Whenever talk of contracts, networks or pretty much anything happens between repairers, the one thing that always, and I mean ALWAYS, comes up is pricing for repairs, and I’ve had thoughts for a while on it, but the primary one is, we’ve all been thinking the wrong way about it. 

Client Can’t Afford To Pay…

Yep, we’ve all heard this many a time a client comes along with a hop and skip in their step promising work and then we get to the price on offer. 

Invariably, it’s low, too low. 

A bit of negotiation and bartering and you get to something that you think might, maybe should or might work.

My question is, from a repairer’s perspective, what’s to negotiate? I mean, think about it, fuel costs money, time, running a van, an office, phones, insurance, equipment and so on. You have a whole bunch of costs that you can’t avoid and you should be able to figure out what it costs per call to cover those. 

(You can get the contract calculator I made in Rapport and other ways I think to work that out)

And that’s before we even get into it’s a flat fee for all areas and all jobs other than reduced rates for write-offs most often, which is hardly in your interests, and it doesn’t cost you any less to get to the customer’s door. 

Way back when I worked this out and made the contract calculator up to work out what it cost me to get a guy to a customer’s door, even 20 years ago it was £27 and that rose over time to £33. That is to get a guy to the door, not do anything, and that’s for every single visit so two visits a recall or return to fit a part was then £66, three visits or more was a kiss of death to profits. 

If you get a contract with no parts on stock, it's hard to pre-diagnose, and in today’s diverse product environment, it’s easy to only complete 60-70% of the work first time. So, let’s say you’re offered £60 a call. On 30-40% of those (at least), you’re losing money, which in turn means you’re likely losing money on the whole contract. 

On a number of occasions I refused to take on a client as they wouldn’t pay what was a fair rate for what they were asking to be done and, as I knew my costs, I knew doing the work would end up costing me money. That’s not a good contract irrespective of the kudos in having it. 

They said, they couldn’t afford to pay more, which brings me onto one of the main points of this piece. 

Subsidising Others

See what I got and, I don’t think that many have, is that I was not prepared to subsidise a client’s (manufacturer, insurer etc) service operation. 

Why should I do work at cost or even and a loss for them, what do I owe them to justify doing that?

Answer: nothing. 

And you get the whole sob story about how they can’t afford to pay more, they have limits and limited resources etc but as a repairer you have to ask yourself, why is that your problem?

I can’t go to Easyjet for example and say I want the premium service but I’m not going to pay for it and the exact same principal applies here. Only unlike Easyjet a lot of repairers do crumble, often coming to regret it. 

My take on it is that if a client cannot price their product or policy or whatever correctly to cover the true cost of delivering a quality of service that they want their customers to receive, that is their problem and not mine. 

If they need to pay more to get what they want, they need to pay more. 

Justification Of Above

Let me explain why I’m quite harsh in the previous section. 

Normally when a client approaches an independent repairer they are way, way bigger and have all sorts of hops they want to be jumped through, some examples are the likes of:

• Rates paid
• Response times
• Area covered
• Spare ordering times
• Call completion times
• Data feedback
• Credit terms for payment
• Credit terms for spares
• Van stocks paid for or not supplied
• And I’m just mentioning the ones that are kinda major here. 

There are all these conditions that you have to meet and if any are wrong you might have a delayed payment or worse, no payment at all, often through no fault of yours. 

My point is, commercial clients will often ask for a lot and honeslty, not offer too much in return. 

By that, I mean there is all too often no exclusivity for products or areas, no guarantee of call volumes, no guarantee of any ongoing work, no payment reviews (index linked) and usually a short termination of the contract just for highlights. You have to offer a lot at a reduced rate but you’re not getting much of anything in return for that. 

Sure, you get a few calls and you might get some other work off the back of it but what you need to work out is, is that worth it?

And if it isn’t worth it then you circle back to, the initial rates have to be right as if they are not it’s real easy to lose money on a contract. 

Nefarious Online Practices

Since the internet really started to gain traction we’ve all seen the rise of these online “hoovers” trying to suck up all the work on a contract-free charge basis and using “insurance” plans or service contracts. 

They hoover up all this online work then feed it back to you, of course taking a cut in the process for… ehm… what exactly?

It never ceases to amaze me how so many repairers take this work on and, often at reduced rates, having to wait to get paid (if they get paid) for work that if they didn’t do it, they probably have gotten anyway and, been paid more faster by the end user. 

There’s a lot to untangle here but the crux of it is, these sorts of businesses do not have any way to get stuff repaired for the punters that they get the details for, they NEED you to do that for them. If you refuse the work, what they gonna do?

These businesses are just trying to take a cut of your work as much as they can.

I cannot for the life of me fathom why repairers would support that. 

I’ll likely write an article on this topic at some point as it’s a topic all on its own but, it’s just another contract type thing. 

I’m Lucky

I got out of the front end of repairs a while ago as I found it unprofitable the way the company was set up at the time, but I was heavily involved in setting up and running a nationwide repair service for a manufacturer when I did. 

I still am heavily involved with the industry and many repairers so I see this stuff quite regularly. 

It means I can say what I want as I’m not looking to get contracts with anyone and, even if I was, I’d have to be insisting that they were fair to both parties, not the one-sided contracts we all seem to see. 

I can also relay all this information as plainly as I please and I do so as I’e often said that it’s not trainign to fix appliances that repairers need the most, it’s training on the business side that they often really need.