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Thursday, May 31, 2007

Are You Achieving the Maximum Sales on Labor?


Are You Achieving the Maximum Sales on Labor?

By Mike Olson, WORLDPAC Director of Customer Development

When selling labor, we hope that technicians complete the job before or within the time period quoted to the customer (in dollars, of course). If not, gross profit is lost.

How profitable is your labor pool?

As a consultant and trainer to many service centers, it is my experience that most shops do not track their technician time, and, as a result, are not aware of the potential losses associated with labor sales. To take a look at your potential loss on labor sales (without a lot of detailed work) try this simple exercise:

Take the hours you pay your technicians (hours worked) and multiply it times your labor rate:

[Hours Worked x Labor Rate = Potential Labor Sales]

How close is this number to your actual labor sales?

Here is another example:
4 technicians work 40 hours. This totals 160 hours worked for the week. If labor rate is $90 per hour, this means your labor sales should be at least $14,400. Now, compare this to your actual labor sales.

If actual labor sales figures are not similar to potential labor sales figures, you need to educate your staff on technician *proficiency.

Information on technician proficiency and other business management topics will be featured in our upcoming business management classes starting in the second half of 2007. Visit the WORLDPAC Training Institute (WTI) web page in June for class dates and locations.

Note:
*Proficiency is the hours sold vs. the hours available to sell. Efficiency is the hours sold compared to how long it takes to do the job.

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