How can we make any Money Doing It for Free?

Lee Newsletter PicThis was the question a service manager asked me during a recent training session. He was charging $109.00 as a minimum fee for a check engine light diagnosis. He felt it was absolutely crazy to do this service for free. My follow-up was, “Explain to me if I was your customer why I should have you do it for $109.00 rather than at the local big box store that will do it for free?” His reply was, “Because we perform a complete diagnosis”. My next question to him was, “What do you think the big box stores are doing?” He said, “All they are doing is pulling codes and giving the customer the code. Then they try to charge them $109.00 for a diagnosis to determine why the light came on.” The light bulb in his mind went off!

Many service managers have seen the importance in changing their approach to this service based on the changing market conditions, but a large number have not had the revelation the manager I just described had. Let’s examine the driving logic.

First, the market has continued to change and your competition will continue to alter their business model to explode your weaknesses. They have been successful in beating us at our own game. They have taken an operation that we owned for many years and moved it to a highly competitive operation. For you to sell your $109.00 versus “Free” give it up! You are comparing apples to oranges. The competition has split this operation in two. They are doing the same type of inspection/ repair we have always done, but have found an opportunity to get the customer into their place of business at our expense by offering ½ of the operation for free.

Let’s drill down into this a bit more. This operation was always one for the dealership. The competitors have split it. The first is the retrieval of the code(s) and the second is the determination of why the light came on.

Why can’t we do the same? Some managers have trained their service advisors to retrieve the codes. It’s fairly easy to do so, but the big picture is the car is in your business and not theirs. Mission accomplished!

If you want to charge for it, the way I see it you have several options. First, continue to charge the “minimum check out” (I hate this verbiage) for $109.00 and you will continue to run customers off. Or reconsider and split the operations and charge a lesser amount for the “diagnostic procedure”. How long does it really take to pull codes? The actual time maybe .1 or .2, so if you stayed with .2 and your rate for this is $109.00 the labor charge is $21.80. I would round it to $21.95 and run with it. The fee is less and should be easier to promote and sell. Now when the customer calls and asks how much, $21.95 or $109.00, which way would you, as the consumer, go?

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