At this year’s SEMA I was involved in several discussions ranging from consolidation to labor rates to paint prices to insurance company interactions. Some of the conversations were deep while others were fleeting because of frustration and helplessness. A couple colleagues and I facilitated “The Ebb and Flow of the New Normal” as part of the SCRS Repairer Driven Education series which opened more opportunity for discussion of the trials we are facing in our industry.
I believe the most reflective discussions was around labor rates. I say reflective because I feel those in the discussion actually thought about their current rates and why they are what they are. One person stated, “the insurance companies need to give us a raise” which opened the door for me to start asking my series of “why” questions to determine why they felt it was the insurance companies’ position to offer a raise. I think that waiting for an insurer to raise labor rates is comparable to standing in front of your collision center waiting for an accident to happen.
Every price in your business should be calculated using your costs multiplied by expected gross profit. Parts, paint, sublet and most importantly labor rates should all calculated based on your costs. I discussed this in depth in a previous ABRN article, Increase Reimbursements by Managing Skillsets, but I will offer a quick recap here. Every skillset in your business has a different cost to main... read more