How Does Workshop Menu Pricing Work?

Workshop menu pricing simplifies the service process by offering predetermined prices for specific jobs. This approach provides transparency to customers and streamlines billing for the service department. This guide explains how menu pricing works and how costs are allocated within the system.

Key Features of Menu Pricing

1. Predefined Pricing:

   • Menu pricing assigns a fixed price for a service, which includes both parts and labour.
   • The price covers all components and tasks required to complete the job.

2. Consistency and Transparency:

   • Customers are provided with clear and consistent pricing for common services, ensuring no unexpected costs.

3. Ease of Use:

   • Staff can quickly select predefined menu-priced jobs, reducing the need for manual pricing calculations.

Cost Allocation Process

1. Invoicing the Job:

   • When a menu-priced job is invoiced, the system records the total price for the service.

2. Cost and Profit Distribution:

   • The accounts department allocates the revenue, costs, and profits associated with the service to the relevant departments.
   • Example: Labour revenue goes to the workshop department, while parts revenue is allocated to the parts department.

3. Journal Entries:

   • The distribution of costs and profits is managed through journal entries in the accounting system.
   • These journals ensure accurate financial reporting and alignment across departments.

Scenarios Where This Process Is Useful

• Offering fixed prices for standard services such as oil changes or brake replacements that includes parts and labour.
• Simplifying the billing process for both customers and staff.
• Ensuring accurate allocation of revenue and costs across workshop and parts departments.

Key Notes

• System Setup: Menu pricing profit split cannot be configured in the system.
• Accurate Journals: Proper journal entries are critical to ensuring correct departmental allocation, these must be done by the accounts department.