What if a customer comes to you for a service or repair you don’t offer? Or during a routine inspection and your tech finds an issue you can’t solve in in your shop? Do you send the customer away? Not offering every heavy duty service known to man doesn’t mean your shop can’t still profit from them. Become familiar with the shops that offer the services you don’t, then provide them as a sublet service to your customers. This is not only an extra income source, it keeps customers coming back to you for all their heavy duty repair needs.
When you offer a sublet service, you basically act as the general contractor. You make the connection with the customer and find an outside shop to do the service or repair. Also called an “outside service” or “subcontracting parts and labor,” a sublet service is one you don’t perform in your shop, but you mark up the price the subcontracting shop charges. That’s justified because you’re spending your time and money to get the job done. You put in the time to find the best shop to sublet to, and you’ll pay them before the customer pays you.
Charging for Sublet Service
There are no rules on what to charge for sublet service. Known as an “upcharge,” you could charge a flat rate per job. Alternatively, it’s common to charge a percentage markup on top of what the sublet shop charges for parts and labor to do the job. For instance, if the outside service shop charges $650 for a job, you could mark it up 25 percent. You would invoice it for $812.50, earning your shop $162.50 to handle the job for the customer. About seven sublet service jobs like that per month increases your shop’s income by $1,000.
It’s important to remember to include up-charges or markup on diesel repair estimates. You’ll get an estimate from the subcontracting shop, so you’ll know what you will pay them to do the job. However, you’ll add your flat fee or 25 percent markup to that price when creating the estimate for your customer.
Reasons to Subcontract Out
When deciding whether you should offer sublet service, you might see it as giving up potential profits. If you have the equipment, facilities, and techs to add services to your existing business, maybe you should expand instead of subcontracting.
On the other hand, it’s not generally realistic that all shops can be everything for everyone. Offering sublet service allows shops to focus on what they do best, instead of spreading themselves thin to cover areas that others might be better at. Plus, contracting for outside service keeps you in the picture, rather than losing out on the whole job because your shop isn’t equipped to do it. It improves customer satisfaction and gets you a piece of the pie. In those cases, sublet service is a win for the customer, a win for your subcontractor, and win for you.
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