A well-built service department menu can dramatically improve profitability in a dealership service department.
Yet many SERVICE MANAGERS never analyze or update their menu pricing. In many stores, the menu was created years ago by a chemical vendor or copied from another dealership.
In Service Drive Revolution #350, Chris Collins and the team break down six practical tips for building a service department menu that increases effective labor rate, improves maintenance sales, and protects profitability.
When built intentionally, your menu can become one of the most powerful profit drivers in Fixed Ops.
Start With a Clear Service Department Menu Strategy
The first step in building a profitable service department menu is deciding what services belong on it.
A menu should focus on preventative maintenance services, including:
- Fluid exchanges
- Alignments
- Tire rotations
- Cooling system services
- Other common maintenance items
These services should not all be treated as loss leaders.
Many dealerships mistakenly price every menu item at a discount. In reality, the only true traffic-driving service is usually the oil change.
Most other services on the menu are recommended during the visit. Because of that, they should be priced to support profitability.
Know the True Cost Behind Every Menu Service
Many dealerships price menu items without knowing the true cost of the service.
A profitable service department menu requires understanding:
- Parts cost
- Technician labor time
- Effective labor rate targets
- Desired gross profit margins
Too often, managers cannot explain how their menu pricing was created.
Instead of guessing, the pricing strategy should always start with the actual cost of the service and work upward to achieve the desired margin.
Accurate Labor Times Protect Your Profit
Labor time inconsistencies can quickly destroy profitability.
Some dealerships dramatically overpay technicians for certain menu services, while others underpay them.
Both situations create problems.
A properly structured service department menu ensures that:
- Technicians can beat the clock
- Advisors can confidently recommend services
- The department maintains a healthy effective labor rate
Small adjustments in labor time can significantly improve overall profitability.
Understand Market Pricing Without Chasing It
Knowing what competitors charge can be helpful. However, copying their pricing can be dangerous.
If another shop is underpricing their services, matching them will only lead to losses.
Instead, use market research to understand pricing trends, but base your final decision on your own cost structure.
A profitable service department menu focuses on sustainable margins rather than simply matching competitors.
Use Maintenance Services to Improve Effective Labor Rate
Many service managers assume repairs generate the highest labor rate.
In reality, maintenance services often provide the greatest opportunity.
With the right pricing strategy, a service department menu can produce some of the highest effective labor rates in the department.
Small adjustments to labor pricing or technician time can significantly improve ELR across the entire service department.
Intentional pricing decisions create measurable results.
Service advisors play a critical role in presenting maintenance services effectively. Many of the most successful advisors consistently demonstrate the behaviors outlined in High Performing Service Advisors: 7 Traits That Drive Results.
Do Not Let Vendors Build Your Service Department Menu
One of the most common mistakes dealerships make is letting chemical vendors build their menu.
Companies like BG, Valvoline, or other suppliers often provide menu templates.
However, these menus may not reflect the dealership’s true cost structure.
They may also include:
- Inflated technician pay times
- Vendor-controlled spiffs
- Pricing that benefits the supplier more than the dealership
Your dealership should always control the structure of its service department menu.
Vendors can provide suggestions, but the final pricing and strategy should come from leadership inside the dealership.
Review and Improve Your Service Department Menu Regularly
Many dealerships create a menu once and never update it.
That approach allows parts costs and labor inefficiencies to slowly erode profit.
Instead, successful service departments review their service department menu regularly.
This review process should include:
- Parts cost changes
- Labor time accuracy
- Effective labor rate performance
- Advisor feedback
- Customer acceptance rates
Frequent review allows service managers to identify opportunities for improvement.
Over time, even small adjustments can dramatically increase monthly profitability.
Consistent menu reviews are not just about pricing — they are about building systems that drive predictable performance across the service department. As discussed in Why Systems Matter More Than People in Fixed Ops Leadership, strong systems create sustainable results.
Final Thoughts
It is a strategic tool that influences pricing, technician productivity, advisor performance, and customer value.
When built intentionally, the menu becomes one of the most powerful profit levers in a dealership service department.
Service managers who review their menu regularly and price services strategically often discover significant opportunities for growth.
In many cases, a properly structured menu can add tens of thousands of dollars in monthly revenue without increasing car count.
FULL VIDEO TRANSCRIPT
Government, Healthcare, and RFK Jr.
Welcome to the big show. Today we’re going to talk about the six tips to creating a menu that will increase your profits. This is one of the most underutilized things I think that we have, and we’re going to share some insights and ideas that we have learned to be effective over the years. Then we talk about our healthcare system. It’s a fun conversation. I don’t know that it has much to do with service, but it’s something that’s on our mind and we’re talking about. So, Adam is here, Hogy’s here, I’m Chris, and that’s what’s coming up right now in Service Drive Evolution.
