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I need some business accounting help

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bobkyllo View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote bobkyllo Quote  Post ReplyReply Direct Link To This Post Topic: I need some business accounting help
    Posted: 05 Jan 2020 at 6:42pm
So guys as some of you might know dad and I operate our own repair shop. I love doing it and have no interest in quiting.

My question to you guys is how do I go about charging the customer. We have a hourly rate of $60 per hour. I struggle when it comes to making the bill because I don't want to screw the customer yet I don't want to short my self either.

For example the other day customer rolls in with a 2008 Chevy trailblazer suv. Power steering is noisy. Diagnose it with a bad pressure line. No problem I have done hundred's of pressure lines. Well let me tell you this was a learning experience like I've never had.

Any way book time said 3 to 4 hours to do this line. I got started on it around 9 and finished and 4. So that would be 8 hours I put in but I had a half hour lunch in there also so that cuts it to 7 And a half hours. But as you guys know running your own business you have customers that come in that also need attention plus dad pulled me off the job to help him with what he was doing. So honestly I don't know how long I truly did work on this. I'd say I have in a bit more then the 4 hours but in no way do I have the 7.5 hours.

I honestly feel like I'm shorting my self a little labor money at 4 hours, but again I don't want to rip off the customer.

Short of having a timer sitting at the vehicle that I can start and stop each time I'm not sure how I can properly bill. And this isn't the first time I've struggled with this problem.

Thank you guys for your help.

Oh by the way if you're going to do a power steering line on this vehicle, the air box and washer fluid tank come out on the passenger side. The skid plate up front comes off. 5 retaining clips come off. Driver front wheel comes off. And then a hold down bolt that holds the two lines into the rack comes off. Once that's all out then you fish the return line out the driver side wheel well then finally you can snake out the pressure line. Oh and if you're going to put the two seals in the rack ports I think the only way to do that is to pull the driver front axle shaft.


Edited by bobkyllo - 05 Jan 2020 at 6:45pm
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JohnCO View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JohnCO Quote  Post ReplyReply Direct Link To This Post Posted: 05 Jan 2020 at 6:59pm
Maybe you count different in Minnesota, but out here in Colorado, 9 to 4 is 7 hours, if you figure an hour for lunch and interruptions you are down to 6 hours.  If it's the first one on this vehicle you have done, (and hopefully the last), you have to figure the learning experience of say an hour.  It does sound like a real pos job which sometimes you just have to remind yourself of what a pain in the behind it was and bid accordingly.  Did you ask what the Chevy garage would charge?  They may have some tricks or maybe they don't follow the book and bill all their time, which I bet is a lot more then $60 per hour.  I'm thinking maybe $325-$350 plus parts and tax, if you have to charge tax. 
Easy for me to say, I wasn't the one working on the pig for most of the day! LOL
"If at first you don't succeed, get a bigger hammer"
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bobkyllo View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote bobkyllo Quote  Post ReplyReply Direct Link To This Post Posted: 05 Jan 2020 at 7:09pm
John you're correct I was off an hour.

I didn't mind fixing out and I'd do it again if another showed up. Yes it did suck that's for sure.

I will work on anything and everything and that's mainly the train for my post here. Because I may not see another one of these all year so when I do get another I may be Rusty at it. It's a different story when a dealer only with on Ford or Chevy or what it may be and they do this day in and day out
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Pat the Plumber CIL View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Pat the Plumber CIL Quote  Post ReplyReply Direct Link To This Post Posted: 05 Jan 2020 at 8:09pm
Hard call to make . Charge for your time and be honest with customer . Good mechanics are hard to find . I charge for my time and materials . Some people want bids or a flat rate for each job . Hardest part of my job . 33 years and I still don't know how long it takes , so I have to cover myself and charge more . Most people think you can give a bid and then if it takes less time than expected they get a discount . Not how it works .
You only need to know 3 things to be a plumber;Crap rolls down hill,Hot is on the left and Don't bite your fingernails

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Post Options Post Options   Thanks (0) Thanks(0)   Quote desertjoe Quote  Post ReplyReply Direct Link To This Post Posted: 05 Jan 2020 at 8:33pm

