One of the collision repair shop's most difficult-to-maintain profit centers is material. Yes, that's right, I said profit center. Many shop owners don't worry too much about making money on material, they just try not to lose money on material. The fact is - like labor and parts - material is a portion of the repair bill where you can and should make money.

However, making money from material has become increasingly difficult. New VOC regulations have driven the cost of paint and clearcoat sky high, and insurers have imposed material caps on estimates. Fortunately, there are many ways to overcome these obstacles and make a profit from your material charges on estimates.

The first thing to establish is what is material? What most often comes to mind is paint, primer, clear and "bondo." Material is much more! Think about all those items that go into a repair that are purchased from your paint supplier or jobber. Masking tape, paper, plastic, solvents and thinners, activators, razor blades, sandpaper, rubbing compound, mixing cans, disposable funnels, spot putty, well, you get the picture. That doesn't even begin to list the things used in the metal shop such as grinding discs, more sandpaper, argon gas, welding wire, adhesive tape and sprays, seam sealers and caulks, rustproofing coatings and more! Once you have discovered all the items that go into the repair, you need to find out how much you typically use.

If you take a look at your average repair bill, you probably don't account for every last scrap of sandpaper or ounce of clearcoat that goes into each vehicle you repair. Understandably so. Most shops aren't huge and don't have the time and resources needed to do in-depth material tracking on each and every job. Not to mention that technicians' time is more valuably spent working than bean counting.

So choose a typical front-end collision that is approximately the same amount as your average ticket, and track that one job. Have the techs keep a "tick sheet" of sandpaper and other materials used and an approximate amount of canned or liquid materials used. For instance, the list might include three sheets of 36 grit stickit sandpaper, one grinding disc and about a sixth of a tube of seam sealer. Do the same in the paint department and use your mixing system's costing functions if it has them. Now find invoices from your suppliers for the materials used and find out how much the material cost you. Then you'll know how much you're making on an average job. A good margin is between 40 percent and 25 percent.

Now that you've established what materials are and how much you spend on an average repair, you can see if you need to improve your material margin. There are two major steps to reducing what you pay for materials, thus increasing your margin: slimming product lines and cost comparisons.

The first step is to slim your product lines. Why buy two (or more) kinds of something if one will do? Look at the shelves and cabinets in your shop and make lists of the materials stored there. Then group them together in categories like "sandpapers" and "polishes and compounds." If you're buying stickit and dryback sandpaper in 36, 50 and 80 grits, you may be buying too many varieties of sandpaper! You need to confer with your technicians and decide what products you can cut out from your supply list. Our shop went from stocking nearly 20 different polishes and compounds to five or six, and from having an entire cabinet full of sandpapers in the metal shop to only one shelf. Reducing the varieties of what you buy reduces the overall amount you buy.

The next step is doing cost comparisons. Take your newly revised supply list and fax it to your current supplier(s) and several other competitive suppliers you may not already be using. Have them fax back quotes for you on the exact items you have on your list. For example, if you use 3M Greencorps 36 grit Roloc discs in the 25-count box, make sure each supplier quotes you exactly that; not a different brand, grit or quantity. This means you'll be able to compare apples to apples and see which supplier will give you the better deal on what.

Depending on your local trading environment, you may be better off to buy some things from one vendor and others from a different vendor, or simply see which one vendor gives the best overall deal. (Just add up all the items on your supply list from each vendor and you'll know which offers the best deal.) Don't be afraid to bargain with suppliers for discounts or other incentives. If you can offer a supplier a great deal of volume sales, they will be more likely to reduce the prices they charge you. If a technician is responsible for ordering supplies, make him or her a list of what to buy and from whom to buy it. Check through your invoices to make sure the purchases are being done correctly. Our shop's simple rule is this: If something is purchased from the wrong vendor or is not a product we are supposed to stock, we send it back for credit.

Finally, every shop should consider waste. Technicians who are wasteful with supplies will ruin any chance for profit. Your shop's managers should take note of any wasteful practices and make every attempt to correct them. It is also a good idea to stock supplies in a single area so they can be easily tracked, and you can avoid putting too much on the shelf at any time. The appearance of a never-ending supply of a product does not encourage thriftiness with its use.

Another item for consideration is installing a paint mixing system if you don't already have one. Most good paint suppliers will set it up at no initial cost to you and will sell the paint on an as-you-use-it basis. Mixing paint in-house will allow you to make only the quantity needed for a particular job, no more and no less, also further reducing waste. Creating and enforcing rules about keeping the shop clean and neat, particularly the paint department, will also curb wastefulness.

So long as shops are compensated for materials based on an estimating paradigm that uses an arbitrary calculation, such as refinish hours times a flat rate, making money on material will be a matter of controlling costs. By using the methods outlined here and good common sense, your shop can be well on its way to making material a strong profit center. After all, making money is part of what business is all about!

Patrick M. Paul is the office manager at Mell Paul's Body Shop, an ASA member in Norcross, Ga. He holds a degree in management and is an ASE-certified estimator.

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