Imagine taking your kid to a local restaurant and ordering a spaghetti dinner, pizza and soda for the kiddo, and a nice glass of wine for yourself… and instead of the $32.00 bill, you offer to pay the cost of materials plus 15%. How about grabbing that next pair of jeans, and instead of paying the $21.99 on the tag, you counteroffer with a bid of $13.05? How far do you think you’d get in any legitimately run industry, walking in and announcing that you have decided that from this point forward, you have chosen to pay the merchant’s actual cost plus an arbitrarily-chosen markup of your own whimsy?
Ridiculous, right? And yet, that is exactly the conversation happening in the American body shop industry today. Desk jockeys working for the insurance companies are rejecting the estimates and supplementals provided by certified experts, and in turn, demanding invoices that show the actual cost of materials, and instead of paying retail, paying only cost plus an arbitrary markup.
Isn’t this America? While some may argue that the current political climate has socialism in the forecast, we are STILL a capitalistic society – and as such, there is no room for one entity to tell another exactly how much profit they are allowed to make. And lest you suggest that in fact it’s a good thing to “limit” acceptable levels of markup, let’s go back and take a look at that dinner you enjoyed.
Actual Cost of Production:
Spaghetti & sauce = $1.47
Pizza = $0.32
Soda = $0.04
Wine = $2.91
Markup for this meal is 600%+… and you pay it without a second glance. Why? Because it’s what the free market will bear. Same thing for your jeans, which typically are marked up 113%. If you don’t like the price, you don’t purchase the product. But one thing is for sure – under normal circumstances you don’t get to go in and negotiate your own terms.
So why then, does it seem to make sense to the insurance companies to lock the labor rate for body shops for years at a time, and demand that they will only pay the shop owner’s actual cost plus 20% for the materials used to make repairs? What’s the endgame that they have in mind? Is there a bigger picture at play? We suggest that there is. And in the coming weeks and months, we will tell this story… connecting the dots and quite possibly shed some light on why you – the average American citizen should sit up and take notice.
Make no mistake… you are affected. And we can prove it.
…To be Continued.