There’s been a lot of conversations internally about this new RFK episode of Joe Rogan. I started watching it right when it came out. I’m a big RFK fan and agree with his thoughts on things mostly. I can’t think of anything I don’t agree with. I think most people that don’t agree with him aren’t really listening. I think it’s a fair judgment for sure. You met him, haven’t you? Yeah. This group I’m in, we had a dinner with him and we talked to him, and that was before the administration got elected, and he was just talking about how the job was going to be pretty daunting in the sense that a lot of the people that are appointed in our government come from or still work in the healthcare industry.
Conflicts of Interest and Bias in Research
So, you’ll have people at the CDC that are also working for or sponsored by some sort of pharmaceutical company, but the conflicts of interest are not policed. It’s just crazy that these guys can get granted all this money for these studies and they can be on a board, they can get paid by other companies, and still serve in the government. He was just saying like we should be studying things without the biases going in. If you start a study and it’s sponsored by a certain company and you don’t come up with an outcome that makes that sponsor look good, you’re not going to get any more sponsorships. There are so many things in that episode that are just mind-boggling to me that we have lost all common sense.
I don’t exactly know how to put my thoughts into words sometimes because it’s so confusing, but if you have the scenario of creating a business, let’s say you have a service center and you go put nails out on the freeway and your tire shop is the next exit. You’re creating the problem and then you’re solving the problem and you basically control supply and demand in a way. My best friend, who has a huge company that does fertilizer, was telling me 20 years ago that the healthcare suppliers and prescription companies work hand-in-hand with the food system and the farmers. He said they can predict what diseases are coming down the pipe and they can start working on cures. I never thought that to be true; I thought there’s no way that we would allow that in America.
Treating Symptoms vs. Root Causes
I’ve gone through this situation with my mom recently where they don’t eat very good and they’re unhealthy, and every doctor’s appointment and trip to the ER, not one doctor comes in the room and says you need to change your diet and you need to eat different. They just write prescriptions or want to perform a surgery, but they only treat the symptoms. They never treat the cause. If this sort of stuff gets you upset, don’t listen to this interview on Rogan with him because basically what happens is the food industry is work—it’s just that input and output thing I was mentioning earlier with throwing the nails on the freeway and then having a tire shop at the next exit.
We got 30-something percent of our kids who are either diabetic or pre-diabetic, and we keep feeding them the same way. We spend the most money on our education system and food and the most money on healthcare, yet we have the most unhealthy population. It lacks all common sense that we’re allowing things to be done. I showed you guys DMs that I got from somebody very politically left-leaning calling me an idiot, but I don’t understand how feeding our kids in our school system is a political thing. It’s just a black and white thing; if we don’t care about our kids, we don’t care about anything. To allow the amount of corruption that’s happening and to have kids that are so unhealthy is nuts.
Food, Behavior, and Reform
I’m a student of human behavior and RFK talks about how they’ve tied food to ADHD and violence and prisons and all kinds of things. I was asking my cousin who works in the prison system about that and he’s like, “Oh no, this administration is taking this very serious. They want reform. They don’t want the status quo. They want things to change and the outcome to change”. RFK talks about a famous Iron Chef from the Food Network who has been helping the military feed the soldiers. They are spending less and the soldiers are lining up for the food because it’s really good. They’re locally sourcing the food from local farms, and if we can’t keep our soldiers healthy, what is it we’re doing with all this over-processed food?. It’s nuts.
I would be curious what you guys think just having kids in this environment. No matter where you’re at on the political spectrum, if you pay health insurance or if you have kids high school age and under, just listen to it from those two viewpoints. Listen to it as a human. There’s nobody that’s paying for health insurance right now and paying these premiums that isn’t interested, especially if you’re healthy and you don’t use it and you just shovel out this money every month. The autism statistics are off the charts; in California, it’s 1 in 12 now, and LA is the worst in the country.
Tools for Better Decisions
The fact that they can connect all those dots and it’s still just okay is wild. He’s talking about this app—I downloaded the one he was talking about called the Yuka app—and you can just scan barcodes of stuff in the grocery store and it pops up and tells you what it’s loaded with. For a parent, it’s just not feasible to go 100% and get all the stuff for everybody, I understand that. But there are tools like that becoming more readily available that help you make the best decision available to you at the time. It’s wild just scanning stuff, even stuff you thought was probably okay. That app’s not trying to sell you any of that food; it just tells you what the information is.
