The Truth About Labor Rates

Everyday I am confronted by people across the counter from me complaining about the cost of labor at my shop. Either they think that my hourly rate is too high or that the charge for a particular job is too high based on the hourly flat rate system that we use. Before you complain, think about what your getting for your money.

First, let's look at hour shop labor rates. Presently my shop rate is $68 per hour. My shop is not the cheapest in town, nor is it the highest. I set the rate by radomly selecting ten area shops and finding what they charge per hour, then I take an average. I include dealerships, national chain stores and other independent shops. The $68 per hour does not go into my pocket, however, as some people seem to think. The technician who performs the work gets a percentage commission, that's how he makes a living. The rest pays for rent, equipment, insurance, utilities, supplies and other salaries. When compared with what other professions, such as lawyers, plumbers, electricians, etc., charge I think that's a bargain. After all, we have thousands of dollars, make that tens of thousands, invested in tools, training and equipment. Remember that the technicians buy their own tools, some costing hundreds of dollars out of their own pockets.

Now let's look at how the labor for a particular job is calculated. Some jobs, like alignments, brakes and maintenance work are charged at a flat rate for the work performed. This is usually based on what the competition charges. For instance, suspension alignments are $45.95 at my shop. Most shops in the area charge between $29.95 and $59.95. If you were to look up what the labor guides call for as far as time to perform this service you would see times from 1 hour to over 2 hours. That means an alignment would cost between $68 to over a hundred dollars, far more than the average and what the market would bear. And considering that a basic alignment machine can easily cost over $10,000 you can see that a lot of alignments have to be performed before the shop can even pay for the cost of equipment.

Speaking of labor guides and times let's look at that next. When a job needs to be performed, like changing a water pump for example, most technicians will consult a labor time guide to see how much time the job should take and then charge accordingly. Why not charge a flate rate for such work? Because as you no all cars are different. On some cars the water pump may be able to be changed in a half hour. Other cars it may take much more. So it is standard to charge more for the more difficult time consuming jobs. This is also where many uneducated people have a problem with the labor charged. They think that if a job calls for three hours and the tech performs it in 2 and a half hours that you are "ripping them off". Not so. After all, if the tech took 4 hours you would still pay for only the three hours worth of labor. Remember that you are paying a skilled professional with all the tools it takes to repair your car. He may have done this same job many times and can complete it faster. The people who complain about this situation are generally those who will complain if the tech seems to be taking too long.

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