5 minute read
Getting Shorted on Paint, Materials ��������������
An auto body shop manager told me he has a recurring nightmare where he is standing in his shop and watching money fly out the door. He keeps reaching out to grab the cash, but it keeps slipping through his fingers.
You don’t need to go to a fortune teller to decipher the meaning of that nightmare. The flying money represents all of the dollars spent on paint and materials, and his inability to catch any of it means he can’t get reimbursed and is losing revenue— not to mention sleep.
One man was tired of hearing about his paint customers waking up in the middle of the night from losing money on paint and materials, so he developed a solution.
Mick Fetter, a former painter, created the MicroMix Material Estimating System more than 15 years ago to produce an itemized estimate of the paint and materials typically used on a collision repair. Unlike many other methods, MicroMix provides an estimate profile specific to each shop and includes every aspect of every refinish and blend operation.
Fetter has seen shops reimbursements being shorted on paint and materials by their insurance “partners” for many years, as his career went from being a painter to working for a paint distributor. Tired of being beaten up by his customers for rising paint costs, Fetter began thinking about a new system designed from a painter’s perspective.
He started the business in 1994, when he called it BodyShopOffice, as a “A Body Shop Management Tool that Any Shop Can Afford and No Shop Can Afford to Be Without!” The focus was originally on paint and material purchases and usage efficiency, as well as other aspects of managing a collision repair shop, but shifted to paint and material reimbursements.
Every career refinisher remembers the first car they painted, and Fetter is surely no exception.
“I was in my late teens to early 20s and I painted my 1966 Pontiac LeMans,” he said. “I went from being a hobbyist to a professional refinisher after a few years and never considered doing anything else.
“Due to a severe car accident, I needed to get out of the shop, so I got hired as a jobber rep,” he said. “I had a large territory and visited 20-30 shops every month. In 1992, I bought my first computer to furnish my customers with purchase reports, usage reports and inventories. Ultimately that move into computers led to the development of several programs used in body shops, including the Paint and Material Calculator.”
With more than four decades in the paint game, Fetter has seen the industry change dramatically—in some good ways and some bad.
“Years ago, body shop people began asking to get paid for all of the so-called ‘little’ things associated with every repair,” he said. “For a long time, shops have used a ‘dollars x hours’ methodology for compensation on paint and materials. Though it was far from being a perfect system, it seemed to work just fine for a while, and then skyrocketing prices for paint and materials triggered by inflation broke the system.”
In 2005, when oil prices spiked, the collision repair industry began devising new ways to measure and categorize things they were not getting reimbursed for by the insurance companies.
“Back then, insurers had no problems telling shops that they should eat these expenses as the cost of doing business and just move on,” Fetter said. “That’s when we started seeing a bunch of new systems hitting the industry—an evolution that every insurance company wasn’t pleased with for obvious reasons.
“Now, let’s fast forward to the present; with inflation that’s out of control, we’re seeing double-digit increases on paint and materials across the board,” Fetter said. “We all know that’s the case, but are the insurance companies stepping up to help out on these expenses? Not hardly. Material calculating systems are more prevalent than ever, and polls tell us more than half of all the body shops in the U.S. are currently using some form of itemized invoicing for paint and materials.”
Some states are even passing legislation that mandates insurers must honor the results of itemized estimating systems, Fetter said.
“In Rhode Island, for example, Mitchell RMC, PMC Logic and MicroMix Material Calculator are mentioned specifically in the legislation,” he said. “This is the first
state to mandate that a body shop can mark up its by numbers 25%, and hopefully many more will follow.”
The so-called “material door rate” that drives the “dollars x hours” methodology needs to be retired, Fetter said.
“One of the main problems with this methodology is the fact that the equation varies from market to market,” he said. “In New York, for example, the insurance company will pay a higher door rate for paint and materials than, say, another state in the Midwest. It doesn’t make sense because the cost of paint and materials is the same regardless of which market you’re in.
“The dollars part of the equation should be used strictly for measuring performance in material sales and material usage efficiency, and not as a multiplier to determine compensation,” Fetter said. “For many years, body shops have endured annual or bi-annual cost increases with lagging compensation increases. As a rule, the paint manufacturers will increase their prices, but the insurance companies customarily drag their feet when it comes to passing these rates on for reimbursement.”
Ease-of-use and time savings are the main benefits of using the MicroMix Material Calculator.
“We use data from all of the major auto refinish paint compa-
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