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bantar Community Regular

bantar

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Posted

Northern suburb of Dallas....  We bumped our labor rate to $149.99 (from $130) at the beginning of August.    It's been 4 months.  No one noticed, nor complained.   We're staying busy and have more work now than before.

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gandgautorepair
gandgautorepair

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 ver

Joe Marconi
Joe Marconi

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ohlmannr
ohlmannr

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 increa

bantar Community Regular

bantar

Posted
Posted
3 minutes ago, Old and Tired said:

Dang, you got me by $1.99.

No, you misread it....   It was a challenge for you to beat.   You deserve a pay raise!

  • Like 1
JerryK Rookie

JerryK

Posted
Posted

We are in the Dallas area... Our labor rate is currently $175 for domestic, $195 for European and $245 for pre-1971. We expect to raise rates again in January 2022.

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CTC Rookie

CTC

Posted
Posted

Base these numbers on the math not on what everyone else is doing. Each marked is different 

  • 4 weeks later...
Hands On Community Regular

Hands On

Posted
Posted
On 12/12/2021 at 3:01 PM, JerryK said:

We are in the Dallas area... Our labor rate is currently $175 for domestic, $195 for European and $245 for pre-1971. We expect to raise rates again in January 2022.

I need to make this a regular thing for myself. We do a "pre 1971" about 6 to 12 times a year. I have a 1960 Nash metropolitan in my shop, I set at I think at 229 an hour. Customer balked at first, but Noone else wants to work on it. He begrudgingly approved the work, then told me his wife is making him sell it now.

The 1966 mustang that was in at the same time had no issue at all with his bill, he was prepared financially for his hobby.

I just bumped to 144.95 at the end of the year. I think I will go for the $149.95 on Monday. It 8s way easier to find customers then employees. If I can get up to $175 an hour I will put out an add offering $55 an hour for technicians. Maybe I will find one.

JerryK Rookie

JerryK

Posted
Posted

We are in Plano, Texas and our shop labor rates are $175 for domestic, $195 for Euro and $225 for 1975 and older cars.

Guest

Guest

Posted
Posted
On 12/1/2021 at 1:26 PM, Old and Tired said:

Dang, you got me by $1.99.

Raised it again to $158.  

Jerrys Auto Center Apprentice

Jerrys Auto Center

Posted
Posted

Happy new year all!

Browsed through this almost 4 year old thread and very happy to see rates trending in the correct direction.

Located in a working middle class in Long Island, NY…

1/1/22 raised labor rate from $137 to $153. 

  • 2 weeks later...
Guest

Guest

Posted
Posted

Do any of you smart successful people look at the percentage of gross sales that your cost for parts is? If so, what's the goal and do you raise labor or parts prices to the customer to achieve the goal? 

Jerrys Auto Center Apprentice

Jerrys Auto Center

Posted
Posted

I aim for 60%-63% overall GP on parts except batteries and tires which are both usually in the 30%-35% GP area. 
I don’t look at parts and labor relationship to each other but if parts are limited more labor is charged, such as diagnostics which is billed at 1.5 times our regular labor rate.

  • 2 weeks later...
Guest

Guest

Posted
Posted
On 8/6/2017 at 9:02 AM, Old and Tired said:

116 in Austin

It's interesting to see where we were at almost 5 years ago. Now its $158.00. Still seems low.

  • 2 weeks later...
Guest

Guest

Posted
Posted
6 hours ago, Joe Marconi said:

Agree Frank, and to add to that, for the most part too many people in our industry have been underpaid for too long, and that includes the shop owners too. 

I also agree that being the cheapest guy in town is a  sure way to go out of business. We are not mass-marketers, we are a specialized group of professionals with a lot of associated costs of doing business. We need to charge what we are worth. 

 

I found out last week that the Honda dealer is at 198 so I raised ours another 20 to 178.  At this rate my take home pay might actually equal an Amazon driver's! Haha.  👍

Transmission Repair Experienced

Transmission Repair

Posted
Posted

What does it matter what other shops charge?  To me, that's not even relevant.  I base OUR labor on OUR costs.  I say piss on the competitors' labor rate.  Their labor rate is mostly based on competition and what the market area can bear.

I base our labor charges on the job, not by the hour because we are a transmission repair specialty shop.  There's a whole lot of the same thing over and over.  Business volume, production capability, and efficiency rate will affect labor rates.  I use the following profit model: 

Parts = 20%
Labor = 20%
Expenses = 40%
Profit = 20%
And I work backwards with those percentages to calculate parts and labor rates.  G/R is different but that's how it's done in the transmission repair industry.

