If you’re a small repair shop – or even a medium-sized one – odds are you don’t or can’t handle every repair on the face of the earth. Your techs are unmatched when it comes to installing turbos or getting an engine back in fighting shape, but if someone comes in needing a windshield replacement, well, you might be scratching your head.
Hold up a second. You don’t need to send that paying customer away. If you set up a good subletting network, you have a range of shops you can turn to that offer the services you don’t. You can sublet – or subcontract – work out to them, attach a small markup to the work, and keep your customer happy. This is not only an extra income source; it also keeps customers coming back to you for all their heavy-duty repair needs.
We spoke to Amy Newman, a Fullbay Customer Support Manager with experience in running the front office of a heavy-duty repair shop, and she helped us pin down what subletting is, why you’d do it, and what you should charge for it.
What is subletting?
A subletting service is anything you contract out. You are basically letting a trusted third party handle a portion of your repairs. They charge you, and you pass that charge on to the customer by marking it up.
While you might occasionally have a mobile guy that shows up to perform subletting work in your shop, you’re much likelier to “sub out” to other local shops. These might be other repair shops that have equipment that you don’t, or even specialized services that strictly handle glass or tires.
Let’s say you have a customer that needs their rotors turned. You don’t have the machinery for that. If you don’t sublet, well, that’s business the customer will take elsewhere. If you do sublet, your shop pulls the rotors off, takes them to the machine shop down the street, and the machine shop turns them. You bring them back to your shop and put them back on the truck. Your customer is happy, you’re happy, and the machine shop down the street is happy.
Some common services that shops sub out include the aforementioned tires, welding, and electrical work, as well as windshields and windows.
How do I decide what to sublet?
What you decide to sublet depends on your circumstances. We can’t tell you to sublet this or that, but we can provide you with some questions to ask yourself:
- Is this work that doesn’t turn up in my shop often? Several of the following questions relate to this one. If you’re only working on five windshields a month, it might not be worth it to keep setting aside space to work on them.
- Do I have to get one of my techs special training that they won’t often use? Some repairs require additional certifications and education, which can get pricey. You can pay for this and offer it in your shop, but look at bullet #1 again. Is it worth investing a ton of money into a repair you might only see a few times a month? How long will it take you to recoup that money, at that rate?
- Do I need to purchase special (expensive) equipment? Sometimes getting a tech trained isn’t enough – you have to get specific machinery to help them do the job. Is that going to set you back too much? Do you need to get special insurance around it? Do your techs need special training to use it?
- Is that equipment going to take up tons of space I don’t have? A lot of smaller shops just don’t have a lot of extra space. If bringing in new machinery is going to require you to give up one of your bays, for example, that’s a lot of work you could be giving up just to have this equipment.
- Is it going to spike my liability insurance? Liability insurance tends to be higher for shops that handle tires, for instance. The mount and balance machine, the plug machine, and other necessary equipment tends to be big, bulky, and potentially dangerous. If you’re trying to pull a rotted tire off a wheel, that tire can go everywhere – and that danger is reflected in your liability insurance rates, adding to your overall burden costs.
By asking yourself these questions, you’re getting a better overall look at what you’re equipped to offer and how you can benefit from subbing some services out.
How do I form good relationships with potential subletters?
We talked a lot about building relationships in our article about shop profits, and we’ll reiterate it here: everything comes down to maintaining good working relationships. That goes for customers, vendors, and subletters. If you’re giving a machine shop a lot of regular work, you become one of their bread and butter customers. Odds are they’ll be willing to jump on a big (or sudden) project for you.
We’ll fall back on our recommendation for vendors: call around, then narrow it down to 2-3 that you use regularly. This gives you options and also lets you negotiate better rates. If you’re subbing your stuff out to 10 different shops, you’re going to have a much harder time getting good pricing, and have a much harder time building a good relationship with your subletters.
How do I mark up subletting service?
There’s not a whole lot of room for markup in the sublet service world. If you pay an outside windshield service $100 for a new windshield, you might ultimately charge the customer $120, which is about a 20% markup.
By basing your subletting upcharge on what the local market agrees with, you’ll be treating your customers fairly while still making a profit on the work.
By now, you can probably see how subletting repair services can benefit your shop, and whether you should give it a try.
The bottom line is, contracting for outside service keeps you in the picture instead of losing out on a job because your shop isn’t equipped to do it. It improves customer satisfaction and gets you a piece of the pie. So take a look at your shop and what’s in your immediate area and start thinking about what additional services you can offer.