I haven’t met anyone who enjoys tracking inventory, but inventory wins when given the option of tracking inventory or losing money.
But that’s just when given a theoretical choice. Most shops I visit do not actually put the choice into practice. Sometimes items will make it on an estimate, but materials like clips, adhesive, and primer are often allocated to “the cost of doing business.”
Fortunately, this expense doesn’t have to be lost. None of the standard estimating systems repair operations include these items, and while sometimes there is pushback, most insurers will reimburse the shop when these items are required as long as they are tracked properly. The MOTORs Guide to Estimating specifically lists ‘Material Cost’ in the estimated work time premise under ‘Not Included’ items. By the way, it’s a pretty long list and well worth a regular review.
Knowing you can get paid for something isn’t the same as actually getting paid for it. It’s often easier not to haggle over a small primed area or a half tube of adhesive. After all, if it’s $30 on a $5,000 repair, it seems too small to sweat. The problem is that we tend not to sweat it every time it comes up. I worked on estimate reviews at the last MSO I was employed. While I rarely saw these items listed, the invoices for these additional materials were about $40,000 for one year at just one location. You see where I’m going with this: Not tracking materials is just as profitable as pulling them from the shelf and dropping them in the trash.
Track Your Materials Inventory
Tracking materials is complicated, though, right? Some systems calculate use, but they’re time-consuming and complex. Others only do entire units, which is rarely the case in actual use. But what if you estimate materials used based on the repair area? Primer is an excellent example as it is not captured in either body or paint materials. It is also around $300 per gallon in some cases, so it is certainly one worth tracking. If you know the repair area size, the amount used for that size will be fairly consistent in most situations. You can then apply this as an estimate line item based on your materials rate.
Let's continue our primer example. At $300 per gallon, primer costs $2.34 per ounce (128 ounces per gallon). If you use 10 ounces of primer to cover a 500-square-centimeter repair area, then $20.34 in primer was used. If your materials rate is $42 an hour, adding an ‘Add for primer, 0.5’ line to your estimate captures that material use. In a very short time, you learn how much material your shop uses on typical jobs, not a calculated average that may or may not apply. This method works equally well on adhesive, caulk, foam, and other not-included materials. Simply note the amount used, measure the area, and bill accordingly.
Itemize Your Billing
But why bother measuring at all? If you know you used 10 ounces, then bill for those 10 ounces and move on to the next repair, right? It goes back to tracking and documenting inventory. If the use of a product is not somehow noted, its billing will not get noted either. Also, some form of documentation is required when trying to get paid for an operation. The product use has to be demonstrated in a meaningful way. Simple measurements do this quickly and effectively.
The Right Tool for the Job
Fortunately, digital measurement and reporting are easier than ever. The Dents.co app does not just measure a damaged area. By completing a normal scan but highlighting the repair area instead of just damage, the Dents.co report gives the area in concrete measurements. Once you determine how much material you use in a given repair area, you can document material use and be paid for it on every repair. Material measurement is just one ability that the Dents.co Damage Appraisal App brings to your shop. Our app measures damaged areas, provides a suggested repair time, and documents the repair with a LiDAR-generated 3D depth map.