4 Keys to Ensuring an ROI on Equipment Purchases
Forming a digital culture at your shop isn’t easy—to be blunt, Donny Seyfer puts it this way:
“You have to babysit [employees],” says the operations manager of Seyfer Automotive. “I try to make things as easy for them to use as possible.”
To elaborate a bit: When you’re looking to purchase new equipment, introduce a new tool to your operation, or form a brand new process around a piece of technology, you need to ensure that the equipment is right for your team and their expertise. It’s a top-down system that ends with everyone working in conjunction, but starts with you, as the owner, determining if an ROI is even feasible in the first place.So before you even budget for specific tools, you’ll need to outline whether the equipment has a place in your operation.
To showcase what he means, Seyfer, who is also the executive officer at the National Automotive Service Task Force (NASTF), paints this picture. Say you want to make a heavy investment in OE factory scan tools (which, for the record, Seyfer thinks you should be doing). Determining the ROI on scan tools (or any tool or equipment for that matter) requires several levels of evaluation:
Level 1: The Macro Overview
Seyfer says there’s a common perception that OEM factory scan tools are very expensive. And while the cost may hover above third-party options, he says that price has steadily gone down in recent years, especially for American makes. While a Mercedes scan tool is still a heavy investment for shops, an ROI for a Toyota scan tool, for example, can easily be achieved based on your shop’s target vehicle demographics.
Essentially, don’t rely on perception—Seyfer says you should take the time to study the equipment and determine if, at a base level, it is in your shop’s price range.
Level 2: Your Vehicle Demographics
After that macro overview, it’s time to shrink things down to your shop specifically. In this case, if you’re between a Nissan and a Toyota scan tool, what does your typical job look like? If your shop’s work mix features 15 percent Toyotas, and 25 percent Nissans, Nissan then seems like the obvious choice.
But if you’ve properly researched the base and subscription costs for both scan tools, you’ll note some nuance. The Toyota scan tool costs $55 for a two-day subscription. Even if your work mix is 5 percent Toyota, Seyfer says that’s a pretty sound investment, as that $55 can be made up with one job. After adding up the base and subscription costs, you can price your labor pricing for using that equipment accordingly, and plan to make that investment up within the year.
The cost of a Nissan scan tool, on the other hand, dwarfs the Toyota scan tool, and requires a much more intricate look at the ARO on your Nissan work and whether that covers the base cost and subscription.
Level 3: Your Team
Who is going to be using the equipment? At Seyfer’s shop, his technicians are 21, 22 and 52 years old, meaning the learning curve differs with each employee. Knowing your team’s capabilities allows you to understand what tools you can put to use right away, and which tools require the least amount of training and coaching.
Level 4: Your Resources
Maybe you obtain enough Nissan work to warrant purchasing the scan tool, but you don’t have any technicians that can use the tool and you don’t want to invest in training. Seyfer says there are still options, such as area collision shops you can partner with, or mobile technicians that perform reprogramming for multiple shops. Consider your resources when determining the ROI as well.