Insurers will sometimes tell me, "We don’t pay higher labor rates for frame, structural or mechanical – it’s the same as your body rate." This doesn’t seem right to me. Why would some insurers pay the difference and others not?
Asked by Forrest Arnhold, Hometown Chevrolet, Whitehall, N.Y.
Insurers often tell shops what they want the shops to hear…and believe. And what they say is not necessarily accurate.
It’s like the standard word tracks they use such as, “You’re the only one,” "It’s not prevailing competitive pricing,” “It’s not competitive in the marketplace,” etc. If repairers accept that, the insurers have then accomplished their mission, quieted another shop and saved their company money. As Ben Franklin once stated, "A penny saved is a penny earned!"
The simple truth is that your company’s pricing is your pricing. And while I could write a book on this and other issues confronting shop owners, the fact remains that it is you who operates your business and no one can dictate your pricing…unless you allow and enable them to do so.
When determining your pricing, you must be competitive, but you need to be competitive with others who offer the same level of service and quality.
I encourage repairers to contact other repairers in their market area and perform a survey of their charges for the various services they offer including: body labor, frame labor, refinishing labor, mechanical labor, aluminum repair labor, paint and material rates/allowances (also if they use a paint material calculator and, if so, which one), storage (inside and outside), mark-up on sublet services and towing, discounts offered and anything else they need to know to be competitive with their peers.
Keep in mind that, like hamburger providers, not all body shops are alike or offer the same level of service or warranties and therefore shouldn’t be paid the same. While insurers may try to pay you the same, they’re not going to get Outback Steakhouse to sell one of their hamburgers for the same price as McDonald’s. As such, a high quality repairer who offers a “lifetime warranty” should not be compelled to sell their goods and services for the same price as a high volume-low value service provider I refer to as a “Shake-N-Bake” who offers a one-year warranty.
Finally, I encourage our consulting/coaching clients to suggest to their customers: “Never take advice on how to collect money from those who owe it to you!” I would also suggest that you not base your pricing on what the insurer suggests.
