Ensuring you are Profitable during the Cost Estimate Process

Tags: Cost Estimating

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http://www.howtopaintcars.com/wp-content/gallery/misc-images/invoice.jpg?i=1066872560Collision Cost Estimating is one of the most important parts of any auto body shop. The quotes that you prepare not only make sure you get paid for the work that you do but can also be a reason that you lose customers or become very profitable.

The average shop will see a mixture of work that is paid for through direct payment and insurance.

Direct payments can come from the vehicle owner, the other person that is the cause of the damage, a business maintaining their fleet vehicles or other situations where insurance is not involved.

When payment is made through an insurance company it can be more difficult for the shop to receive full payment for work performed. There may be restrictions on product lines and methods of repairs and you may need to submit paperwork over and over again to get paid for even small jobs.

You Must Factor All Costs into your Estimates

I have heard more then a few customers complain that the cost of materials and time for labor does not seem reasonable however most customers believe that you should eat part of your cost of doing business to turn a tiny profit and satisfy their needs.

Any business that wants to stay in business and provide their workers and the owner a reasonable income must take into account all of the costs behind any repair.

These costs are hidden in your labor rate but may also be added when special requirements mean you need to follow dictates of an insurance company or a customer that asks for more then your general work procedures dictate.

How do you know when to add additional fees?

If something that the customer requires adds to your shops overhead then you should expect to be paid a reasonable proportion of the up front costs you will need to bear.

For instance if you need to send their vehicle out to be media blasted because you do not perform that work in your shop the full cost of this service should be covered in the estimate. This means not only what the media blaster would charge you but also the cost of delivery and pickup of the vehicle and any time spent by you or your staff during that process. Fifteen minutes here and thirty minutes there adds up to a lot of money at the end of the week.

The same is true if you have to purchase tools for this specific job that you normally will not use for other work. If you have to buy a spool of wire to weld aluminum or rod for your tig welder then the cost for materials that you will shelf for months or maybe forever should be higher then the basic fee you may charge for standard sheet metal mig welding.

Factoring in your shop costs during estimates

You must always keep aware of your cost to simply keep your doors open. Fees for many different things can change.. Insurance, heating, electric, water and Rent.

You should make adjustments as soon as you see differences in your cost and not wait until the next month to apply higher fees or you are basically giving away your money and that might mean you don’t have enough at the end of the month to pay yourself.

If you understand costs will go up in the future you may want to step the fees in gradually by raising your labor costs or other fees in steps.

Knowing your Expenses Will set the Prices you need to Charge

The more you know about where your money is going the easier it is to make changes that can provide more profit and fewer headaches.

You should dedicate a credit card for your purchases from vendors if you do not have a business credit card.

When you make cash purchases record the transaction immediately. This means if you are picking up supplies or donuts to put in the office for customers. Every transaction should be immediately recorded and that is why a credit card is a good idea but unfortunately there will be times when credit can not be used.

Use a credit card with cash back bonuses if you can.

If your credit card company provides better detail online or can export payment details to an accounting software product make use of this feature to track your purchases.

To become profitable means charging more then it costs

Don’t be afraid to stick to your estimates when customers ask for discounts.

Can you go into a Pizza Place and ask to pay $3 for a $10 pizza .. no so its not acceptable for your customers to short change you.

It is ok to provide discounts for large customers that will provide continual work but you do not want to give full discount on the first few orders because they may end up being the only ones you get.

And always remember you may love your job when you consider other things you could have chose as a career but you need to support yourself and unless you make money it doesn’t make sense to give it away.

 

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