In one of our most requested webinar topics, Chuck Hartle, founder of PartsEdge, dove deep into pricing strategy, breaking down what dealerships can do to increase gross profit without scaring off customers. Whether you're a seasoned Parts Manager or new to pricing strategy, there are key takeaways here you won’t want to miss.
With recent manufacturer changes—like return allowance reductions and shrinking margins—dealerships can’t afford to “set it and forget it” when it comes to pricing. Staying profitable now requires a proactive approach to pricing, especially for customer pay repair orders.
Evaluation:
Understand where your department currently stands. That 38% gross profit number? It’s just the start. Dig into what’s actually driving that figure.
Investigation:
Analyze real data from your DMS. Use Excel to pull your entire inventory pad (with cost and list price) and calculate gross margins. You’ll start seeing trends—where you’re strong, where you're weak, and what’s bringing your numbers down.
Review:
Look at what percentage of your sales are being influenced by your matrix strategy vs. menu pricing. Spoiler alert: It’s likely only 10–15% of your CP sales are even being matrixed.
Kickoff & Adjust:
Roll out small adjustments. Review reports monthly. And remember: pricing is never set in stone—you can tweak it as needed.
One of the most common requests Chuck hears is, “I heard someone in my 20 group is getting 42%—can you tweak my matrix to get there?” But it’s not that simple. Most dealerships are only matrixing a small portion of their sales, and you can’t move the needle meaningfully if you're only affecting 10% of your revenue.
Instead, the biggest opportunity is in menu-priced items. Cost increases from manufacturers have outpaced sale price updates, shrinking your margins. Small tweaks—$2 here, $5 there—can make a major impact.
"If your gas supplier raised your cost by 10 cents, would you eat it? Or would you raise your pump price?"
Here’s what you should be tracking:
Customer Pay Sales Report (60–90 days)
Break it down by part number, sort by gross profit, and identify low-margin items that need adjustment.
Matrix Usage Reports
If you’ve implemented a pricing matrix, track how often it’s actually being used. In one dealership Chuck worked with, their matrix only applied to 41 out of 3,400+ part sales—because it was overridden by settings on the service side.
Sales Override Report
Are advisors constantly using "S=" to manually adjust prices? That’s a red flag your pricing strategy isn’t aligned with reality.
Chuck shared a memorable story: by gradually increasing each pricing category by just 2%, and checking monthly to see if anyone complained (they didn’t), he brought gross profit from 39% to 42%—without pushback. That’s the power of incremental improvements.
✅ Review your pricing strategies monthly
✅ Focus more on menu pricing updates, not just your matrix
✅ Get buy-in from your team—parts and service must work together
✅ Don’t underestimate the power of simple tweaks
Watch the recording here: https://www.partsedge.com/webinars
The PartsEdge team works with hundreds of dealerships every day to improve inventory health and profitability. Have a question or need a second set of eyes? Email us or schedule a call today.