Hi, it’s Alex from Progi.
This week, as part of Capacity Month, I wanted to discuss a topic that doesn’t always get enough attention: profit margins vs. the severity level of your repairs.
I’ve noticed something simple—just because a job is big doesn’t necessarily mean it comes with a good margin.
When it comes to capacity planning in collision repair, using a severity grid to manage collision severity is one of the keys to running an efficient shop.
What you’ll notice when you set up your severity grid is that the distribution of job sizes helps smooth out your production flow.
But there’s also a maximum to consider. Even though few people think of it this way, that maximum—like saying “I’ll take on four big (or bigger) jobs per week”—isn’t just about managing your shop’s workload. It’s also about protecting your margins.
Big jobs mean complex jobs. They’re harder to estimate, cause more production interruptions, require support from your most skilled employees to handle the trickiest aspects, demand more coordination with parts and subcontractors, involve more work with replacement vehicles, and carry a greater risk of missing your production targets. Put simply, it’s easier to lose money on a big job.
There’s a magic number: once non-drivable vehicles (large or x-large jobs) exceed 22%, unless the shop is strategically designed in its operations to handle a high volume of large repairs, margins begin to decline.
In winter, hitting that 22% can happen quickly. So, keep that in mind when reviewing your severity grid before the season starts, and find a way to strategically position those big jobs in your production schedule. You also need to know your limits.
If you’re looking for a great tool to plan your shop’s capacity this season and achieve quick wins, I invite you to check out ProgiPlanning.
Article by Alexandre Rocheleau
