How to address market based pricing increases with your customers

Today we’re talking about how to address market based pricing increases with your customers. If you’ve been out of your house in the last six months, you know that prices are escalating everywhere…and that includes the car service arena. I was in North Dakota a couple of weeks ago and a dealership there was charging $240/hour in labor for a diesel service technician. Frankly, that surprised me. I would expect to see that type of pricing in San Francisco or on the East Coast, but in North Dakota, not so much.

The reasons for market based pricing increases in the car service industry are basically the same as they are throughout all industries. Good, qualified employees are more and more difficult to find and to keep. So, service managers need to offer higher wages and benefits to be able to attract and keep those premium mechanics.

A 90-Day Roadmap to Your Best Fixed Ops Month Ever

How to address market based pricing increases with your customers

So, how do you present price increases to your customers? We have a few suggestions…

  1. Detach your emotions from the situation

Just because you might think the price that you need to charge for your customer’s car repair (to be able to cover your costs and be able to make a little money) is high doesn’t mean that your customer will think so. They might have a high-end vehicle and be used to paying for quality service. You probably don’t own a BMW or a Mercedes and aren’t used to what it costs to maintain that type of vehicle. Get your wallet (or your purse) out from in front of your face and remember that as a service advisor, you are selling solutions, not a price.

Do this by outlining for your customer the solution you are providing for them. For example, if their brakes need repaired. The solution is making sure that they won’t be in a dangerous road situation, that their vehicle won’t break down soon and that they won’t face a more costly emergency repair after that happens. As service advisors, we are basically offering three things…

  • Helping customer maintain their vehicles
  • Preventing them from unforeseen surprises and emergency repairs
  • Protecting their investment in their vehicle

Remember that if you believe the price you’re charging is too high for the market, you’ll project that to your customers. Don’t be your own worst enemy!

  1. Associate time and price with quality and reliability.

When you present the price and the time estimate to your customer, emphasize that good work takes time to complete and that you “don’t want to rush the technician”. Presented that way, your customer is likely to agree. After all, they don’t want their brake job to be rushed either. When you focus on quality, customers are more likely to see the value in paying a little more than they did a year or two ago.

  1. Listen and be empathetic.

After you’ve presented the solution you are offering and emphasized the quality of your shop’s work, shut up and listen. Too many service advisors get in their own way by continuing to talk until they’ve talked their customer back out of having the repair done.

Listen to your customers’ concerns, treat them like you would your family or close friends, and guide them to the solution you think is best for their vehicle.

Your Market May Be More Ready for Price Increases Than You Thought

Customers are likely not as reluctant to paying higher prices than you may think. They are already conditioned to paying higher market based prices for things like higher gas and grocery prices. It’s not an exaggeration to say that consumers have never been more accepting of price increases.

In addition, many consumers are delaying purchasing a new vehicle and are instead having their existing vehicles repaired. When you look at a $700 repair bill instead of a $50,000 price tag for a new vehicle, it doesn’t seem so expensive.

That last word: Don’t be afraid to charge what you need to charge to keep good employees and make your business profitable. Just make sure you know how to present the increase to your customers in a way that makes them see the value associated with the increase.

A 90-Day Roadmap to Your Best Fixed Ops Month Ever

Podcast

On today’s episode of Service Drive Revolution, Chris and Coach Christian go over the rise in prices. Dealing with inflation can be tricky and challenging especially when it comes to translating these to your customers.

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