y for a service department. At $80 per hour, one minute per day per tech is about $2,700 in a year! Did you ever think that one drop from a leaking faucet can fill a swimming pool in a year! You don’t need a calculator to imagine how many dollars are going out the door when you think that just one minute per day for just one tech represents that much potential revenue.

Now if the product that our service departments sells is time and we measure it in minutes let’s see what a typical day might look like. For our hypothetical se

Benjamin Franklin is attributed as the first person who said, “Time is money.” Well, that was over 200 years ago and you know, for Service Managers, it couldn’t be any more true today than it was back then. That is the essence of what Service Managers do everyday. They turn a technician’s time into labor revenue. For a service department to be profitable they have to turn the time paid to technicians into dollars and do it efficiently.

Many dealerships are not paying enough attention to the relationship between time and money. And that one area represents one of the greatest opportunities we have in improving service departmental profits. So let’s see how we can improve this situation and start returning the profits we need and deserve.

We will start at the really basic level. What does a Service Department do to make money? They hire technicians who work on equipment and they charge the customers for doing that. In other words they hire techs and bill out their time one way or another. Sure there can, and should be, other income streams such as outside labor and materials, sublets, shop supplies, vehicles etc, but the basis of any service department is to sell time. They buy time from their employees and the sell it to their customers, and hopefully at a profit.

OK, so now that we all agree that the function of a service department is to sell time can we also agree that the service manager has to manage this resource efficiently so that at the end of the day he produced a profit? We all know that the way we measure time is in years, months, days, hours, minutes, seconds, nanoseconds etc. The most common measurement for service departments is in hours; that is the one we are most accustomed to. We pay technicians by the hour; we have a labor rate by the hour, our reports account for billing hours, etc. But I propose and strongly believe that hours are not the best measurement for managing a service department. A much better way is to manage by minutes and to measure those minutes every day.

We will soon see examples of how minutes can add up to make the difference between making a profit and losing money for a service department. At $80 per hour, one minute per day per tech is about $2,700 in a year! Did you ever think that one drop from a leaking faucet can fill a swimming pool in a year! You don’t need a calculator to imagine how many dollars are going out the door when you think that just one minute per day for just one tech represents that much potential revenue.

Now if the product that our service departments sells is time and we measure it in minutes let’s see what a typical day might look like. For our hypothetical ser

nd that one area represents one of the greatest opportunities we have in improving service departmental profits. So let’s see how we can improve this situation and start returning the profits we need and deserve.

We will start at the really basic level. What does a Service Department do to make money? They hire technicians who work on equipment and they charge the customers for doing that. In other words they hire techs and bill out their time one way or another. Sure there can, and should be, other income streams such as outside labor and materials, sublets, shop supplies, vehicles etc, but the basis of any service department is to sell time. They buy time from their employees and the sell it to their customers, and hopefully at a profit.

OK, so now that we all agree that the function of a service department is to sell time can we also agree that the service manager has to manage this resource efficiently so that at the end of the day he produced a profit? We all know that the way we measure time is in years, months, days, hours, minutes, seconds, nanoseconds etc. The most common measurement for service departments is in hours; that is the one we are most accustomed to. We pay technicians by the hour; we have a labor rate by the hour, our reports account for billing hours, etc. But I propose and strongly believe that hours are not the best measurement for managing a service department. A much better way is to manage by minutes and to measure those minutes every day.

We will soon see examples of how minutes can add up to make the difference between making a profit and losing money for a service department. At $80 per hour, one minute per day per tech is about $2,700 in a year! Did you ever think that one drop from a leaking faucet can fill a swimming pool in a year! You don’t need a calculator to imagine how many dollars are going out the door when you think that just one minute per day for just one tech represents that much potential revenue.

Now if the product that our service departments sells is time and we measure it in minutes let’s see what a typical day might look like. For our hypothetical se

e labor and materials, sublets, shop supplies, vehicles etc, but the basis of any service department is to sell time. They buy time from their employees and the sell it to their customers, and hopefully at a profit.

