You Cantt Take Percentages to the Bank by Bob Cooper Far too many shop owners are so determined to make a certain percentage of gross profit on each job, they lose sight of profitability. I’m talking about the people who judge their success by percentages rather than dollars. They’re so busy trying to squeeze every last penny out of every job that they forget about the dollars that are being lost at the same time. Sure, you can take that starter apart and fix it. But with rare exception, most shop owners will install a replacement, right? Does the replace- ment cost more than the sum of the parts and labor it would take to repair the customer’s starter? Typically it does. But with the replacement, you don’t need technicians that are skilled in rebuilding starters, the warranty is off-loaded to the remanufacturing company, and the customer is happier since they get their vehicle back faster. Now here’s the part most shop owners miss. With the installation of exchange remanufactured components, both the car and the customer are out of your service bays faster, which means you can now start on the next job. Bottom line? A little less profit on the “job,” but a whole lot more profit per hour, and profit per hour, in any business, is the real secret. Consider this. Over the years we have been helping to install remanufactured transmissions. Not only have shops been thrilled with the results, but the majority of the transmission shops that we work with today (most of which are world class) have now turned to augmenting their business with remanufactured units as well. Why? Because they realize that in today’s world, turnaround time is crit- ical to most customers. Exchange units skyrocket tech productivity, and they lessen the shop owner’s dependency on highly skilled rebuilders. So let’s look at some numbers. If you are working on a 15 percent net, and if you sell an in-shop transmission rebuild for $2,400, you’ll earn $360. But what you’ ll need to give up for that profit is ten hours of time (R&R, rebuilding, etc.), plus you’ ll have the liability of the warranty. Divide that $360 profit by the ten hours and you’ll see you’re earning $36 an hour off that job. Now imagine instead you decided to install a remanufactured transmission that brought a $240 net rather than the $360. At first it might not sound like the right choice until you consider the all-important profit per hour. In this case, the vehicle was in your shop for only four hours so your profit per hour is $60 rather than $36. A staggering 66 percent increase! And good gets even better, because while your competitors are busy trying to figure out why the rebuild kit they just received doesn’t have all the right number of friction plates, you have a happy customer back on the road, and you’re now helping your next customer. For those of you who are interested in generating a higher “percentage” of profit, the old way of doing business may still work for you. But for those that are interested in generating higher incomes, what you need to do is find the right suppliers and take advantage of the benefits of installing exchange, remanu- factured components. Because one thing is for certain—you can’t take percent- ages to the bank. Courtesy of Elite Worldwide, Inc.