Pricing like the garage down the road? Why the average price is a trap

If you’re opening a garage, or you’ve been open a while, and you set your prices by working out what the average is in your area, I’ll be straight with you. You are doomed to failure.

It feels like the safe choice. Nobody can say you’re too expensive, and nobody can say you’re cheap. But it’s one of the most dangerous places a garage can sit.

I explain why in just over a minute here.

The middle ground of our industry

I call it the middle ground of our industry. Your prices are the same as everyone else’s, so you are the same as everyone else. There’s no difference between you and the garage down the road, and you’ll never have a chance to separate yourself from them.

Think about what that means in practice. You’re chasing exactly the same customers as every garage around you, with exactly the same offer. That makes it very, very difficult to win.

And when your price is only average, there’s always someone willing to come in a little cheaper.

How the vicious cycle starts

So what happens? We start to discount. We start giving things away to fill the workshop, even though we weren’t charging correctly for them in the first place.

Then the rest follows, one step after another.

So we stress, we put stress on our team. We make no money. Round circle. We can’t retain people because we’re not paying them enough. We can’t attract people because we’re not offering enough. And it’s a vicious cycle.

Andy Savva

That last part matters more than most owners realise. A price that’s too low doesn’t just cost you profit. It caps what you can pay your team, and that’s why so many garages struggle to keep good people.

Your prices should start with your own costs

Here’s what the local average hides. The garage down the road doesn’t have your premises, your team, your equipment or your plans for the next few years. Their prices tell you nothing about what your time costs you.

The starting point is knowing what it costs you, per hour, to open your doors. I call that your cost of doing business. It’s the only sound place to start setting a price, because it’s built on your garage, not someone else’s.

Then you price for the service you actually deliver, and you stop competing on being the same.

What to do this week

1. Write down what you charge now, and be honest about where that number came from. If the answer is “it’s what everyone else charges”, you’ve found the problem.
2. List every discount, bundle and freebie you’ve used to fill the workshop in the last three months, and ask what each one actually earned you.
3. Add up a year of your operating costs and start working out what an hour costs you to open your doors.
4. Take the free Garage Healthcheck to see where your pricing sits alongside the rest of your business.