3 Ways To Increase Your Auto Shop's Profit Margins

Posted on: 5 August 2018

As an auto shop owner, you likely have a lot on your plate to worry about. There are employees to oversee, customers to retain, and auto parts to keep stocked. Then there's the important task of making sure that your profit margins don't suffer at any point throughout the year. Here are a few ways you can increase your auto shop's profit margins and grow your business as time goes on.

Implement a Service Minimum

If you don't have a service minimum, you may be losing money on the services that you provide your customers as time goes on. So instead of changing a flat tire and spending more on employee costs than you made on the service you provided, implement a service minimum that will help ensure that you are compensated enough to make servicing your customers worthwhile.

You can implement a time minimum if you charge by the hour, which would require customers to pay for at least a full hour of services even if the job you're doing will only take you 20 minutes. If you charge by the job, you can price your services to ensure a profit or implement a service charge that decreases as the number of services ordered increases.

Offer Referral Incentives

Another way to increase your auto shop's profit margins is to offer your customers incentives for referring new customers to your place of business. If a customer refers a friend to your auto shop for a transmission repair and they're compensated for their efforts in some way, they will be more likely to continue referring people to your shop whenever the opportunity presents itself.

So whether you decide to offer customers a few dollars off their next service, a free oil change, or a pen with your logo printed on it, you can expect your customers to provide you with word-of-mouth advertising in return. Consider offering a variety of incentives for your customers to choose from so they can tailor their perks to meet their needs.

Recycle Your Leftovers

Recycling your leftover parts and scraps is one of the easiest and most effective ways to increase profit margins for your auto shop. Many recycling companies are willing to pay a premium for a variety of things that may be littering your auto shop, such as:

  • Radiators

  • Motors

  • Batteries

You should also be able to recycle steel, aluminum, and brass parts and scraps in exchange for payment. As time goes on, the money you make from recycling your leftovers can make a positive impact on your auto shop's bottom line. Visit websites like http://www.sunwestmetals.com for more information.