When a dealership wants to increase Fixed Operations revenue, there are typically two common avenues to follow: selling more and increasing traffic. While these two strategies can certainly work, there is a third and often overlooked avenue: optimize your pricing.

Profitability can be greatly impacted by failing to optimize price in your Fixed Ops department. When a dealership sets its pricing, what is used to decide if the strategy is competitive and in alignment with customer expectations? Oftentimes, there is little to no data-driven decision‑making when it comes to pricing simply because dealerships do not have access to the data or industry insights necessary to make informed decisions.

What Factors Impact Fixed Ops Revenue Opportunities?

Whether you’re aware of it or not, there is a good chance you’re leaving money on the table every month, leading up to potentially hundreds of thousands in lost revenue each year. There are numerous factors influencing Fixed Ops revenue opportunities, but among the top three are pricing, work-mix and poor warranty filing protocols.

Pricing Challenges
Establishing and maintaining the “perfect price” that maximizes customer retention and profitability is no easy task. Oftentimes, dealerships lack the market insights to be able to competitively price their services without losing out on repeat business or new customers.

Work-Mix Impact on ELR
It can be challenging to know the impact work-mix can have on an optimized CP ELR. Making sure tech times are in line with labor rates for all your different services can be equally as difficult. Dealerships oftentimes lack the bandwidth and tools to track these metrics which can lead to many small price deviations that add up to a major loss of revenue.

Lacking a Warranty Filing Protocol
Without accurate data and business intelligence tools, dealerships miss out on potential revenue gained from proper warranty labor and parts filings. Oftentimes, there are unnoticed gaps in customer pay that can hinder markups and approvals.

How to Increase Fixed Ops Revenue

Once you’ve gained an understanding of what is impacting your fixed ops revenue opportunities, the next step is to do something about it! Here are three ways you can overcome the challenges previously mentioned and ultimately increase fixed ops revenue.

Optimize CP ELR
In order to optimize CP ELR, you must strategically determine optimized customer pay labor rates, pricing matrices, packaged menu pricing and parts pricing in a way that drives more revenue without driving away business. Setting the “perfect price” requires analytics and market intelligence which are the tools you can get with Dynatron Software.

Increase Price Compliance
Once your pricing structure has been optimized, service management should hold service advisors and technicians compliant.

Enhance Work-Mix Visibility
Understanding your five categories of work-mix is the first step to being able to control pricing compliance, flat rate times paid to technicians and discount allocations. Dynatron helps your service department easily view your work-mix, a task that would otherwise be very challenging.

Dynatron’s Approach to Increasing Fixed Ops Revenue

At Dynatron Software, we find data-driven hidden opportunities and execute our proven process that historically has generated an average of $200K of revenue within the first year for our clients. When it comes to fixed ops revenue, we help dealerships develop business plans to combat sub-optimal pricing, price erosion and the challenge of warranty parts and labor reimbursement rates. This is done by combining market research, data analysis and strategic processes to define a clear path to continuous improvement.

Our pricing optimization analytics software provides unique business intelligence data essential to creating a roadmap to success. Daily reports help dealerships easily identify pricing overrides, hidden discounts and extra unauthorized hours, all factors that can hinder performance. This data also helps to keep technicians compliant with the pricing strategies set forth. In addition to this, we understand a pricing strategy should be determined in part by examining the performance of the surrounding market and potential competitors. Dynatron has access to comparative market performance metrics that are used to create an optimal variable price strategy.

PriceSmart — Price Optimization for Your Fixed Ops Department
PriceSmart helps dealerships develop business plans to combat sub-optimal pricing, price erosion and the challenge of warranty parts and labor reimbursement rates. This is done by combining market research, data analysis and strategic processes to define a clear path to continuous improvement.

“Two or three years ago, we bought a Chrysler dealership in Tennessee, and their warranty rate was $90. And our current rate that we’re filing for right now is $203. It’s typically so hard to do a warranty rate increase that people skip it, and they take the percentage increase that the manufacturer gives, for instance, or they just don’t file. With Dynatron it gives you the opportunity to maximize your effectiveness when you’re filing for warranty rate increases, whether it’s parts or with labor. It’s made a massive difference in our gross profit percentage to our stores. I wouldn’t run a store without it,” said Eli Andrews, regional fixed ops director at Hudson Automotive Group.

Get in the Know with Dynatron Software

When it comes to fixed operations revenue, the conventional approaches of selling more and increasing traffic often overshadow the critical role of pricing optimization. Neglecting to fine-tune pricing strategies can significantly impact profitability. Without the insights derived from data-driven decision-making, dealerships risk leaving substantial revenue untapped.

By embracing Dynatron Software as a strategic partner, dealerships can overcome these challenges and significantly increase fixed ops revenue. Through a combination of market research, data analysis and strategic planning, Dynatron empowers dealerships to not only optimize pricing but also navigate complexities such as price compliance and work-mix visibility.

Schedule your 30-minute meeting at go.dynatronsoftware.com/cata to learn more today and start building your dynasty.