Where Your Shops Part to Labor Ratio Needs to Be
In this quick video tip industry superstar Jim Murphy shares the importance of maintaining a balance with your parts-to-labor ratio.
Jim Murphy heads up Elite Pro Service, a peer group made up of 90 of the industry’s top shop owners. To learn more about this caring community, visit https://elitepeergroup.com/
Hi, I’m Bob Cooper, President Etworldwide. Thanks so much for joining us today. Today, I’m actually with Jim Murphy, a longtime dear friend of mine that actually heads up our pro service, which is a peer group of 90 of the top shops in America. And we’re actually in Scottsdale, Arizona, today for our 2020 conference. And Jim, you were talking to me a little bit earlier about a tip with a ratio. And I absolutely loved what you said and I thought our audience would love to hear it, too.
Sure. Sharing it with our audience. I’ll be happy to, Bob. Great. So, guys, you know, one of the things that is not paid attention to very often is a parts-to-labor ratio. And it’s insignificant even with the guys that I coach many times. But here’s the importance about this is that by really looking at that ratio, you want to keep a balance of looking at what you’re selling. And from parts of the labor, any time that you sell an hour of labor parts, just come along with it. So really paying attention to how you sell the labor and how much of it you sell compared to your parts is extremely important. So we want to keep a ratio that’s at least 1 to 1 parts dollars to labor dollars or less. Extremely important to watch because again, a lot of the influence will come from not selling diagnosis, Right? Not selling electrical work. Right. Those types of things will have a negative influence and you’ll be too high in your parts of the labor ratio. So you really want to pay attention to that.
There you go. You just heard a great tip from a fellow that really understands the business, works with 90 of the top shop owners in America. Take it, put it to use. You’re going to love the results that you see. Jim, thanks again for that.
All right. Thank you for joining us today.