OK, so now that we all agree that the function of a service department is to sell time can we also agree that the service manager has to manage this resource efficiently so that at the end of the day he produced a profit? We all know that the way we measure time is in years, months, days, hours, minutes, seconds, nanoseconds etc. The most common measurement for service departments is in hours; that is the one we are most accustomed to. We pay technicians by the hour; we have a labor rate by the hour, our reports account for billing hours, etc. But I propose and strongly believe that hours are not the best measurement for managing a service department. A much better way is to manage by minutes and to measure those minutes every day.

We will soon see examples of how minutes can add up to make the difference between making a profit and losing money for a service department. At $80 per hour, one minute per day per tech is about $2,700 in a year! Did you ever think that one drop from a leaking faucet can fill a swimming pool in a year! You don’t need a calculator to imagine how many dollars are going out the door when you think that just one minute per day for just one tech represents that much potential revenue.

Now if the product that our service departments sells is time and we measure it in minutes let’s see what a typical day might look like. For our hypothetical se

conds etc. The most common measurement for service departments is in hours; that is the one we are most accustomed to. We pay technicians by the hour; we have a labor rate by the hour, our reports account for billing hours, etc. But I propose and strongly believe that hours are not the best measurement for managing a service department. A much better way is to manage by minutes and to measure those minutes every day.

We will soon see examples of how minutes can add up to make the difference between making a profit and losing money for a service department. At $80 per hour, one minute per day per tech is about $2,700 in a year! Did you ever think that one drop from a leaking faucet can fill a swimming pool in a year! You don’t need a calculator to imagine how many dollars are going out the door when you think that just one minute per day for just one tech represents that much potential revenue.

Now if the product that our service departments sells is time and we measure it in minutes let’s see what a typical day might look like. For our hypothetical se

y for a service department. At $80 per hour, one minute per day per tech is about $2,700 in a year! Did you ever think that one drop from a leaking faucet can fill a swimming pool in a year! You don’t need a calculator to imagine how many dollars are going out the door when you think that just one minute per day for just one tech represents that much potential revenue.

Now if the product that our service departments sells is time and we measure it in minutes let’s see what a typical day might look like. For our hypothetical service department on a typical day for the sake of simplicity we have 6 technicians working an 8 hour day. Each tech has 8 hours or 480 minutes to work that day and for the service manager to sell that day. Our six techs have a total of 2,880 minutes available that typical day which the service manager can try to sell.

Every morning your service manager starts the day with a fresh inventory of 2,880 minutes and he has to do the best he can to utilize those 2,880 minutes wisely. At the end of that day he has no carry-over of those minutes; the minutes that were not sold are gone forever and he has to start off the next morning with another fresh inventory of 2,880 minutes. His inventory has a shelf like of exactly one day before it goes bad. If you think a meat market has a perishable product just think of what your service manager has. His product is gone every night, never to be sold again. That is why it is so important for him to manage those minutes everyday so that he is not wasting his available inventory of minutes.

Accounting for all those 2,880 minutes for our 6 techs is so important that the success of your whole service department depends on it. The way we measure and how efficiently we bill out those minutes is usually called Revenue Recovery. The percentage of minutes each day that can be charged to revenue jobs compared to the lost minutes to non-revenue is called Revenue Recovery; in other words how many of our available minutes are we charging to paying customers ?

There are service departments who are consistently charging out 90% of the available minutes every day; that means they are achieving a 90% Revenue Recovery. Those managers are watching the details and paying close attention to all their available minutes every day. But there are many service departments far below that number, some as low as 50% Revenue Recovery. Those who have revenue recovery rates less than 85% have opportunities to improve the profitability of their department and in a dramatic way. Here is an example of what it looks like to have a revenue recovery rate from a high of 90% to a low of 50%, knowing we have a total of 2,