Volume 8, Issue 5 - September/October 2006

Higher Gas Prices = Cost of Business = Less Profit!
Is there an answer?

by Peg Stroka 

Competition is fierce in the repair business. You feel like you are losing control over your profit margin due to many influences in the marketplace of windshield repair. Just as you feel that you can’t take it anymore, gas prices go up. 

Many repair companies incorporate mobile service into their business and others offer mobile service exclusively. The more dependent you are on mobile service, the more the spiraling gas prices have hurt your business. Some companies have chosen to absorb these increased costs; some have raised their prices. Still others have added a surcharge for gas for mobile service to bill. Some repair companies that provide insurance work may be hesitant to go the surcharge route, believing that instituting one is against the contract you signed when you agreed to do the insurance work under set conditions. I currently know of no insurance company that will pay a gas surcharge.

What about cash customers? Some in the industry have already added a gas surcharge to their mobile cash service to recoup their losses. 

I asked a major national glass claims manager what the small independent mobile repair business could do to get the insurance industry to reimburse reasonable expenses for increased fuel charges. He said his company reviews pricing by tracking cash prices and if gas surcharges were to become a line item with the cash customers, the insurance companies may have to consider allowing such surcharges for gas with insurance work. This puts the repair business in a difficult position. A company doesn’t want to charge an additional charge to cash customers only.

Give It a Try
Cindy Rowe Auto Glass, Harrisburg, Pa., last year experimented with charging a fuel surcharge to its cash and insurance customers for mobile service. The customers paid the surcharge, but representatives of the business were told that it “might” be in violation of its contract to charge such a surcharge to the insurance customers. The company stopped the surcharge after a couple of weeks. 

Mel Neulander, owner of Mr. Chips Windshield Repair in Cliffside Park, N.J., has not instituted a gas surcharge, even though most of his business is cash customers. Neulander thinks it is too competitive in his area to add a surcharge or to raise the price for a windshield repair. He is fortunate to have a fixed location in the county seat of Hackensack, N.J., and says he now offers mobile service only within 10 miles to compensate for the higher price of gas.

Gary Gifford, former owner of Maverick Glass in Glendale, Ariz., looks at it differently. He doesn’t see a gas surcharge as the answer. In his opinion, the business owner needs to “suck it up.” Owners, he says, need to take a serious look at their business and, if necessary, make better decisions and raise the price of the windshield repair. Rather than limiting its mobile area, a company should watch its scheduling and plan its route better when doing mobile work. Gone are the days when a business can take a truck or car out 20 or 30 miles for just one job.

In an article in the March/April edition of AGRR magazine, Jim Horrox talked about how manufacturers and suppliers are passing on their fuel cost problems to the customers, but those doing mobile service are having limited success in trying to recoup their additional fuel expenses. He referred to the fact that “NAGS provides a service type code (MB) and an actual part number (SMB00500) for mobile service.” I wonder how many people actually use it.

As always in the windshield repair industry, there are many differing approaches, opinions and thoughts. There is no magic solution or answer. The smart businessperson will analyze his or her business, its approach and bottom line. Tighten up where he or she can and decide how much rising gas prices are really hurting the business. If it is necessary to make adjustments, they should be made.

AGRR
© Copyright 2006 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.