Put your labour rate up £10 tomorrow. You won’t lose a customer.

One of the regular themes I see when I visit my garage folk is this: I can’t raise my labour rate.

It’s the fear of putting your prices up. And I think it comes from three places:

• Your labour rate has been fixed for so long that moving it feels wrong.
• You don’t really know where your rate came from in the first place, because there’s no formula behind it.
• You’re worried about what everyone else is charging.

Put those together and it puts the fear of God into you. So here’s what I tell every owner who comes through my financial understanding course.

Your costs only go one way

The problem in business is that operating expenses never come down. They’re always going up.

So as garage owners we have to look at our labour rate and never be afraid of putting it up, as long as we’re justifying it with the service and the products we deliver to our customers.

The £10 test

Once owners have finished my financial understanding course, I practically force them to go in the next day and put their labour rate up by £10, as a starting point. And I tell them: you will not lose one customer.

They get really frightened. Can’t do that, Andy. Can’t do that. I say, just do it. And every single one of them has done it.

A few weeks down the line, they’ll call me or I’ll catch up with them in some other chat, and they say, you know what, Andy? Not one person has left. No one. Not one. No one’s mentioned it, no one’s walked out.

Andy Savva

Customers want a quote, not your hourly rate

Why does nobody leave? Because in our business it’s very rare for a vehicle owner to call you and actually ask, what is your labour charge? What they’re after is a quote or an estimate.

How you put that quote together, and how you present it, is the key to success. Far more than whether you put your labour rate up or not.

What to do tomorrow

1. Put your labour rate up by £10.
2. Make sure the service and products your customers get justify it.
3. Put your effort into how you build and present your quotes, because that’s what your customers actually see.
4. Give it a few weeks, then see how many customers have mentioned it.

£10 is a starting point, not the finish line. If you want to work out what your rate should really be, I go through it properly in Your Labour Rate Is a Guess. Here’s What It Should Be.

Whatever you do, don’t be fearful about it.