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Servicing vs. Appliance sales. I may have found an answer.

Lorainfurniture

Entry posted by Lorainfurniture

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Gross appliance repair YTD $12k profit = ?

Store gross YTD roughly $86k. =22.5 profit

So I think I have come to a conclusion.   I really, really love doing COD service work.  Its not very intense, And average profit per call is around $200.  If I could do 4-5 of those a day, Im making some serious money.   The problem is: not enough lucrative COD work.  My observations while reading this site is the fact that most of you would like to increase your COD workload, as in you are not working a full schedule.  You end up doing warranty work for some scum bag insurance, or factory warranty work for $75 per completed call.   You fall in to the trap of thee cheap calls being fed to you, and well, the end.  

 

The store can wind up the same way.  I could get used to selling shit machines that are dirty for $150/ with a 30 day warranty.  I would just be another hillbilly selling junk.  But I digress.  

 

When I fix a washer in my store, I essentially made $150.  I just didn't collect the cash yet.   When I'm in my groove, I can fix north of 15 appliances in one day.  That means I can essentially make over $2k / day as a shop owner.  Now that tax season started, they are starting to fly off the shelves. 

Owning a store is a real pain in the ass, but it pays accordingly.  

 

My conclusion is this.  *If, you can keep yourself moderately busy doing COD work,  Servicing can be a decent living.  For me, I currently gross about $6k/ month. Lets say I run a tight ship and 2/3rds of that goes in my pocket.  That works out to about a thousand bucks a week clean money, or about $50k/ year.  Not really enough for me.  

If I was doing 5 COD calls a day, 5 days a week, at roughly 150 profit each, thats 3750/ week - 1/3= $2475/ week, $128k/ year.  ( this is goooooood money)  

PLEASE can anyone share with me roughly what you make in a month/ year/ day?  Im just trying to get some perspective. 

The store makes about 40-50k per month.  Without blowing up my calculator, I can say that generally speaking my take home is about 20%.  Being conservative, I take home about 8 grand a month. There are some months I only pull in 30k, and my profit margin goes in the toilet.  See, my labor is basically a fixed cost, insurance, etc.  I need $2k a week to cover payroll, whether I sell anything or not.  So at 30k per month, my net profit is not 20%, actually might be only 10.  After 30k, most of the money is mine.  

 

So ultimately, we are in the same business.  

 

Sorry if this blog is all over the place, I have been working 7 days a week for the last 2 months (tax season), and its late.   If anyone has a topic they would like me to write about, let me know. 

 

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  • Team Samurai
Samurai Appliance Repair Man

Samurai Appliance Repair Man

Posted

  • Team Samurai

Good breakdown, Eugene. I think you came to the right conclusion: keeping the schedule full is the key to making a good living as a servicer. The way to do this is to increase market share.

At the ASTIs, I've met guys from all over the country, all different type of areas where they started as a one-man show and then gained market share, adding techs as they grew. In some cases, dramatically. One guy I met at an ASTI just three years ago who was a one man show. When I talked to him at the recent ASTI, he was running 10 techs. Now that's a market share increase! He has a whole different set of problems like managing millennial techs (and, of course, figuring out how to spend all that money he's making). 

One qualifier I would add is keeping your schedule filled with the right kind of service calls. Warranty jobs are a money loser BUT (and it's a big one) it comes with a back-end payoff. In the case I mentioned above, he runs warranty calls for almost all the manufacturers. But his techs have access to tech line (important if your techs are new or aren't trained well) and he gets the COD referrals that he pays nothing for in advertising. 

This works if you're running multiple techs who need the hand-holding of a tech line (and to keep your tech's schedules filled). Doesn't work that well if you're a one-man show because you don't have the economy-of-scale to make the numbers work for you. 

The keys to making money as a one-man show are 1) be a shit-hot tech who doesn't need a tech line to troubleshoot problems and 2) go after the high-end COD market with very selective warranty contracts (eg., Sub-Zero, Bosch, Dacor, etc.). Avoid running warranty calls for any home insurance or appliance mill brands (eg., Whirlpool, Electrolux, etc.). 

We also try to avoid running service calls on appliances that we know the customer probably won't pay to have repaired because either 1) the likely repair will be close to the replacement cost or 2) there's a perception problem ("seems simple" to the customer or it's something they really could do themselves with a little help from Youtube). Examples: microwaves, dryers, most top load washers, lower-end dishwashers. Instead, we focus on higher-end appliances, especially refrigeration appliances (single most profitable appliance to repair), cooking appliances, higher-end dishwashers, and front load washers.  This reduces the number of service call-only jobs to almost nothing and raises the job average well above $200. But it also means that you'll need to expand your service area (more windshield time) and target market share if you want to keep your schedule full. 

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mikeyjd

mikeyjd

Posted (edited)

We're currently doing $30-65k per month sales at about 20-40% margins, after factoring for salary for my wife and I. I have some amazing suppliers who shall remain nameless on the scratch & dent side that I'm able to do 50-60% before factoring fixed costs. We only dabble in COD work as I prefer to have my employees producing thousands of dollars in value daily vs hundreds. I think controlling the variables on the repair side and ensuring customer satisfaction while still making money on each transaction is significantly easier if the work is being done in shop. I've started offering to allow more people to bring their machine in for a waved service call fee in order to manage productivity more effectively. 

 

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Edited by mikeyjd
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