This is the second part of our continuing series on improving the profitability of your shop by using the powerful tools available to you in NAPA TRACS.
Did you know?
Raising your labor rates according to job difficulty rather than increasing the time, will save your customers money and will ultimately be more profitable for you.
In the following examples, we’ll show you how to use NAPA TRACS and the Mitchell Labor Guide to establish the most profitable labor pricing for your shop.
In the examples below we’re using the standard Labor Rate of $80 per hour with the technician receiving $25 per hour.
Looking at the chart above you can see in the third example that by increasing the time chargedfor the job, you’re increasing the cost to the customer by $40 over the standard rate, as well as, pay to the technician. In the second example you’re only increasing the cost to the customer by $10 over the standard Labor Rate and that goes directly to your Gross Profit and the shop benefits.
How do you set up rates?
In NAPA TRACS, under Labor Rates, set up multiple rates according to the Mitchell Skill Level Code starting with your base Labor Rate in the Semiskilled Code or C. Then adjust Labor Pricing in increments of $5 as you increase difficulty and keep lower skilled jobs at your base rate. As the job gets more difficult (A + B skill levels), the Labor Rate goes up to compensate your shop accordingly.
A- $90
B- $85
C- $80
D- $80
E- $80
More shops are setting up multiple Labor Rates which correlate to the Mitchell Skill Level Codes. Mitchell ranks the difficulty of each job and provides you with a suggested time for that job.
A- Highly Skilled
B- Skilled
C- Semiskilled
D- Low skilled
E- Low skilled
Once you have set up labor pricing, TRACS will automatically select the correct rate from the Mitchel Guide. Once you have implemented this method you should start to see an increase in your gross profits very quickly.
What NAPA TRACS Users Are Saying:
“Labor pricing helps me account for jobs that are more difficult and time consuming and therefore should be more profitable. It is super easy to set up within TRACS. I continue to use this coupled with a parts matrix to maximize profitability.”
Steve Horvath
Jeno’s Automotive
Littleton, CO
“The labor matrix within TRACS is great —it’s as simple as classifying A, B or C in terms of job difficulty. It has increased by profits by approximately 15-20%. I have been using it a little over a year and love it!”
Brian Burford
Zarlingo’s Automotive Service Center
Grand Junction, CO