Jan 14, 2022

Three Ways Your Shop Can Combat Inflation

Three Ways Your Shop Can Combat Inflation

Unless you’ve been hanging out under a rock or in a nice, cozy cave, you’ve probably become aware that inflation is on the rise. It went up seven percent in 2021—the biggest jump since 1982.

When inflation goes up, everything else gets dragged up with it. For repair shops specifically, that means cost increases—on top of all the other problems you’re already dealing with, like our wonky supply chain and the ongoing parts shortage.

So, what can you do about it?

Well, you could sing:

In-fla-tion, inflation!
In-flaaa-tion, inflation!

(Editor’s Note: She actually wrote more lyrics to this but I cut them. You’re welcome.)

While we would love to see your full rendition of Repair Shop on the Roof, the fact of the matter is there are some steps you can take to make sure the current inflation doesn’t smack your shop too hard. To help us understand what’s going on, we once again summoned Robby Gilbert, Fullbay’s Director of Finance, and he appeared in a puff of diesel smoke.


As we mentioned up top, inflation basically makes everything more expensive. You’ve no doubt noticed home and gas prices, for instance, making headlines lately. But inflation can hit a repair shop hard if you’re not ready for it. If you’re paying a buck for, say, a glow plug, then with seven percent inflation you’re now paying $1.07 for a glow plug.

Alone, this doesn’t seem so bad. But how many glow plugs are you swapping out over time? Thousands of parts means thousands of dollars. At the very least, that’s seven percent of your income that you’re losing at all times. On big ticket items like turbos and engines, that could be hundreds of dollars lost.

You don’t want that.

But what can you do about it?

You pass it on.


We’ve said this before, and we’ll say it again: no margin, no mission. You are running a business. You need money—and healthy margins—to keep your repair shop operating at a high standard.

When inflation jumps as much as it has, you need to take pretty quick action if you don’t want to wind up in the red. Here are three things you can do right away that can close the gap between actual and desired revenue:

  • Increase shop supply fees. If you don’t already charge for shop supplies (like cleaning equipment, towels, and so on) then now is a good time to start. If you’re using Fullbay, by the way, you can manage that markup automatically—no math needed.
  • Increase parts markup. Granted, you’ll want to look at the market around you and make sure you can mark up your parts a little more, but it’s a solid way to recover income. Again, Fullbay can do this for you!
  • Review your contracts and seek out new work. Robby suggests reviewing your existing contracts carefully, as some don’t allow you any wriggle room to increase rates. But if you can, now is the time. Additionally, see if there are any fleets in the area that need, say, regular PM work!


Repeat after us: Your techs drive your revenue.

(Louder for the folks in back!)

Your techs drive your revenue!

Or, to borrow a quote from Robby, “Now is not the time to penny-pinch with wages.”

We’ve heard all about the Great Resignation, where workers are departing existing jobs for others with better pay and benefits. The diesel industry is already at risk due to the existing tech shortage. If your people start leaving because you aren’t paying them enough, you’re going to have a hard time hiring replacements—because there aren’t a lot of them available.

The bottom line is, it’s an employee’s market. Yes, it may hurt to pay your techs more…but it’s going to hurt far worse when they leave you for a place that pays what they’re worth.

So, if you’re looking for ways to close your revenue gap while combating inflation, don’t look at pay cuts or not giving people the raises they’re owed. Increase their pay, charge a higher labor rate, and don’t look back!


Robby had one more word of caution for shop owners looking to offset inflation: if you need to borrow, borrow soon.

Here’s why.

Every time inflation goes up, the Feds talk about raising rates to combat it. In this case, rates means interest rates—or how much you’ll have to repay over time to square away a loan. The higher the interest rates, the more you end up paying.

So, if you’ve been debating applying for a loan to get a new space, refurbish your existing area, or buy some new equipment, you may want to think about getting one sooner and locking in those lower rates.


Unfortunately, inflation probably isn’t going anywhere. But if you can raise your rates appropriately, you can spread some of the pain out amongst your customers, lessening the sting for everyone and keeping your margin right where it should be.

Suz Baldwin