Jun 02, 2021

Heavy Duty Shop Supplies: Why to Charge for Them

Heavy Duty Shop Supplies: Why to Charge for Them

What do you charge for heavy-duty shop supplies?

You do charge for them, right?

If you aren’t, relax for a moment: you’re in good company. Plenty of shop owners are quite good at charging for the obvious—labor and parts, for example—but sometimes smaller costs can get away from them.

Running a shop means cleaning up after a repair job and keeping your area tidy in general. The shop supplies you use to do this are generally considered part of your overhead; you’re spending a regular amount of money on them, and they’re not something you can just ignore. But if you’re not charging for those supplies, you’re losing revenue. It may not seem like a ton of money—$5, $10 there—but over time, and with each job, it adds up.

We want to put that money back into your pocket.

But Fullbay, you may be saying, I don’t know how many towels I used on a specific job.

Of course not. We aren’t asking you to count out towels or how many times you sprayed a particular grease stain. The point of charging for shop supplies is to make you whole for that particular cost.

That’s where the heavy-duty shop supplies fee comes in.

In the finance world this is called the matching principle: you want to match costs to do a job with some sort of revenue. This is critical in making your shop profitable.

Methods of Calculating Heavy-Duty Shop Supplies

Charging for shop supplies isn’t one-size-fits-all. You’ll need to select the one that best suits your particular shop.

Here are three methods we’ve seen other shops use:

1) Charge as a percentage of labor

The most common method for calculating shop supplies is to charge it as a percentage of total labor on a service order. For example, 8% of labor. If the total labor charge is $500, shop supplies would be $40.

If the intent is to recapture the cost of consumables used on a job, labor is a pretty good measure; the longer a job goes, the more supplies your techs will use.

2) Charge as a percentage of labor and parts

Some shops calculate supplies on labor and parts. To end up with a reasonable charge, this usually means the percentage is lower. For example, if you charge 5% on labor and parts, then a job totalling $800 would charge $40 for shop supplies.

The problem with this method is that the supplies charge gets unreasonable on services with big-ticket parts but little labor. Conversely, if you’ve got a job involving only a few low-cost parts—but a lot of labor—the charge won’t be quite enough.

3) Put a ceiling and floor on what you charge

Regardless of the calculation method you choose, you might want to have a minimum, and even a maximum, that you charge for supplies.

A maximum, or ceiling, can keep charges reasonable, especially if you are charging based on labor and parts. A minimum, or floor, can ensure you at least recoup some basic costs on every service.

Look Into State Laws

Before you decide what percentage to charge for shop supplies, make sure you’re working within the constraints of your state’s laws. We mention this because over the years there have been lawsuits centered on the “shop supply fee,” and various lawmakers have tried to address it over the years. Whether you can lawfully charge for shop supplies and how detailed your invoice needs to be (some states require an itemized list!) will depend on where you live.

Take Care of Business

Charging for heavy-duty shop supplies makes you whole on real costs in your business. No matter which method you use to calculate the charge, make sure you are keeping the charge reasonable.

But keeping track of these charges can take up more of your valuable time than you’re willing to commit. Why not turn to an app that can do it for you? Every part of Fullbay is designed to streamline the work you put into running a repair shop. Curious to see how it tracks shop supplies, and what else it can do for you? Give our free demo a whirl today!

Jacob Findlay