5 Factors That Affect Profitability for Mechanical Workshops

28 Jun 2022 Helpful Tips


Profit. It’s the most important word in business. Without profit you can’t operate. As a Workshop owner your number one priority is to reduce costs and increase profitability. There are many factors that affect profitability for Mechanical Workshops, from supply costs to overheads, it is important you stay focused if you want to be profitable.

Here are 5 Factors that Affect Profitability for Mechanical Workshops in 2022.

1. Part Costs

Part costs are one of the largest expenses for all mechanical workshops. To put it simply, the price that your Workshop sources parts for will determine if you generate a profit or not. As a Workshop owner it is important you understand the prices you are sourcing parts for and the prices you are selling them for.

This is where it gets a little bit tricky! Many Workshops remain loyal to their regular supplier and just pass on costs when rises are given. The problem with this is it affects your customer and limits your profit. If your Workshop isn’t providing competitive part prices, customers will go elsewhere, it’s that simple.

To minimise your Part Costs price, it is important to shop around. Talk to your supplier and see what the best price they can give you, if they can’t offer you something better, go to a supplier who will. One of the best things about the Australian automotive market is there is an abundance of suppliers available, and they are all fighting for your business. The cheaper you can source parts, the more profit you will generate.

Related Article: 5 Tips To Get Better Parts Prices.

2. Mechanic Efficiency

Believe it or not your mechanics play a huge role in determining whether your Workshop is profitable or not. Think about it, the more time your mechanics need to complete a job, the more you need to pay them.

To increase profitability, it is important your mechanics are working as efficiently as possible. You need to implement systems and processes that allow them to complete a customer’s job in the timeframe provided. Your mechanic efficiency is a huge factor in determining whether your Workshop is profitable or not.

Related Article: The Most Time-Consuming Tasks for Mechanics in 2022.

3. Customer Service

Customer Service is a key factor in generating a profit. The better your customer service is, the more likely customers will be to return to your Workshop. Customer service is a massive factor in profitability, you may not realise it until its too late.

The ultimate goal for all Mechanical Workshops is to get customers to return, and to do that you need to offer a customer experience that is second to none. Look out for your customers, ensure you are doing everything you promised, complete the job on time and give them something that they cannot receive elsewhere. The better your shops customer service is, the more profitable you will be.

Related Article: The Best Strategies to Improve Customer Service at your Workshop in 2022.

4. Booking Process

The booking process your Workshop uses can and will determine how profitable you are. To maximise profit, your Workshop needs to offer customers a fast, easy, and accessible booking method. If your Workshop only offers bookings either over the phone or email, you are losing money!

The best way to increase profitability is to implement an online booking process. Using a Workshop Website, customers can place their booking request online, at a time that suits them best. The benefit of having an online offering is you don’t need to have a mechanic by the phone taking and confirming bookings. Additionally, this helps create a better experience for customers as you no longer require them to call or email to make a request. The easier your booking process is the more customers you will get.

Related Article: What Customers Look for on a Workshop Website.

5. Suppliers

Your Suppliers also play a massive role in determining whether your Workshop is profitable or not. We already spoke about the supplier prices above, but another more important factor you need to consider when it comes to suppliers is reliability.

Your Workshop needs to ensure that your suppliers are being as reliable as possible. Your suppliers need to get parts to your Workshop as fast and as often as possible because at the end of the day you don’t want to make a customer wait. If you make a customer wait, you run the risk of them going to another workshop who can provide a quicker turnaround. Before you decide on a particular supplier make sure you speak to them about turnaround times, remember, reliability is just as important as price.

Final Word,

There’s a lot more to profitability then charging customers more than your costs. To increase and maintain profit, your Workshop needs to watch key areas closely. The 5 factors mentioned above will play a massive role in determining whether your Workshop is profitable or not.

We hope you enjoyed reading this article. To read more articles like this, please visit the Workshop Mate latest news page here.

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