 I do a little shade treeing on most things mechanical and charge $60 per hour, IF,  I want to do the job and $100 per hour if I don't want to mess with it such as ECM issues or electronics, because I do not want to buy the $500 reader it takes to troubleshoot.
 I always tell the customer my rate up front so there ain't no surprises. I also used to struggle about pricing a job cause sometimes there are some circumstances that prevent you from finishing on time,,,Altho,,Those circumstances are not his fault or YOURS. If you are honest about your actual time spent on the job then there should not be any reason not to charge actual time spent. You also have to keep in mind there may be a comeback that will most likely be on your dime.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote john(MI) Quote  Post ReplyReply Direct Link To This Post Posted: 05 Jan 2020 at 8:36pm
I would think you need to deduct some time while you got educated on the job!
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Michael V (NM) View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Michael V (NM) Quote  Post ReplyReply Direct Link To This Post Posted: 05 Jan 2020 at 9:03pm
You need to find out what the flat rate manual says, then adjust accordingly..
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bobkyllo View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote bobkyllo Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 12:01am
Thanks guys for the thoughts. I'm glad to see I'm not the only one to struggle with this. Like I say it's though because it's just dad and I. Dad is getting to the point he wants to slow down and he has been directing more of the customers to me. So now when a customer comes in 7 times out of 10 they will come to me for the questions or advice.

So I'm just getting into my project and then I have to quit to help the customer. Which is fine I'm not complaining about that at all.

As far as the customers go I think they all understand and trust me to treat them fairly. And it's because of that trust I don't want to take advantage of them. We live in a town of 1800 people we all know each other.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Ted J Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 3:18am
The way it sounds, you spent approximately between 4 & 4.5 hours on it.  The only real way would be to have a notebook and write in it when you start and stop all the way through and then you would know for sure.
Obviously you don't have that here, so just saying time spent on other stuff, lunch and what ever,  I'd say the 4 or 4.5 is workable.  Actually $60 is DARN CHEAP so no matter what you decide, it is going to be fair.  If I were on the other end and you charged me $350 for labor, I'd probably give you a $50 tip!
Let your conscience be your guide.  You have a good one, as it's bothering you right now about it.
One thing that more people are aware of andglad of is someone in your position who above all else, is honest.  Take pride in that and you'll never go wrong.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote fixer1958 Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 4:36am
Well I think you are a little on the lean side at $60 an hour.
Where I work if you bid the job at 4 hours that's what the customer gets charged, doesn't matter if it took 3 days to complete. Chalk it up for the next time.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote jaybmiller Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 5:36am
Welcome to being between  'rock and a hard place' ! On one hand you want to help, on the other you NEED to be paid. As others have said $60 is too low. When I woke up and started to charge $100/hr for 'small engine repairs' I lost 90% of my business. Got rid of the  'do it fast,do it cheap customers' that don't appreciate the KNOWLEDGE needed for fixin stuff. Seems every other trade, auto mech,plumber,electrician,carpenter, etc. gets $100 so why not me ? My mechanic(yup..I don't work on MY truck..) uses some online book for rates. How he wins is when he does the job faster. Over the years he's found 'tricks' to shave off time for the repair. That 'free' money helps offset the PITA jobs that take longer than the 'book' says.
If you're going to be doing it as a business do it as a BUSINESS ! Quote using a pricebook, only do jobs you KNOW you can do or WANT to do. Life's way too short to try fixin everyone's problems....
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Post Options Post Options   Thanks (0) Thanks(0)   Quote bobkyllo Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 7:45am
I've got a labor guide that I refer to and that's how I come upon the 3 hours and 4 hours. Chilton said 3 hours regularly and 4 hours if it's severe. I'm guessing the severe would be if it's Rusty or tougher.

I generally go by that but not always. Like for example they say that I'm suppose to charge an hour to rotate. I've timed my self doing a rotate and even including the hoist set I've done it in a half hour. I'd feel guilty charging that extra 30 minutes.

I've only once in my life quoted a job for time and i shot my self so bad in the foot I won't ever do that again. I live in Minnesota the vehicles don't just come apart like Chilton might think they would. That's the nice think about my customers they know that it might be a bit of a struggle and they trust that I'll treat them well
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Dakota Dave Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 8:01am
When I worked in a shop we charged flat rate manual time for every job. Some times I could complete 2 or 3 brake jobs in the time allowed in the manual. some times it took twice as long as allowed. working in a shop with others there were times when Id have help the guy in the next bay would remove and balance all the tires while I worked the brakes id get done twice as fast id do the same for him. you'd spend a lot of time trying to separate out how much time was on each job so just use flat rate time on every job. also we charged $60/ hr 20 years ago. most places are at least $120 now. you need to be getting enough money from the work to not only pay labor (the cheapest part of the job) and all overhead. that building, heat, power, and insurance aren't free.  also add shop supplies to each bill rags, lube oil, break free, parts washer fluid all cost money a small fee on every bill is the fairest way to account for it.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote chaskaduo Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 8:48am
Where in MN are you located? Honest mechanics or shops are getting slim these days.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote desertjoe Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 10:48am

