The Motor Trades Association of Australia (MTAA) Limited and its affiliated organisation, the Australian Motor Body Repairers Association (AMBRA), launched a new cost calculator tool to assist motor body repair businesses transparently identify their costs and a charge out hourly rate for their business. In transparently identifying business costs, the task in determining a viable, sustainable ’shop’ or business rate is improved.
The importance of this calculator is that it provides motor body repair business owners a relatively simple tool (please see link below) to enable the identification of a proper charge rate based on total business costs.
MTAA CEO, Richard Dudley, said the development and provision of the cost calculator tool was an essential element in providing transparent competition in the motor body repair sector and had involved all State and Territory Member Associations and their body repair membership as well as trusted partners and business associates.
The tool, which has been independently analysed by national business advisory and accountancy firm BDO, and examined by the Australian Tax Office (ATO), enables all motor body repair business owners / management to capture all of the costs associated in running their businesses. What this means is that the Calculator has undergone rigorous assessment by these parties and as a tool has been subjected to independent analysis. This is not something that other calculators / tools can attest to.
The tool also includes helpful worksheets for Profit and Loss, Tradespersons costs, and has the added potential of highlighting areas of business operations where further efficiencies can be made and / or improvements to productivity. The MTAA and Members are also investigating ongoing, cost effective arrangements to further validate the use of the calculator and the transparency of data input in the event that body repair members are challenged on the transparency or veracity of their business costs.
AMBRA Chairman, Jeff Williams, said the cost calculator would help motor body repair businesses not only identify their actual costs of doing business, but assist in determining a fair, reasonable and transparent ‘shop’ or business charge out hourly rate that was verifiable, defendable and in accordance with sound business and accounting practice.
Other calculators in the market place MTAA and AMBRA suggest are not necessarily identifying the full costs of a business and tend to capture costs necessary in delivering a pre-determined outcome such as a ‘network’ rate. Other calculators, often invariably do not capture total business costs with some potentially amortized across multiple businesses or sites, or amount of work, or absorbed across significantly higher volumes of work.
This is an important distinction as often professional, transparent independent or preferred supplier motor body repair businesses can experience a constraint on competition or be placed at a competitive disadvantage by trying to match a rate that is derived for a different purpose rather than a rate that reflects actual business costs.
‘Too many motor body repair businesses, who have heavily invested in training, equipment, tooling, and in meeting the demands of a rapidly changing automotive industry, are being forced to accept rates and charges demanded by work providers that simply do not reflect the costs of their business and placing them at a significant disadvantage or even jeopardizing their future’ Mr Williams said.
‘Most work providers to the motor body repair industry have their own calculators or processes that are required to be applied in order to secure work. These tools or processes rarely capture the complete picture and contain elements or parameters designed to produce a pre-determined charge rate outcome. This leads to different motor body repair businesses, with different capabilities or services, differing levels of staff and costs, being subjected to a rate for their services which are not reflective of their actual costs – even though they may have already made significant improvements, generated efficiencies and productivity enhancements to be competitive,’ Mr Williams said
Mr Dudley also highlighted the importance of Federal Government initiatives, particular the ATO and ACCC programs, designed to improve the business acumen of particularly small business.
‘The development of this tool highlights the value of relationships and collaboration by the MTAA and Members with these Departments and Agencies to improve the sustainability and profitability of its business constituents. In particular, the MTAA is grateful for the work of the small business team in the ATO for providing essential feedback and suggestions for improvements to the tool,’ Mr Dudley said.
MTAA also notes the ATO acknowledged ‘The challenge faced by the Smash Repair Industry to influence and control profit margins in a competitive economic environment largely controlled by insurance companies is clear. Accurate calculation of direct and indirect costs places smash repair businesses in a more powerful and informed position to negotiate contracts, prepare quotes and ultimately operate successful businesses.’
- It is important to note that the use of the calculator is voluntary. It is not being forced on body repair business owners / management (unlike other processes demanded by work providers). MTAA, Members, AMBRA, cannot force any product or service on its members. But it has been developed in response to member demands for tools / processes to improve their ability to determine actual costs of their business.
- There should be no collaboration between motor body repair business owners / operators in the use of, or input of data to the Cost Calculator. Any action or activity including comparative discussion etc. could be in potential breach of cartel conduct and other provisions of the Competition and Consumer Act. The Cost Calculator is for individual business use.
- It is important to note that this is a tool designed to provide assistance. It does not replace or curtail the need of a body repair business owner / operator to seek independent financial or accountancy advice. MTAA Members, AMBRA, or their staff should not be place in a position where they give financial advice or input data other than normal information such as superannuation rates, award pay etc.
- If a body repair business owner /operator is unsure on the input data for the Cost Calculator then then should seek advice from their financial adviser or accountant including using the Calculator with them.
To access the MTAA and AMBRA endorsed Shop Hourly Rate Cost Calculator please access the following link
To access user guidelines and checklist for use of the MTAA and AMBRA endorsed Shop Hourly Rate Calculator please access the following link.