CASE STUDY DEPARTMENT BY LES SILVER PARTS PRICE OPTIMIZATION CASE STUDY Uncovering Lost Gross Profit from Warranty Processing B ozard was established in 1949 in St. Augustine Florida and is currently under the third generation of ownership. The dealership is known for having one of the largest Fixed Ops Departments in the country as a brand boasting a team of 27 Service Advisors and 93 Technicians working across 98 fixed service bays and 10 mobile vans. Despite being rurally located, Bozard maintains a loyal customer base. In fact, their reputation for excellent customer service and involvement within the community contributed largely to significant growth within the last 10 years. Their success can be summed up by the culture of their organization which focuses equally on their customers and their teammates. FIXED OPS STATUS PRIOR TO PRICE OPTIMIZATION In the case of Bozard, their rapid growth required operational and strategic changes to be made within their Fixed Ops. Some existing operations were more anti58 quated than the rest of the dealership and they did not always take action to seek the help of external partners when needed. WHY IS PRICE OPTIMIZATION IMPORTANT? Price optimization is the intelligent setting of customer pay labor rate and parts pricing to drive more revenue and gross profit WITHOUT negatively impacting customer retention. The goal is achieving the " perfect price " where customer retention and gross profit are both maximized. When a dealership lacks a strategy for price optimization it impacts their customer pay (CP) business, which in turn impacts the allowed warranty reimbursement rates from the OEM. The reason for this is that the OEM determines warranty reimbursement rates based on the actual dealer performance in the CP area for both labor and parts. This means that there is a " double whammy " for optimizing CP rates as it impacts both CP and warranty.