Transparency Pricing for Big-Ticket Items; Engines, Transmissions

As a shop owner, you’re constantly balancing profitability, transparency, and customer trust. Especially when it comes to selling big-ticket items like engines and transmissions. Selling big-ticket items takes skill, patience, and an understanding of your business model. Plus, your customer may be riding an emotional roller coaster when they hear the news that a major component of their vehicle has failed.

 

Deciding whether to replace an engine or transmission is a big investment, and your customer may be looking to you for guidance, and reassurance that they’re making the right choice. As with any sale, always lead with integrity. Ask yourself these questions: What is the right choice for the customer? Would I make this recommendation to a family member? And then guide them through the process.

 

In the blog article, I will give you proven strategies that will help you sell big-ticket items, giving your customers greater peace of mind. These strategies will also give you tips on how to make big-ticket items like engines and transmissions more profitable.

 

Always Consider What is in The Best Interest of the Customer

As mentioned earlier, as professionals we must keep in mind that the customers’ needs come first. Deciding to replace an engine or transmission may or may not be the right decision for everyone. To best guide your customers, consider the age of the vehicle, the mileage, and the overall condition of the vehicle. It may be time for the customer to think about replacing the vehicle. Pushing the customer without these considerations may create buyer’s remorse and damage the relationship you have with your customer. As we say, transparency is king.

 

Once you have confidence that moving forward is something that the customer should consider, then clearly explain the process in detail, and speak slowly allowing the customer to process the information. Stop at times and ask, “Do you have any questions, before I go on?” Allow for open dialogue. This will help ease any anxiety and allow the customer to think clearly.

 

One thing we cannot ignore is the training your service advisors will need to sell big-ticket items. Again, it takes patience and skills. A well-thought-out sales process should be created and practiced by your service advisors. You should also consider additional sales training, such as Elite’s Sales Master University and the Elite Master’s Program.

Sell Value, Not Price

Even before you give the customer the price for the engine or transmission, the customer knows that the cost of this repair will be considerable. However, the price you give them may be more than what they had in mind, which may shut down any further discussions, and you may lose the job.

 

As with selling any repair or service, emphasize value, rather than price.  This allows the customer to focus on the benefits of moving forward.  When someone is too focused on price, and sees little or no value, the sale becomes much more difficult, if not impossible at times. When presenting big-ticket items, explain all the options, the warranty, the benefits, and offer price options. Highlight the fact that replacing the engine is far less expensive than purchasing a new vehicle and will add years to the life of their vehicle, essentially lowering the cost of vehicle ownership.

 

Focus on Labor Profit Dollars, Not Percentages

Many shop owners are concerned about the profit margin percentage on a big-ticket item, which may be significantly less than on other repairs. Maintaining a certain profit percentage margin is important in satisfying the financial needs of the shop, and also for attaining the goals set by the owner.

 

However, when we sell a big-ticket item, such as a transmission or an engine, we are looking more at the profit dollars, and not the profit percentage. The key thing to remember is to look at the total gross profit dollars on the job to see if it meets your overall gross profit dollar requirement. 

 

I would recommend, for big-ticket sales, sticking to the list or near the list price set by the manufacturer. This will keep you competitive in your market. After all, people are far more likely to shop for the price of the engine or transmission, and not the labor.

 

If you feel that these big-ticket jobs don’t meet your required overall profit margin, there are strategies you can use that would help attain your desired profit. One is to use a higher labor rate for big-ticket items to make up for the lost profit. For example, if your normal labor rate is $160.00 per hour, you may need an additional $40.00 per hour to make up the difference to meet your desired gross profit dollars, making the labor on big-ticket jobs set at $200.00 per hour.

 

Calculating the right labor and overall gross profit will take a little bit of work. This is an area where a business coach can be extremely valuable.

 

Make Sure the Job is Aligned With Your Business Model

For most auto repair shops these days, working on all makes and all models is not a practical business model. While you cannot always control the type of work you bring in, the more work you do that is in line with your profile customer and preferred vehicles, makes your shop more efficient, and more profitable.

 

I would highly recommend that with big-ticket jobs, choose the jobs that you know can be done efficiently and in line with your business model. For example, if you are a shop that caters to Asian and domestic vehicles, then perform big-ticket jobs on those vehicles. It would not be wise to sell an engine replacement for a Volvo or Mercedes if those are not the vehicles your technicians are familiar with or trained on.

 

Regarding productivity and efficiency, create standard operating procedures (SOPs) for all big-ticket jobs. And then train your technician using these SOPs. This will standardize those jobs, making your technicians more productive, and increasing profitability. In addition, make sure that you have all the necessary tools, equipment, reprogramming capability, and technical information to perform these jobs with the highest degree of efficiency.

 

Big Ticket Jobs are not One and Done, Set up Future Opportunities

Many shop owners don’t realize the future opportunities of selling big-ticket jobs. When we consider the size of the job and the cost to the customer, it is in the best interest of the customer to set up future maintenance services for their vehicle. We all know that periodic maintenance helps to lower the chances of a mechanical breakdown. Periodic maintenance is also important for warranty purposes. Again, the investment in an engine or transmission is considerable; protecting the customer is crucial.

 

Another important strategy is follow-up inspections. Replacing an engine or transmission is an extremely labor-intensive process, with many steps. Things can go wrong, or a part can fail. Before the customer leaves, make sure you book a follow-up inspection no longer than a few weeks out and a month after that. Spotting an issue before it becomes a major problem will benefit you and the customer.

 

Conclusion

Whether selling big-ticket items, increasing profits, or improving efficiency, Elite Worldwide can help. At Elite, we have world-class, experienced coaches who understand your business. Our coaches live in the trenches and have built amazing, successful companies. Elite also has sales, management training, and peer groups that can take you and your business right to the top. No matter where you are in your business career; startup, growth mode, or looking to retire, Elite can guide you and help you achieve your goals and build a more profitable and successful business.