What did he say about food stamps and soda? Was it 30% sodas?. Yeah, 30% of food stamps are used for soda, basically sugar water. They’re having to give cooking lessons to people because people can eat healthier for less but they don’t know how to cook for themselves. So part of the solution is teaching people how to cook. I thought that was really interesting on all those fronts. From a parent’s perspective, Payton’s going through some evaluations even as a kindergartener. She is five years old, super sweet, but it’s the attention. We do look at her food intake and everything.
Conscious Efforts in Parenting
To your point, Hogy, you’re making a conscious effort. I don’t think anybody really wants to have overly processed food when you balance it out as a parent trying to make ends meet. The emphasis from this video is that certain things are not being paid attention to, and the whole big pharma stuff—people can do the research, but quite frankly, it’s hard to find all that. I have an appreciation for what he and his team of experts are really trying to fix. A lot of people that go down some of these rabbit holes, like on red dyes and all that stuff—well, I’ve always been a big dude gone through the ups and downs of trying to lose weight.
One thing I always look back at as being a kid is looking at the food pyramid when he talks about flipping it on its head. He said Froot Loops are at the top of that old food pyramid, which is amazing to me about how far gone we’ve gotten with grains and processed food. If you cut some of those grains out, you do feel better. I’ve always tried to base it off of how you feel and how active you can be. Now it’s the next phase with all the sugars. It’s really quite fascinating what they’re finding out through actual unbiased research on cutting the processed foods and the sugar out.
Managing Both Sides of the Spectrum
I’m looking at that with Payton. We’re doing these evaluations and I’m really worried about the system when you talk about controlling both sides of that spectrum. I told the doctor I’m not this conspiracy theorist kind of thing, but I am very cautious. I want a baseline. I would like to think that people have the best interest for our kids, but I do believe a lot of it has to do with starting very simple with common sense of what their intake is and what they eat. Maybe she just needs a little extra assistance or a better form of a diet.
I’ve always questioned that food pyramid thing; it’s a bunch of crap. I’ve done the calorie counting and all that, and sometimes just more protein and less sugar personally has gone way better for how I feel and for mental clarity. That’s the same thing back in shops: just getting it back to the basics and simplifying things with common sense. It’s hard to make a segue between shops and this because this is just straight up corruption and theft, and that we’re allowing it is just crazy. I’d be so curious what your wives think because Andrea was a schoolteacher and Brooke is a principal; they were watching it first-hand.
Beyond Politics: Prioritizing Health
It shouldn’t be about politics at the end of the day. If we all agree that we want everyone to be healthy and have the opportunity to eat the right things, especially when talking about cost—I appreciated that RFK Jr. was talking about reform in prisons and the military having local farm-to-table which is actually more affordable. How do you say no to that?. I just hope that we’re smart enough to think about common sense and what’s best for the youth and people in general, not about being misdirected and greedy. Other countries are not using our wheat, red dye, or blue dye. We’re the exception to the rule now.
Statistically, we’re just off the chart in so many areas. We read a book together called Change or Die which has a story about a heart doctor. He has all his patients join a group and put them on a diet plan if they want him to do their heart operation. Then 90% of those patients end up not having to have the surgery because it reverses it. All that information is out there, but the way he’s laying it out makes you sick. It’s weird that there’s a doctor out there who would be let down by having to do a surgery again seven years later and would want to fix the problem because they’re just treating the symptom. That is rare; most doctors are like “more money for me, line them up”.
Tip 1: Have a Clear Idea of What to Sell
Let’s talk about menus and this is a great conversation. A lot of times we don’t have organized menus in our departments or organized reference sheets for when things are due that hold people accountable. It keeps us from over-recommending. For us, a menu is our maintenance items—fluid exchanges, alignments, rotations, any preventative maintenance. We have six tips to create a menu that will increase your profits. The first one is to have a clear idea of what it is you want to sell and when it’s due.
You have to understand that everything can’t be a loss leader. At the top, you have some sort of competitive or loss leader that drives traffic, which is usually the oil change. Alignments and brake fluid are not going to drive traffic. Most of the time, the things on the menu are things we recommend when the customer is already there, not things they are coming in for. Your menu should not be all made up of loss leader items. Does the average American wake up and say, “I need to get my brake fluid or coolant changed”?. No.
Tip 2: Know True Costs of Parts and Labor
Number two is know the true cost of your parts and your labor. You want to work from cost up. Most of the time when somebody does a menu, like for a brake fluid exchange, they don’t have a plan if the cost of parts varies for different models. You need a clear idea of the cost, what time you’re paying the tech, and how you want to achieve a certain gross profit percentage for parts and retain an effective labor rate for service. You’ve got to really understand what the cost is.
