rate survey is their door rate..Any rate less than your posted rate is a discounted rate .
I agree, and can't for the life of me figure out why you wouldn't give them your door rate...makes zero sense to me....I know shops that discount their rates, not just to insurance carriers...some discount for cash ( :roll: :wink: ) some have fleet deals and discount to them..(ie ERAC, Hertz, local po-po etc)...In fact most shops only charge their door rate I'd bet about 20-25% of the time...based on an informal innacurate survey.
What's informal or inaccurate about it? Shop asked question...Shop answers question...easy..If a shop does not use a materials invoicing program on a typical 20 hours of refinishing at 32.00 per hour they arrive at 640.00. If a true invoicing program is used with a profit margin built in of at least 20 percent , the actual materials charge would be closer to 850 to 1000.00 depending on color of refinish product and amount of primers used to bring substrate up to the refinish hours allowed. Refinish times in guides are for new undamaged panels; just try to collect for prime and block and additional primers and fillers in refinish and supplies and watch the typical adjuster howl and bark , we don't pay for that.
And on the flip side, that car that was keyed all the way around was over paid...I do agree with you however, that materials are off the wall in the past five years, there has been a bad trend..I further agree that hourly paint and material based on refinish hours are not accurate any longer,...especially if you get over a certain point..(hours wise)...and TRUE invoicing makes far more sense...I have on some jobs (larger refinish or funky colors--or that freakin' 'jeep' color that you have to get the kit for..)...gathered all the invoices and went above to get (much) more money on these jobs...it's very difficult to determine and so much opportunity for the 'shady' shops to fool around with this..that I don't see it becoming uniform across the board...in eTruth is some shops could do just fine on current labor rates and others need huge increases to compensate for costs of doing business and to recover all those concessions on labor and materials that they annually give to their insurance partners through private agreements
(for any 'new' readers to this 'old' debate)..The company I work for there is NO concession on labor, parts or materials...period, none within the DRP agreement...(ok that's done for now :roll: ) A lot of shops need a huge increase because they over improved on 'flash' in the front of the house, in a misguided attempt to 'prove' they are the best shop in town, because, well their are the 'prettiest'...no joke, I've seen four or five of these knuckle heads...even so far as to spend 1k for a freakin' coffee maker in the lobby, plus what the coffee costs them...really? you really think THAT will bring in more business :roll:
Rising Costs
This is the same for every business and every person in our world right now mike... :( I sure as hell haven't got a 18 or 11.1 % raise! neither did my husband, or kids...or really anyone that I personally know of...that'd be (in this economy) almost unheard of...what companys or industrys have you NOT heard about 'tighting their belts' 'cutting back' 'not replacing employees and flat laying off?' who's safe? Maybe we should find that out and change careers? You think it's too late? :wink:
Posted: Sat Mar 21, 2009 08:30 pm Post Subject:
This is the same for every business and every person in our world right now
I think the reference was not relevant to present conditions, but to the last five years perhaps. Regardless, materials and supplies charges should keep pace with all price increases and not just on a bi-anual basis.
Posted: Sun Mar 22, 2009 12:44 pm Post Subject:
Regardless, materials and supplies charges should keep pace with all price increases and not just on a bi-anual basis.
I couldn't agree more with you Mike...and I wish there was an easy way to do that...actually (i forgot) Mitchell does have a program (can't remember the name of it) that you put in the paint code and the manu...and it is supposed to figure actual cost based on, (i'd assume) info supplied by the manu (ie.dupont-ppg, whatever)...I do no have this program on my computer, but one of the 'trainers' for the company I work for does..I called him once to ask that he run it thru this program (the estimate I was working on)..I also had the invoices from the shop...(this shop uses dupont)...it came out pretty close as I remember...I did have to adjust it alittle, then of course added mark up..one problem with this is though, each shop doesn't pay the same even if it's the same product..the discounts are different and based on amount purchased..at any rate, I think the reason the hourly p&m had stayed is of course it's easier.. :roll: I personally have no issue at all with any shop that brings to my attention if they have been shorted on a particular job on p&m and then get invoices review and pay them what they are owed...(typically will be a bigger job) problem is it's a case by case or car by car deal...the vast majority of the time, the hourly still works...what to do, what to do? guess they should just put me and you (mike) in charge of the world and we could get things straightened out p.d.q. :wink:
Posted: Sun Mar 22, 2009 04:06 pm Post Subject:
It's not rocket science, it's just simple math. I made my own materials and invoicing system after trying several on the market. I use a simple quick books inventory system. I can calculate my use of materials by the oz including paints, reducers, adhesives, catalysts, and clears. I can calculate masking by the foot for interior jambs, exterior, bordering tape, total car masking etc. I can cost the amount of abrasives, grinder discs, welding spools of wire, acid brushes, dust masks, latex & nitrile gloves, razor blades, drill bits and a multitude of other products.
If a shop owner would calculate the cost of every product taken either from a bulk source or individual application and add in a reasonable profit margin they would be shocked to realize the amount of materials use per job that is not overhead, that is not being charged for which is coming out of shop revenue streams or from other services.
