The opportunity cost of anything. The customer they should have been serving, rather than wasting time on the other one. The tech they should have hired for more money, rather than the cheapest one they could find.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Sat Mar 29, 2008 7:41 am Post subject:
Bud wrote:
The opportunity cost of anything. The customer they should have been serving, rather than wasting time on the other one. The tech they should have hired for more money, rather than the cheapest one they could find.
Hi Bud,
That is very true, and frankly one I had not considered. I was thinking of another large cost that I don't think many shops truly realize.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Sun Mar 30, 2008 10:41 am Post subject:
Dave wrote:
Louis,
Is this an abstract question or a black and white one?
I do not know, so I must not be accounting for it. Will make a couple guesses.
The cost of waste, anything that is not fully used efficiently. This can be materials, people or time.
The owners costs. In most shops the owner gets what is left over at the end of the month. His “wages” are an expense to the business.
Hi Dave,
I think it's fairly black and white, though it took me about twenty years to fully appreciate it. I think you nailed it, here.
One of the largest cost I know of, in any shop is the cost of lost potential sales; techs standing around without work or underutilized. With a theoretical service rate of $80 per hour and selling about 50/50 parts and service, it cost at least $160.00 per hour, per man, to stand around idle.
I used to think effective marketing was expensive!
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