Tip 3: Accurate Labor Times
Number three is having accurate labor times. A lot of times the labor times are just crazy and don’t make any sense. In most shops, you see it go both ways: technicians who are underpaid for stuff, or shops that are wildly overpaying for something and losing money when they sell that item. Somewhere in the middle is the sweet spot. It doesn’t make sense to go into one place that pays a half-hour for alignment while another pays two and a half; it shouldn’t be all over the board.
Tip 4: Gather and Share Market Data
Number four is gathering and sharing market data. If you’re calling around to see what others are charging, tell them what you’re charging too because a lot of times nobody’s updated their pricing for four or five years. They’re just trying to survive and are not very intentional. I want to know what’s in the market, but it plays a small part in my decision-making. If I know I lose money selling something for $149 but make money at $189, I’m going to $189 even if everyone else is at $149 because it’s not an item that drives traffic.
Tip 5: Target Effective Labor Rate
Number five is having a target effective labor rate. Your highest effective labor rate should probably be on your maintenance items. Most people think repair, but if you’re doing it right, you can make up effective labor rate on maintenance. Take some of these menu items and take two-tenths off the labor time and see what it does to the effective labor rate on that service. With just a little bit of intentionality, your highest ELRs can be on these maintenance items. There’s a lot of psychology that goes into pricing for how consumers perceive it rather than just following the market.
Tip 6: Create Your Own Menus
Number six is creating your own menus. Often, menus have been done by the chemical company guy, and managers haven’t done the math on their ELR or parts margins. A lot of times those guys tend to overpay the techs; for example, something that should pay 0.8 is paying an hour. You’ve got to run your own business. I would also be taking all the packs and spiffs out; I want that coming back to me so I can be the one spiffing my people. We want to control that part of it.
A tech or an advisor getting spiffs from chemical companies often thinks the chemical company is the one paying them, but it’s really the dealer. You’re in an interesting spot if you let them do the menu because they’re setting the intervals, and you’re not always serving your customer best. For example, BMW once claimed lifetime transmission fluid, but we were pulling transmissions out at 54,000 miles. On the other hand, chemical companies might want a transmission service every half an oil change, which isn’t right either. Pull some of your best experts from the shop together and put real intentionality into building your menu with the best products and pricing.
Win-Win Maintenance Strategies
A menu can be a most valuable product for everybody. Parts should have good margin, service should have good ELRs, and for techs, it’s gravy work where the labor time allows them to beat the clock easily but isn’t over-inflated. Most importantly, it’s great for the customer because it saves them money in the long run. As a tech, I pulled out so many components that failed simply due to lack of maintenance. Manufacturers sometimes try to lower the perceived cost to maintain a vehicle by under-maintaining it, but it’s not realistic that fluid in a mechanical part under stress would last forever.
I always go to the foreman and the techs and ask them to help me with intervals. I always use the baseline of would I tell my mom to do this to her car? We’re not trying to over-recommend, but we want to maintain the car within a variance of common sense. I would review the menu every month to look at what we’re selling versus the opportunity and the ELR. This keeps parts prices from creeping up on you. Your menu is somewhere where you can have a lot of strategy and pull different levers, and the dollars tied to it are nuts.
Conditioning a Culture of Change
In the beginning, I like to change the menu often—sometimes every two weeks. First, I want the advisors conditioned to look at it as a guide. Second, I want to condition a culture of progress and change. If you’ve never changed anything and then the market changes, your team won’t be able to move along with it. You want to constantly be trying new things and getting feedback. Most of the time, a good menu can add up to an additional $50,000 a month if you’re doing it right, but even more. Use this as an opportunity to check that out. We’ll see you next time on Service Drive Evolution.
Final Outro
Thanks so much for watching this episode of Service Drive Revolution. We’re uploading new stuff every day, so make sure you subscribe and click the bell icon so you don’t miss out. If you have a question you’d like us to answer on the show, call 833-ASK-SDR, and we’ll answer your question on the show. That’s 833-ASK-SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com. I’m Chris Collins, and I’ll see you in the next video.
đź”— Related Resources
- High Performing Service Advisors: 7 Traits That Drive Results
- 9 Reasons Service Managers Fail in Fixed Ops (And How to Avoid Them)
- Why Systems Matter More Than People in Fixed Ops Leadership
Feel free to explore the linked articles above for deeper insights into each strategy. If you have any further questions or need additional resources, don’t hesitate to ask!
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