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Posted

Hi Spencer, I'm in the Richmond/Rosenberg area here in Texas. Our labor rate is at 78 an hour. I strongly feel that labor rate highly depends on the area of town that you are in and how much overhead you have. 

Posted

We are in Covington LA, about 35 miles north of New Orleans, LA. Our labor rate is $112. Have been $112 for 2 years and have been thinking about bumping it up to $115.


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Posted (edited)

$80 for maintenance.$105 General. $115 for Euro. $121 if customer supplies the parts. Peoria Az.

 

Edited by kars
Posted

$120 Chicago suburbs. I can see $130 by the end of the year.

I think in the near future we will be going thru a major industry change. I think labor rate will go up substantially.....like 30%. There is a major tech shortage out there and the ones who will win will be able to compensate their people properly and that's going to take a lot more $$$ and a change in how we currently compensate techs. (flat rate)

Of all the industry speak I hear all shops including so called good ones are having difficult times finding employees. Business has been really really good....but we can't keep up.

  • Like 2
Posted (edited)

I completely agree with the change coming. With a shortage of Techs the industry will need to raise wages to get people interested in the trade. I’m trying to stay ahead of the curve.  

Local dealer has an add out with a $10,000 signing bonus. I had seen $1500 - $2500 in the past two years and have had trouble finding 2 good tech's myself but things must be worse than I thought.

Edited by ohlmannr
Posted

I like seeing this, the industry has been low for years, our techs are valuable and we pay them well  

We are in Marin county our labor Rate is 155.00. The near by dealers are at 175.00,

i am considering a thee dollar bump because of recent expenses. 

Tony. 

  • Like 1
Posted

Ankers auto service Schenectady NY 99.90  and 119.00 if customers own parts. I am one of the highest in the area.

 

Posted

I have also been dabbling with the idea of raising our labor rate. I'm just kind of worried about future customers not returning because of that.

Posted

My experience in the past two years I went from $85 - $95 then $95 - $105 my car count has increased.  Industry standard is around 2 hrs per RO I think. So if you raise your rate $10 per hr the increase average is about $20. If a customer doesn’t come back over $20 either you don’t want that customer or you haven’t built enough value into your repairs or service.

 

  • Like 3
Posted

We are just outside of Pittsburgh, PA and recently raised our rate to $100. But we tend to adjust it down if the bill seems too high. Probably not a good practice on our part but we aren't in an affluent area so we try to take care of people if we can. The average rates in our area are $80-$110.

 

Posted

I'm in Bakersfield CA and our rate is $126.57, $110 for first time customers, $96.50 for initial testing time, $189.86 is they bring their own parts. We are definitely the highest in town, by a long shot, and we pay our techs probably the highest in town. I actually want to pay the highest in town and I want everyone to know it.

We've struggled with parts margins and overall GP% and I wonder how you all hit your GP goals with such low labor rates. Not being sarcastic, I really wonder. I'd like to know what labor and overall GP percentage you're hitting with those labor rates.

  • Like 1
Posted

I’m really surprised to see a sub $130 rate in California and to hear it’s among the highest. You mentioned labor GP %. The cost of living and going rates for tech’s from each of our areas I’m sure is different so that will have an effect.

I like the fact you are paying top dollar for techs. I’m moving in that direction and the only way I can do that is to continue to raise my labor rates. I wont actively poach other shops, but I wouldn’t mind if word got out that we have a great place to work, good car count and we pay well. If anyone has looked for techs lately you know they are hard to find. I believe anyone who wants to survive in the coming years is going to have to raise their rates a significant amount to retain your current tech’s or attract new ones.   

Posted

We're in the central valley of CA, so more of a midwest economy than SoCal and the bay area. We have among the lowest home prices in CA. We are the highest, the shop across the street from us has a $90 labor rate, a couple of my friends who own shops are at $98. I just decided I need to charge what we're worth regardless of what anyone else did. In the last few years we went from $89 to $126.57, and we've grown 30+% per year for the last 4 yrs. I'm pretty convinced that labor rate is a state of mind. If we're going to attract the type of techs we'll need in the future, we better make it an attractive, relatively high paying job, and to do that we need to charge enough for what we do. I learned that nothing bad happens by raising the labor rate. We had a strategy, we kept initial test time lower so we don't have to discuss a higher rate, and we avoid quoting rate...way too many ways to nicely and credibly side step the issue...and if we must quote a rate we quote our average rate (effective rate). We also price frequent services, like oil changes, brake jobs, trans service, etc, at competitive prices...what we call comparables. And, we focus on the customer having a great experience. I know every one of you could raise your labor rate $10 tomorrow and nothing would happen.

  • Like 3
Posted

When you say you've grown 30+% I'm assuming you mean in sales and not car count, hours billed or some other metric. It's logical that you would have a big increase in sales if you raised your labor rate 42+%. So your car count and hours billed might not actually change, you're just making more for the same work. And that ain't a bad thing.

 

Posted

Good point. One of the things we did to build car count was go to cheap oil changes, which dropped our ARO. We've worked hard to get ARO and GP up to where it should be, and we're finally having a very good year in GP and net. From 2013 to YTD 2017 we grew an average of 33.5% per yr in gross sales, 35% in car count, and 27.5% in hours billed. And at the same time raised our labor rate from $89 to $126.57.