  Ditto on Fixer and Dakotadave's input. When I was assist Service Mgr at the local GM dealer, we went strictly by the Flat Rate Manual,,,if the manual said a job paid 3.5 hours,,that is exactly what the dealer charged the customer, Plus a nominal fee for "Shop Supplies". The Tech got paid by the book whether it took him 3.5 hours or 3 days. There was a tech there that could R&R a water pump on the chevy V8's in 1.3 hours,,,!!! He knew all the short cuts,,!!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote DMiller Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 11:57am
Last Open Shop I worked in was all Chilton Book time, UNLESS there were difficulties as added on structures, severe rust locked parts, mounds of oily debris that had to be removed first, those were all T&M until got down to the actual repair.

Some customers did not lie that, others just shrugged and went on. ALWAYS left the caveat on Book Flat Rate as to unseen issues, some never required, many others were nothing But problems.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Scott B Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2020 at 1:36pm
Business rule #1:  Always take care of the customer.....if you're going to error, error in their favor.
I help my nephews manage a lawn and landscape business. Their Dad does the books and said he'd only do it for them if they gave a 7% tithe back to any business they do for a Church......they started with one church, word spread and they have every church within a 15 mile radius!  They're new challenge is that the Churches aren't even taking competing bids now so they now are afraid of "charging too much"!
Some problems are good problems to have and, in this situation,  if you take care of the Customer they come back and take care of you.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Red Bank Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2020 at 9:47am
I am in the same boat with my shop. We were at $60 an hour and I reluctantly went to $80 based on other shops and dealers in my area. I usually use the labor guide but because we mainly work on Ford diesels there are some jobs I price out as a flat fee that’s higher than book time but because I know it’s going to take longer. Some jobs I won’t charge book time because I have a special tool that makes the job half of the book time. It’s a constant struggle for me to make sure I am fair. What kind of parts mark up are you doing? That’s another area I struggle with. I don’t mark up parts as high as other places. With the discounts I get from the supplier I mark up to where the walk in customers would pay. Every invoice I make out I keep in mind if the customer checks around with my invoices i want the other shops to say that guy is crazy I don’t have a lot of overhead, the shop is on my farm and we don’t advertise, everything is word of mouth. Sometimes when you can’t make people happy I will eat the job so they can’t badmouth me to others and sometimes I tell them they came looking for me I didn’t look for them? But that’s on the ones looking to scam me.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote john(MI) Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2020 at 10:01am
Oh, and if you can obviously see that someone else attempted to do the repair prior to you getting the job .  .  . You need to charge twice as much!LOL
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JohnCO Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2020 at 11:51am
You could charge $60 an hour if you do the job, $80 if they watch and $100 if they help! lol
"If at first you don't succeed, get a bigger hammer"
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Red Bank Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2020 at 2:31pm
Originally posted by john(MI) john(MI) wrote:

Oh, and if you can obviously see that someone else attempted to do the repair prior to you getting the job .  .  . You need to charge twice as much!LOL
John you won’t believe how many times I have heard “but I already had it apart why full price”
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Post Options Post Options   Thanks (0) Thanks(0)   Quote jeremiahquellette Quote  Post ReplyReply Direct Link To This Post Posted: 12 Jan 2022 at 6:35am
You don't want to rip off the client is okay. I, too, often think that I'm ashamed to take money for my services. However, your time at work should be paid in a fair and dignified manner. Do you think you are not worthy of good pay? If you realize that you, too, should benefit from standing and doing all the client transactions, then stop thinking you are guilty of something that is not your fault. Every one of those people can generate fake pay stubs and realize that you're not ripping them off. You're just charging them a fee. The check you give the customer proves that fact.


