Trade Rates

CCM’s Tina Drayson is back and looking at trade rates, and why they cause so many issues for garages

Published:  19 January, 2022

There are so many platforms out there for our industry, to assist each other in our hour of need, from help and advice in a business sense, to help and advice in a personal way. So why when we come to work with each other, does this sense of comradeship go out the window? Why do we feel that we must undercut and devalue each other? Not everyone is guilty, but it is happening everywhere.

Definition
What are trade rates? In my opinion, trade rates apply when you are purchasing products that you are using to assemble, mend, maintain, improve, or fix an item. Typically building supplies, plumbing, fencing etc. The definition in the Cambridge Dictionary is as follows: “A price that businesses pay for goods rather than the price at which they sell those goods to the public.”
    
Seems clear, but why in our industry do we have trade rates we charge each other? In our industry, you could relate this to parts. We purchase parts to assemble, fix or maintain vehicles. Trade rates are typically lower than retail rates allowing us to add a profit margin to the price. This is generally applied to garages as over time, we purchase a high volume of goods compared to the retail customer who only purchase goods irregularly.

Application
Should this apply then to the services that we offer? In my view, absolutely not. A service offered is not the same as the purchasing of a part. That is what we sell as a garage; Labour.
    
Imagine, if 80% of your specific skill is carried out for other garages and you are expected to offer trade rates. Take a moment to think about that. The price of a MOT is capped at £54.85, but why do we offer these at lower prices? Yes, many of us are guilty of doing this. Predominantly this is done to win that customer and have them on our database to be able to market to in the future with the hope of gaining some further work.
    
How does this change when you are dealing with another garage? Why do those in our industry expect, (not want but EXPECT) to be able to bring their MOTs to other garages and get them cheaper than your retail customers?
    
This is a conversation that I have on a regular basis. Any Testers reading this, know how hard that Annual Exam was this year. Any garage testing stations know how much work, effort, expense goes into to the monthly site audits, calibrations, costs, training to maintain DVSA expectations. Those garages that do not have their own testing stations, why do you expect to get your MOTs cheaper than retail? As MOT Testing Stations, many of which are also fully-equipped service and repair centres too, we do not win any work from you. With this in mind, why would we go out of our way to give you cheap MOTs, priority timeslots and even on occasions, collection and delivery? How many garages that outsource their MOTs are selling them at a higher price? How many that do, are adding the VAT to the service
fee element?
    
I recently had a phone call from a trade customer who complained that his MOT, that had been collected early morning, did not get delivered back until mid-afternoon. This had caused him untold problems with his customer as it had failed the MOT and he was unable to get the remedial work done by the end of the day. As this was a Friday, it left his customer without a car all weekend as he did not provide courtesy cars. He had not booked a slot, called up in the morning as an extra and we did our best to accommodate him. I told him from the off that we would fit it in when we could. He had the cheek to complain. He is no longer a customer of ours, trade or not.
    
It was natural to panic when faced with the possibility of losing that trade customer and the work that they brought in. What was proved quite quickly was that this was a typical 80/20 scenario; High volume of jobs for a small amount of turnover. It is not just MOTs, the list is endless, ADAS, wheel alignment, DPF and diagnostics; All unique skills.

Niches
At CCM, one of our niches is alloy wheel repairs. The condition of our roads has resulted in a lot of vehicles failing their MOT on buckled or cracked wheels. To carry out this repair requires a unique skill with specific tools and equipment which our technicians have mastered over time, with training and practice. You send your wheel repairs to us and others like us because you do not have the equipment or skill set to carry out that repair yourself. Why should you get that cheaper trade rate?
    
Head skimming and pressure testing; It’s not normal for your average customer to walk in off the street and ask for this. Generally, it is requested by other garages or technicians. The reason being, we have the equipment, tools and skill set to carry this work out. Again, why do you ask for a trade rate?
    
If you need to use the services of a specialist to carry out work that you cannot do yourself, do not expect it to be cheap, do not ask for a trade rate, all you are doing is undervaluing their skills. Very often these garages are on a smaller scale as they specialise in just a small area, should we not be supporting them?
    
Is it not time we all developed some integrity and supported all corners of our industry? We are all here to make a profit. We need to connect with each other and be supporting of each other’s strength.
    
When you pay for a job, you are not only paying for the parts used and the time taken. You are paying for a lifetime of experience and knowledge. You are paying for the assurance and accountability that if something goes wrong, it will be sorted. You are paying for the equipment and tools that continually need updating. Stop under-valuing our trade; We are our own worst enemy.
    
Or, to put it in the form of a quote: “If I do a job in 30 minutes, it’s because I spent 10 years learning how to do that in 30 minutes. You owe me for the years, not the minutes.”    In conclusion, we are in this together.







 

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