It's a time consuming process to do this on every job and some programs have component pricing for example when replacing quarter panels or skinning a door. It's an averaging process but not necessarily an accurate accounting, but it's still better than refinish hours times an arbitrary or capricious dollar amount. There are people working on programs that calculate the cost of refinishing or repairing by the square foot of a vehicle adding in other factors. But at least, I can verify my accounting of product use since I developed my own system. It would be very easy to explain my cost of materials and supplies to a small claims court judge if necessary. Not sure how anyone could defend the present system or to justify it.
Posted: Mon Mar 23, 2009 02:39 pm Post Subject:
Lori,
[quote:7e007f3ea7]When you want to use a scale to grade, ''this shop is better so they deserve 50 bucks an hour, and this hole in the wall shop
pretty much sucks so they only get 25 bucks....
That's not what I'm saying at all.
sorry Fred but what else could you mean by [quote:7e007f3ea7]: do you calculate different rates for different classes of Repairers?
[/quote:7e007f3ea7][/quote:7e007f3ea7]Oh... maybe things like an repairer with 2 employees and a 2000 sq. ft. shop as opposed to one with 30 employees and a 60,000 sq. ft. shop. Fenced in storage facilities. Shuttle service, One that supplies Free Office space for insurance personnel. [oh wait those guys give insurer's a discount for that privilege (sic)] etc.
again if that's not 'right' then WHO decides WHO is worth more?
Oh,... Maybe willing reasonable consumers of each and every provider of those services.
Certainly not a bias entity that stands to Profit from its obvious ability to suppress the entire Collision Repair Profession. What entity might that be??? I'm thinking the Insurance industry and their employee's.
On that thought... the current scheme enacted by the insurance industry (the one suppressing Collision Repair rates) makes about as much sense as having the Collision Repair Profession setting __The__ Prevailing rate that __All__ insurance companies must accept as full payment for insurance premiums.
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For some time now I've been wondered why you've been unable to understand/comprehend what I consider Basic Business Principals. Then after reading your comment below....
Is your shop worth 5 more an hour than the dealership shop around the corner? (i'm sure it is but you get the point ) and who and how is that gauged? Do you ask a shop owner, 'ok PROVE to me how long you've been doing body work..guess your first years W2's will do it, showing you (at age 17) worked at 'billy bob's body and tow' and for every 10 years you get 5 bucks more an hour." ..... do you still have your first pay stub or w2? I sure don't that's be way too many years ago, and time would've surely turned those papers to dust by now do you see my point though fred? who decides and are YOU going to be happy when they do?
I read that a second time and it finally hit me... thinking Duh... as I slapped my forehead with my palm.... Your seeing all this from an Employee's point of view...!! Why didn't I realize this Months ago and save us both a lot of frustrating Typing.
Sorry for all the confusion.
I promise in the future to avoid discussing Basic Business Principals.
Sincerely,
FK,
Posted: Mon Mar 23, 2009 11:23 pm Post Subject:
Oh,... Maybe willing reasonable consumers of each and every provider of those services
And you think that consumers that are paying out of their own pockets would be unbiased? are you kidding...you'd be back to 20 bucks an hour...if the general consuming polulation got a vote!the current scheme enacted by the insurance industry (the one suppressing Collision Repair rates
Fred this ''scheme'' as you call it has been going on well over 20 years...where you been?Your seeing all this from an Employee's point of view...!! Why didn't I realize this Months ago and save us both a lot of frustrating Typing.
meaning an employee of the shop? ins. carrier? I don't care what the rates are fred, I wish you the best, hope you make 100 bucks an hour how would/could that possibly affect me? What I wrote about YOUR opinion and idea that all shops should not be paid the same, the ''better'' (i assume you count yourself among them)...shops DESERVE to be paid more per hour, but you can only come up with...first...''quality and experience'' (ok you'd have to prove the years of experience to get it, you decide how if you don't like my idea)..then YOU decide purely by the fact that a shop is large makes it better and thus worth more per hour!!! :shock: :o are you ka-raise-ee? :o ...watch out fred i see some of your fellow shop owners getting all wound up about that one as well they should...why should the big boys make more money an hour...Fox better than your shop huh? .. :roll: how about the Hendricks? they DESERVE more money per hour than you and your guys...? Simply by vurture that they have more money to put into their business...yeah that makes zero sense...course I guess that's how the rich get richerMight interest you (or not) to know that I too fred was a business owner...started that puppy from zero, a blank building...built it up and in five years sold it for a really nice profit..so I understand basic buisness principles...You my friend are the one that wants to pay shops differently...and now have decided the 'heavy hitters' deserve more than the med to small local shops...Carstar oughta be happy to hear that from you. :roll:
Posted: Tue Mar 24, 2009 02:23 am Post Subject:
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Lori,
That Rant was an excellent example of my "seeing things from an employee point of view" Point. But as promised, I will continue to avoid discussing Basic Business Principals.
Oh, one thing though. About your "Current" Scheme comment?? The Democrat & Republican two party system/scheme has been around a lot more than 20 years, and ya know what??? They are still current. And they will stay that way until something else replaces them. I do hope something else replaces both of these schemes sooner instead of later.
FK,
PS, In case your worried... No... I'm not holding my breath till either one of them changes. :)
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