Edited by jeremiahquellette - 17 Jan 2022 at 6:49am
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Harvey/pa Quote  Post ReplyReply Direct Link To This Post Posted: 12 Jan 2022 at 9:26am
Was in family business over 50 years, first with Dad, then mine, and last Son-in-Law & Daughter. Lots of great advice above, take care of your customers and they will take care of you (repeat work) sometimes you have to 'eat' part or all of a job to be fair and that's a learning experience, The Auctioneer I help out now said to me one time "I don't ever want my integrity questioned" when I pointed out a bidder that lied about his bid and wanted it cheaper. He said he knew that but $20. was cheaper than all the bad publicity the guy could spread, He told the guy don't ever try that again. Remember some professionals are expensive at $60.00 per hour and others are cheap at $100.00 per hour. You may lose some customers if you charge the going rate but you are probably well rid of them, I had those guys say "never coming back" but they did when cheaper professionals screwed up.  Good Luck, I predict you will have a successful business. Sorry for long post...Harvey.
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From an accounting perspective, you need to keep time sheets.  Fill out the time everyday for each job.  Then you will know how to better estimate in the future.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Coke-in-MN Quote  Post ReplyReply Direct Link To This Post Posted: 12 Jan 2022 at 12:41pm
I ran into that a lot when I was doing excavating - people wanted a firm price , so most time I gave a bid of XX a hour and not to exceed a certain price rather than a actual dollar amount . It allowed some variation in final price . 
 One neighbor I bid a basement for at not to exceed price / but he said he wanted a firm bid so I told him firm price about twice the not to exceed cost  - he hired a neighbor kid to dig it with a skid loader at some price lower than mine , Machine broke down , large rocks and buried water line exposed , old foundation from previous building exposed . 
 He asked me to finish job - told him it would be for the firm cost estimate , no matter if 1/2 of the job was already done as all the problems were now known . 
  Mad a H but paid me to finish it + he paid the neighbor kid also 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote shameless dude Quote  Post ReplyReply Direct Link To This Post Posted: 13 Jan 2022 at 12:27am
one mechanic here charges for the time any vehicle sits inside his shop. i went up there one day to get a new battery, (only place that sold interstate batteries in town) i had the old one about out of the burb when he came out and said "lets just pull it inside the shop and change them"! it was lightly spitting rain at the time...didn't bother me any. when he figgered up the bill, he charged me for the burb inside his shop. he also walked around and helped his employees do things while my vehicle sat inside! guess he'll wonder why i'll never go back to him again!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote DMiller Quote  Post ReplyReply Direct Link To This Post Posted: 13 Jan 2022 at 4:43am
Coke, I made estimates for mechanic work as you did for grade work, the client would walk to someone else and end up paying more where the job was still not done right or completed at all, then they would come back insisting I repair for price quoted.  Explained to nearly all of them I quoted PRIOR to a Botched Mess, to fix the Botch Up is T&M ONLY and they could take it somewhere else if could not do that.  90% of them agreed and lived with the costs.

Not once did we ever 'Charge for Shop entry' that is just a rip off Shameless.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote tractorboy Quote  Post ReplyReply Direct Link To This Post Posted: 13 Jan 2022 at 1:04pm
We had the shop repair times at the motor pool "USMC"  I always thought they were for a perfect shop under perfect conditions, which hardly anyone has !!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bekebe Quote  Post ReplyReply Direct Link To This Post Posted: 04 Mar 2022 at 6:19am
Hey, I recommend that you know how to value your work and time. Nowadays, a good mechanic is hard to find, and you must charge customers fairly. When I started my small business, I was indulgent with my workers and asked for little money from customers. My mom found out and was mad at me because I didn't handle my business correctly. She also owns a company and told me about https://www.prendo.com/leadership-challenges/engaging-stakeholders. She said that learning how to become a leader and managing my time is vital. Perhaps you should think about this. Good luck!

Edited by Bekebe - 06 Mar 2022 at 5:43am
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Post Options Post Options   Thanks (0) Thanks(0)   Quote shameless dude Quote  Post ReplyReply Direct Link To This Post Posted: 05 Mar 2022 at 2:36am
you said you've done many of the hose changes? charge what you charged the others as a base hourly charge. if you charge to much. that customer will prolly never come back to you. enough of them and someday you'll sit there praying for a customer. who says you hafta charge $60/hr.? why not $70, or $40, how about $55? you want to undercut the dealers of what they charge, enough of the independants really undercut the dealers, the dealers prices will come down too, and they'll be begging for business. i'm sure you're charging retail on parts, labor can be anything, you are there anyway. how much do you pay yourself out of that hourly charge? your overhead is a whole lot cheaper than the big boys. this response could go on and on with "what if's" and "i gotta's", mostly depends on if you want repeat customers or one timers.  
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