I started my shop from scratch 7 yrs ago with me and a partner. I bought him out in 2013. I now have 8 employees plus me, and I don't work in the shop. I'm only saying this stuff to encourage others to not be afraid to raise your rates. When my partner left I was afraid to raise the labor rate, and I worked my ass off and didn't make any money. Then I was challenged to raise the rate and I did, then raised it again, and again, and again, in both big jumps and small jumps. Nothing happened, and we kept growing. If I can encourage some of you to just raise the rate then we're all better off. Friendly service and marketing matter, price is very minor.

  • Like 5
  • 4 months later...
Posted

When you mention paying your techs "well", would you care to share what dollar range that is? I think our highest paid tech non equity individual is paid "very well". Is anyone paying more than 80k a year?

  • Alex changed the title to Shop Labor Rate
  • 2 years later...
Posted
On 1/1/2018 at 10:33 PM, Silas Martin said:

When you mention paying your techs "well", would you care to share what dollar range that is? I think our highest paid tech non equity individual is paid "very well". Is anyone paying more than 80k a year?

That, in my opinion is "very well"!  I can't imagine how you pay a tech 80K/year with a labor rate as you stated of $74ish. How is there any left for you or expenses? Next question; Are you hiring? lol.

Posted

All in, my guys get over $80k per year.  That includes the whole picture, salary, tool allowance,  health care, IRA contribution etc...  We're in Westchester County NY and the labor rate is 113 and going up.  I can't  seem to attract techs either.  Maybe I'm not looking in the right places, maybe not offering enough, maybe no one is out there...  I wish I had the answer.  One thing i do know... my labor rate will be higher this week and I'll be paying closer attention to parts margins.

  • Like 2
Posted

I'm at $99.00 in Southeastern Wisconsin.  The average independent shop is at around $105.00, Places like Firestone are at $130.00 and the dealers are up to around $150.00.  I have been considering raising my rate for a while.

  • Like 1
Posted

We're at $130 and on our invoices, I don't print the rate or hours (not required to).   We simply quote a labor charge for the job.   I have a shop near me with a labor rate of $99, but job for job, his labor charges are same or higher than mine - using additional labor hours.  We pad for our persistent negotiators to have room for them "to win".   If asked, we share the labor rate.   We start with a base diagnostic of $99.95 for the 1st hour.  While working on this, we fail to always charge for longer diags.  Sometimes it's lost and sometimes we factor it into the rest of the job when building the quote.      Even when we're asked the labor rate, we haven't received any negative feedback on it.  We build value / trust which helps on approvals.  If we don't close a deal, it is usually related to cost-of-job vs value-of-the-car OR cost-of-job vs down-payment on a new car.   I get more vitriol for having the audacity to charge for diag.   If I get a pure price shopper, I quickly dismiss them saying we won't be the cheapest.

 

  • Like 2
Posted

$110 to $120 depending on type of work done, northwest rural Seattle. Labor rate needs to be set by a lot of expense factors and I think you really need a variable rate for different types of jobs, most modern management system can do this.

One of the expense factors here is how much you pay your Technicians, I hear and read how hard it is to find good experienced Techs and most agree that low pay is a big factor especially when trying to bring up new Techs, I am sure there is shops out there taking good care of there top Techs, I have been Tech for over 40 years now and my pay has been stagnant for the last 20 years but I have seen labor rates at the shop's go up nearly 40% ????   I understand the cost of doing business in this industry and how its rising all the time, I started at 50% labor 10% parts at a gas station then went to a Dealership and it dropped to 40% Labor has dropped from there now around low 20%. When Looking for new Employees you have to show the cost of the position, insurance your retirement plan tool allowance ect. ect. now the employee can feel better about the base wage and why its not 50% labor any more. 

This is a good Podcast about how they are doing Business Down under  and there way of pricing.

 

       

  • Like 1
Posted

We are just north of Houston, TX. On Jan 1, we went up from 116 to 120. I totally agree with the comment above that if the ARO is around two hours labor, the increase isn't noticeable or even impactful to the customer. Our total GP is around 63%. 

  • 2 weeks later...
Posted

Shop labor rate should be set off your shop’s fixed costs & hours of operation, not what somebody else is charging.  That’s what we do.  However, I don’t tell customers what we charge per hour, I simply tell them we charge by the job, not by the hour.  We are a transmission specialty shop and for most vehicles, we charge $1,750 labor only for the R&R and the build.  Some are less, some are more.  When calculating by the hour behind the scenes, we calculate it @ $125/hr but still tell the customer we charge by the job if they ask how much an hour, but that’s only perhaps >2% of all customers who ask.

In my experience, the subject of shop hourly labor rate virtually never comes up unless we mention it.  Most people only want to know the bottom line.

  • Like 1
Posted

The people that ask the labor rate are not normally good customers. We price by the job brake pads and rotors $335 plus tax for most cars just an Example but that's all they want to know how much to get my car fixed. Tell someone its $90/hr next thing you know they show up with half the bolts taken out and parts in the trunk "imma pay you 30 mins to put it together right now quick" so I just price the job so we can pay everyone to work another day. 

  • Like 1
  • 1 year later...

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  • Have you checked out Joe's Latest Blog?

         0 comments
      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.
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