Editorial
A new year’s resolution that’s worth making
CHARGE FOR THE VALUE YOU DELIVER — AND START NOW By
Mike Manges
H
ere’s a challenge to kick off the new year. Name a single “In reality, customers only price shop a few, selected products and services, like tires, brakes, oil and filters and alignments,” he says. consumer good that hasn’t gone up in price over the last “Recently, we were talking with a large-volume dealer whose several months. (Cue the “final Jeopardy” countdown prices were below what they should be. He knew it and had been song.) Can’t think of one? Same here. Just look at our industry. Tire manufacturers slow to react. The following month, he raised alignment, oil and announced 44 separate pricing actions during 2021. Several brake prices $10 each and dumped a sizable, additional profit in additional tire price hikes took place earlier this month. And the bank. And he didn’t lose a single customer.” those are the only ones that have been publicly announced. I’m Furthermore, Crawford argues that most customers won’t notice if you bump up your service rate. “I don’t believe the vast majority sure there have been more. of customers ever ask what the labor rate is. They only care about Inventory, equipment, personnel, rent, insurance, taxes — the what the end price to fix a problem is. They define value as the costs associated with running your business are not declining. What’s your plan to combat this? As I see it, tire dealers with total price, out the door.” the brightest futures realize that they need to adjust their pricing If someone calls and asks about your service rate, “it’s probably the competition shopping you.” to absorb the cost of inflation. Simply put, the moment you take possession of Crawford also says you don’t have to tires — or any product — at an increased enact a dramatic, one-time price hike. price, you must pass that increase onto “If raising prices or rates becomes your customers immediately. (MTD’s part of your ongoing routine, increases columnists have advised doing this can be smaller and (can happen) for years.) more often.” I recently had an opportunity to gain The end result, he adds, “is basically insight from Dave Crawford, who leads the same.” franchise operations for Tire DiscountIn addition, resist the urge to feel ers Inc., one of the country’s fastest like you’re taking advantage of loyal growing independent tire dealerships. customers by charging more for what He says the solution to dealing with “Do your homework to see what the market is you deliver, he advises. rising costs is simple — start charging charging, decide what the increase will be, make up “Dealers go in business to make a your mind and start charging more immediately,” what you’re worth. In other words, it’s says Tire Discounters Inc.’s Dave Crawford. profit, yet they are afraid of asking for a time to raise prices for your services. fair price, in many cases,” notes Crawford. “Everything goes up, so it’s important to run the numbers. Crawford, who has nearly 40 years of automotive aftermarket experience, says many tire dealers are undercharging for the services, One just can’t pay the bills and hope the checking account balance expertise and products they deliver. stays within a certain range. If you do, you will slowly squeeze your own profits. “Most small independent dealers are wearing many hats. They have to focus on day-to-day activities and seldom have time to “Do your homework to see what the market is charging, decide do things like shop the competition or scrub prices, like the large what the increase will be, make up your mind and start charging more immediately. And make sure your employees are aware of regional and national players do. “Our days are hectic. That makes it easy to get in a rut or comfort the increases and expectations to sell at new prices.” zone and not realize how much money we leave on the table.” New year’s resolutions aren’t always easy to keep. What sounds doable in January might not be as easy to maintain six months Does this sound familiar? Crawford says dealers frequently undercharge when it comes to down the road. tire and wheel installation packages, shop supplies (“if they charge Charging for the true value that you deliver, however, is one for this at all”), road hazard plans and “most services. And many resolution that’s worth making and keeping. You do a lot of things for other people. It’s time to do someunderestimate the cost of jobs when giving estimates for services thing for yourself. Both Dave Crawford and I urge you to go because they are hesitant to sell a big ticket.” for it in 2022. ■ The fear is that price hikes will alienate current customers and scare off potential ones. But this concern is overblown, according to Crawford. If you have any questions or comments, please email me at mmanges@10missions.com.
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MTD January 2022
1/6/22 6:39 PM
