Has The Value Of Quality Died? - A Look At The Impact Of Discount Marketing On The Classic Car And Muscle Car Industry

by Andrea L. Algar
Motorheads Performance

In this age, where "discount-focused" marketing tools such as GroupOn, Living Social, and deal of the day sites allow retailers to attract new customers with reduced prices on products and services, we wonder how this has affected the classic car auto industry and shops that provide repairs, performance upgrades and restoration services for muscle cars, hot rods, classic cars and old trucks.

Many of us have become hardwired to look at paying less than full price. The new status symbol has shifted from talking about "what great quality/service I received" to bragging about "how much I saved". Many who would typically be quite satisfied with the service or the product they received at the establishments full price are now attempting to bargain or talk down a business. This is great with businesses that have a set markup on their goods or services, but impractical and impossible for business like those that cater to the classic car or muscle car market.

Why? Guy Algar explains, "When dealing with services provided from an auto repair shop, restoration shop, or paint and body shop, you need to understand that they've generally got a lot of overhead and a huge labor cost. These eat away at thin profit margins. Shops typically bill by the hour, as opposed to having a flat fee that is padded to include a profit. Unless the shop is also in the business of 'flipping' a car, there isn't room to make extravagant profits on the jobs." And, there is usually quite a bit of expense hidden in the time involved behind the scenes. Difficulty finding rare parts, time spent on the phone with vendors who have a back ordered item, missing deliveries, damaged shipments and other problems occur on a regular basis.

I know of a fellow shop owner who had a customer who demanded a discount after the job was finished, even though prices were discussed and agreed upon at the start. There were no hardships presented, no dissatisfaction with the work, just an explanation that, "the economy is bad and everyone is offering discounts." Asking a repair shop to discount your job after they've already put 20, 50 or 100 hours (or however many spent) into your job, having already paid their employees, bought their supplies, paid their overhead bills such as rent, utilities, etc., means that they are no longer in a position to discount. Negotiations are only fair if done up-front when the shop owner and customer both have a chance to make informed decisions and choices.

In these economic hard times, prices of nearly everything a shop purchases has gone up. From shop towels and hand cleaners to garage owners insurance, Workman's Compensation coverage, health insurance, mandated safety equipment, and supplies such as paints, tools, sandpaper, blast materials to electricity, hazardous waste disposal, phones and other expenses. We've seen the cost of paint alone double in recent years.

The big driving factor in classic car repair is that there simply isn't the ability to increase the numbers in order to absorb the cost of discounting. You can only do so many repairs in a given time period. A ten hour job will still take ten hours of labor you must pay for, whether you charge $60 per hour or $120. This is what makes coupon deals impractical and ill-advised for repair shops that provide specialized work. The only way to absorb excessively low discounts is to cut corners, and I'm sure no one wants this to happen.

So what can you do if you need to negotiate a lower price? Sometimes bad things happen after you've already contracted to have work done. You may have lost your job, had a child, got married or had another life event that now prohibits you from spending the type of money you made an obligation on. We encourage you to act quickly and offer the shop alternatives you would be able to follow through on. Here are some things to consider:

• Enter negotiations before you start business or as soon as possible if your economic situation has changed (i.e. you've lost your job, etc)
• Talk with the business owner or manager (talk only to those who can make the decisions)
• Be clear on what you're trying to accomplish (save money, faster delivery, etc)
• What can you offer in exchange for your request (is a barter or trade possible?)
• Invent options so that both sides "win"
• Be prepared to give and take
• Remember you are asking for consideration (don't insult by inventing problems to support your cause or ask for unrealistic things)

I love what blogger James Bucki advised, "Know the difference between what you need and what you want." This is an important thing to keep sight of, and one that most people forget in the heat of negotiations.

RESOURCES FOR MORE INFORMATION:
About.com - Contract Negotiation Strategies
Business News Daily - Deal or No Deal: Are Coupons Good For Business
Business News Daily - Groupon Effective For Creating Local Brand Awareness, Study Finds
MoneyCrashers.com - 11 Effective Negiotiation Strategies & Tactics
Top Ten Reviews - Daily Steals 2012 - Deal of the Day Site
Vistage.com - Six Successful Strategies for Negotiation

ABOUT THE AUTHOR: Andrea L. Algar is co-owner of a classic car performance and restoration design shop in Leesville, Texas. Motorheads Performance specializes in repairs, maintenance, performance upgrades and restorative work on cars and trucks from the 1920’s through 1970’s. Her husband Guy L. Algar is a Mechanical Engineer with over 25 years experience. He holds 5 ASE Certifications from the National Institute for Automotive Service Excellence and has been working on old cars and trucks for over 37 years. Together they share their passion for old cars and trucks with other enthusiasts from around the country.