Profit Margin

Discussion in 'Detailing Bliss Lounge' started by 05audi, May 21, 2011.

  1. 05audi

    05audi Virgin Detailer

    Just looking through most of the posts in the show and shine section, a lot of the chemicals being used are fairly expensive. Have any of you guys calculated approximately how much it costs you per car?
  2. Kilo6_one

    Kilo6_one DB Forum Supporter

    less then 20.00 maybe
  3. 911Fanatic

    911Fanatic DB Pro Supporter

    Your cost for supplies should run between 5 and 10% with the exception of a high end wax as your LSP. Most products are bought in gallons and diluted down so the cost per application is actually very small. On a $200 detail that allows for product costs of $10-$20.
  4. Kilo6_one

    Kilo6_one DB Forum Supporter

    man, I was guessing LOL.
  5. Grouse

    Grouse DB Forum Supporter

    For the first year i ran an excel spreadsheet of all my products, my cost to buy them, how many times i used them till they were gone per bottle, box, case. tube. pad ect.

    I tracked that against my prices.

    The first twelve cars I bought specific detailing stuff for 12 and 16 oz. average cost was about 100 bucks per car, I simply used to much. 2nd batch of products Was gallon sizes. Combine that with my new frugal useage and my cost dropped down to around 25 dollars. Moving forward over the years i have it down to about 9-14 bucks per car, truck, suv.

    That is where many detailers leave it. Particularly mobile guys. You need to think in larger pictures. We have Lisc (state county city) we have vehicle ins, we have general, we have garage keepers, We have gas, we have set up time and back office time.

    As i measured those out starting in year 2 -5 my costs were pretty constant. For me to schedule a new client, show up, talk the talk and start work. My cost was 125$ for just arriving. I was already in the hole before i started work. My sales pitch rose to that level accordingly. That is one reason among many why i went to referral only. By the time i finished a 1.5-2.5 hour wash I would have at least covered that 125 dollar cost if not started to make a profit.

    This one reason why i am a big proponent of hourly rates. It allows you as a business man to track your costs against hours worked (those on vehicle) and hours spent (those on vehicle + office, bills, forums, phone)
  6. Bunky

    Bunky DB Forum Supporter

    For mobile guys in trucks, gas has to be the single biggest expense. It must cost at least $5 to $10 in gas per job.
  7. Auto Concierge

    Auto Concierge DB Pro Supporter

    There you go, the detailing industry is the only automotive entity I know of where the charges are usually not based upon "time spent" like it should be. If you take your car to a dealership for repair/maintenance that job task is assigned "Booktime" and in some cases the jobs are "Canned jobs" such as L.O.F or a brake job including parts and labor.

    Those jobs are still based upon on industry averages and the tech in most cases is "Flatrated" where he/she is given a specific time to accomplish the job task assigned so the shop maintaines "Productivity" levels of 100% - 200%, if not there WILL be a problem.

    Many times I will see someone post "What should I charge?", and of course there will be regional pricing differentials but that should not change the fact that you have to establish first your costs per job taking into account everything you do, and then maintaining a 35-40% minimum gross profit margin if not the business will be unsustainable(Spending more than you take the U.S Government lol).
  8. Kilo6_one

    Kilo6_one DB Forum Supporter

    ^^^ I agree, people need to be retrained in their mindset when it comes to Auto Detailing, they are so used to a "package price" which ends up resulting in people working for far less then what the work is worth. I have basic washes etc, but they are based on hourly and "custom work" like correction or metal polishing is "per hour" or based on. Makes sense and it works.

    even if you charge 15.00 an hour, its easier to explain to someone that "i charge hourly, this job will take me 8 hours" if it takes less then awesome, if not then you are loosing money. So if you do decide to charge on an hourly basis make sure you allow for overages. Your hourly should include labor and materials factored into it.
  9. aml5578

    aml5578 Any Rag Vehicle Washer

    This is good stuff. Thanks guys
  10. togwt

    togwt Nuba Guru

    Setting a Price
    This should be fairly simple, materials used plus, a percentage % of (b) items 1 -6, plus Labour costs, plus profit margin

    Any cost that is incurred by carrying out business
    a) Materials used (car care products) + expendables (i.e. micro fibre towels, latex gloves, etc) + depreciation on tools (machine polisher, pads, vacuum, power washer, etc)

    b) Overhead Costs
    1. Tools (to cover depreciation / Breakage)
    2. Water
    3. Electricity
    4. Rent or Lease
    5. Insurance, business licence, etc
    6. Marketing

    c) Labour
    Estimated time x expected hourly rate

    To estimate labour wage cost it’s important to include paid holidays, vacation pay, Worker's Compensation Board (WCB) (both calculated on gross pay) a matching employees pension plan (PP) contribution and pay 1.4X what our employees contribute to employee insurance (EI).

    As a general number for actual labour costs multiply hourly rate 1.35 (not including benefits). At a minimum wage of $10.25 per hour that equals $13.87 per hour. Your labour costs should never exceed 30-35% of your total costs so you need to include 3.3x labour costs included in sales to cover all your costs plus profit. This equates to approx $42-$45 an hour for a minimum wage employee. (Check these figures as they vary by state)

    d) Profit Margin
    Percentage profit that you expect to make on sales
  11. WashingJosh

    WashingJosh Jedi Nuba

    For the exact reason of profit margin, I have been trying to find products that have multiple uses and buy bulk on products to save money,
    It's more upfront cost for the bulk supplies but lowers the per use value.

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