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  • 1 month later...
IDAS Cleveland Newbie

IDAS Cleveland

Posted
Posted

We are based in SE Tennessee and are charging $100/hr for asian and domestic & $125/hr for European and diesels.  We shoot for 35-40% markup on parts.  We have lately had quite a few customers asking for work on 1975 and older vehicles and I have not been adjusting my prices much for this.  But like some other shop owners I think I will increase the price for those jobs as it always includes many suprises and 10x time comittment.  Thanks as always for all the great info!

Transmission Repair Experienced

Transmission Repair

Posted
Posted
1 hour ago, IDAS Cleveland said:

We are based in SE Tennessee and are charging $100/hr for asian and domestic & $125/hr for European and diesels.  We shoot for 35-40% markup on parts.  We have lately had quite a few customers asking for work on 1975 and older vehicles and I have not been adjusting my prices much for this.  But like some other shop owners I think I will increase the price for those jobs as it always includes many suprises and 10x time comittment.  Thanks as always for all the great info!

Like Joe said, that's not even relevant.   We were (I'm retired since 60, 7 years ago) a transmission specialty repair shop in the greater Salt Lake Market area of Utah.  2015 was the last year I was in business.  We based both parts markup and labor profit to obtain a 60% gross profit margin and a 20% net profit before taxes.   We charged by the job, not by the hour, however, when calculating the job price for a routine repair we used $125/hr. and that was 7 years ago! 

Because of inflation, everybody expects things to cost more.  Right now is an IDEAL TIME to recalculate your prices.  If you've read any of my previous posts, you'll know that on the rare occasion somebody asks how much we charge per hour, I always say, "We charge by the job, not by the hour."  That worked 100% of the time.

Take your COST of parts and labor for any give period, the longer the period the more accurate your calculations will be.  Divide that figure by .4 (inverse of 60% gross profit) to arrive at what you should be charging overall.  You can break it down from there.  Continue to monitor and adjust your prices until you reach a 60% gross profit.

Let's say your parts and labor costs you $100K in a given period. (month)  Divide that by .4 (40% costs) and that is what you should be SELLING parts and labor for.  EXAMPLE:  $100,000 costs divided by .40 (40%) = $250,000 revenue or $150,000 (60%) gross profit margin.  That sounds like an awful lot, but isn't really.  All your expenses including rent, taxes, insurance, tools, equipment, and etc. all come out of that $150K, so it's really not that much.

Others may have an alternative method to calculate your prices, but that's the one I use in the transmission business.  Many business accounting software packages like QuickBooks and others can help you monitor individual accounts for profitability.  Separate accounts may be higher or lower than the 60% gross profit number but just remember what you really need to track is the OVERALL profitably of your shop target of 60% gross profit.

Cheers, Larry

[email protected] 

  • Like 2
Transmission Repair Experienced

Transmission Repair

Posted
Posted
5 hours ago, Joe Marconi said:

60% overall gross profit (parts and labor) is a realistic and needed number to attain. For a general repair that usually means a labor margin of 70% and a part margin of 50%.  Even in this age with the Rock Autos, Amazon, and eBay, a shop must achieve its needed part profit. 

While there are differences around the country, it's becoming more uniform in terms of overhead expenses. 

Sit down, and crunch your numbers. Review all your expenses.  Understand what it takes to be in business. Your expenses should be around 40% of sales revenue. BUT, here is the difference: Once you know the Cost of Doing Business, you then add an ROI, a return on your investment. That's right, profit. 

Typically, general repair shops target a goal of 20% net profit.  There are other factors involved, but these are the core numbers of a general repair shop: 60% overall GP, keeping expenses at 40%, and a goal of 20% net profit. 

 

Well put Joe.  Some accounting software places the labor under expenses, including office payroll.  I need to make it clear the office payroll and technicians' payroll are in two different categories.  Technician's payroll is a Cost Of Goods Sold (COGS) account and any office payroll is under an expense account.

Another is the owner's pay.  If he/she works predominantly in the shop repairing vehicles, their payroll is a COGS account.  If he/she works mostly in the office, then their payroll is an expense account.  In either scenario, the shop owner's pay should be commensurate with what a normal employee would be paid for the same job.  The owner's pay IS NOT the net shop profit. 

This was a hard concept for me to grasp early on.  In the beginning, I thought my pay was what (if any) money was left over in the checkbook.  Later, I began to think the net profit was my pay.  Much later in my career did I finally learn the concept of my pay should be commensurate with what a normal employee would be paid for the same job.  Throughout my career I was always learning more and more about accounting and that was a good thing.

Cheers, Larry

[email protected] 

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  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Technician Shortage Is Our Fault, And It's Time We Own It
      By Joe Marconi in Joe's 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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