By Betsy Chase
Flat rates offer your dealership the opportunity to increase both service department income and customer satisfaction. By pricing by the job instead of the number of hours, you can account for the different levels of experience among your service technicians and provide customers with an up-front price they can agree to.
What is a flat rate?
A flat rate is a charge that is the same in all cases, and does not vary based on different variables. In this case, things that might vary would be the cost of a technician based on their skill level, or the condition of the piece of equipment being repaired.
Bob Clements summarizes the revenue upside of using a flat rate guide best:
“While I understand that not all jobs can be flat rated, I also know that 70 percent can, and on those jobs, techs that are high “B” or “A” level techs will beat the time by almost 20 percent. So, in an average shop with a recovery rate of 80 percent and a labor rate of $80 per hour, two techs would bill out an additional $200 per day, $1,000 per week or $52,000 for the year. You are missing the boat and leaving valuable dollars on the floor if your shop is not utilizing some type of flat rating system.”
Use flat rates to increase customer satisfaction
By using flat rates, you can provide timely, consistent and accurate estimates so customers understand their repair costs up front and have fewer write-offs. It provides your dealership with more consistency in what you charge for jobs, allowing customers to anticipate expenses and plan for them.
Use flat rates to increase service department revenue
By pricing by the job instead of the hour, you not only account for how long it will take your least experienced technician to complete it, you can also challenge more experienced technicians to beat the time. Pricing this way ensures you don’t lose money; you create an opportunity to make more. If your tech completes the job faster, he’s on to billing the next job.
There are big benefits to using digitized flat rate guides, including:
• They are more regularly updated so the data is accurate.
• More consistent service quoting across your locations.
• When integrated with your business system, you can more quickly create a work order and service the customer with an accurate quote.
• Better tracking of technician performance – Identify your strong performers and those who need development. This will result in an improvement of the service department’s revenue contribution
A great example of a digitized flat rate guide is the United Equipment Dealers Association OPE FRG. Charter Software partnered with UEDA to provide the technology platform for this product, but it can be integrated with most business systems. It is the only online FRG that carries multiple brands and uses actual dealer times to calculate flat rates. It also offers a secure web portal in case your DMS doesn’t have an integration, and allows you to set user-based permissions. The OPE FRG is designed so even an inexperienced user can pull the correct data and quote accurate repair times to a customer. Another big advantage of the OPE FRG is that the flat rates are based on actual dealer reported data provided by Bob Clements International so you know they are realistic.
Using the OPE FRG you can:
• Search and view flat rates for current OPE models.
• Multi-select jobs to view and quote the total labor charge for a customer.
• More accurately price a job. Dealer reported data considers things OEM flat rates don’t, like machine conditions resulting from wear and tear, that make the actual repair time take longer.
• Show customers your rates are competitive compared to other dealers across North America.
• Search for flat rates on units in the OPE FRG from within your dealer management system and quickly add them to a work order – no re-keying data!
• View flat rates on a mobile device when you are away from a computer.
If you are ready to purchase a license, visit UEDA Flat Rate Guide website.
Betsy Chase is director of marketing at Charter Software Inc. This article was provided courtesy of Charter Software Inc. If you are interested in receiving more content like this, including business best practices, change management techniques, financial management and departmental tips and tricks, please check out and subscribe to Charter Software’s blog.