Service Business - ADDRESS UPDATE
Over the years I’ve worked with hundreds of contractors and the vast majority of them don’t make money in their service department and they do not have a separate operating system for their service department! Their thinking typically is “my flat rate is set at $200/hour. I’m bound to be making money!” Believe me, just because your flat rate is $200/hour does not mean you are making money.

In order to make money, your service labor has to be at 25% or less of service sales to make decent money (12-15%) in service. To get started to find out if you are making money get your bookkeeper to separate your service billings from total billings on your Operating Statement. Also, separate your tech labor from total labor on the statement. Then divide the service labor amount by the service sales amount. If it comes out at 25% or less your labor is good!

Also, your parts multipliers have to be correct. This is what they should be:
To have a profitable service department you have to check your tickets. Service techs do not bill their tickets wrong on purpose, but they do bill a surprising number of them wrong in some way, and if you don’t check them they will continue to bill incorrectly. You need to go over the tickets that have mistakes with each individual tech and explain why the tickets have to be billed in a certain way. The more you check your tickets the better they will get and the more money you will make!

I’ve checked hundreds of tickets and believe it or not I like to check them! Mail me 30 or 40 paper tickets (don’t pull the bad ones) and I will review them for you! The tickets must show the time spent on the job. It’s impossible to check the tickets if you don’t know how long the tech was there. For instance, if I see a ticket where the tech spent 1.5 hours on the job and billed for a diagnostic and capacitor, I know there’s missed opportunity. The flat rate for a capacitor is ½ hour + parts cost and the diagnostic only covers travel to the job and 15 minutes to diagnose the problem. That means the tech should be at the job for 45 minutes total. Instead the tech was there for 1.5 hours – twice as long! The 45 minutes that didn’t get billed is $150 left of the ticket. If this is happening just 3 times a week that’s $23,400 not billed in a year. Believe me this happens all of the time!

Send me your tickets and I’ll mark them, make notes, and send them back. I think you will find it very interesting! Send them to: Bruce Martin 4404 Chesapeake Avenue Hampton, VA 23669
If you have any questions, please do not hesitate to call me. Send Bruce your operating statement! brucemartin@virginiaair.com
 
Thanks for all you do and as always “Expect More From Us”!
 
Thanks,
Bruce Martin
Dealer Business Consultant
Value Added Distributors
(757) 469-1205