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Raising Rates Without Losing Business

7/15/2008 4:27:43 PM

I thought your article on raising rates [“Raising Rates Without Losing Business,” April, pg. 32] was fantastic! I’ve been preaching this for the last year to several shops in my area. But the thing I’ve noticed about society today is that common sense is history. There are too many ignorant people in this world. You can contact all the body shops in Iowa and ask them, “Do you run your shop or does the insurance industry run your shop?” and 99.9 percent of them will tell you they do. And that’s pure Iowa bull right from the feed lots. Start asking the correct questions and you’ll find out that this is true.

This is also true of the people running the state collision repair association. I’ve spoken with the president of the Iowa Collision Repair Association on different occasions and come away thinking, “No wonder we’re in the situation we’re in today!”

My attitude is that this is my business and I’ll run it the way I want to (like a business). When appraisers tell me they need invoices, I tell them to look at the disclaimer on my estimate. It states the only invoice that will be revealed is the final invoice, and that all others are for private internal use only. If an appraiser needs photos, I invite them out to the shop to take some themselves. I don’t have a camera, and furthermore I won’t do a job for someone else. They’re making more money than I am, so let them do their own job. If they need further proof that I’m not billing for parts I didn’t install, I show them the damaged parts and the boxes the new parts came in.

On January 1, 2007, I raised my labor rate by 3.85 percent, which is the first time I raised it in three years. For eight months, I was paid on every claim. Then, a funny thing happened. I received a phone call from the Iowa Farm Bureau and was told it wasn’t going to pay my labor rate anymore. The very next day, I was contacted by State Farm and was told the same thing. By that time, I had received six claims from Farm Bureau and four from State Farm, but now all of a sudden they refuse to pay my labor rate. In these cases, I just pass the bill to the customer. I say let these insurers cut their own throat by getting a track record of not indemnifying their customers.

The funny thing is, they had questioned me when I first raised my rates. I simply explained to them it had been three years since I had received a raise and, with the cost of doing business, the cost of fuel prices, and the cost of living going up, I felt it was time to raise my rates to help offset these increases. They agreed with me and then eight months later refused to pay it. This is a perfect example of refusing the right to exercise free enterprise. Until people look up the definition of common sense and exercise it, things won’t get any better.

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