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From as far back as I can remember, labor has always been an issue. As and industry, we have struggled to get paid properly for the work we do.  And those shops that understand how critical labor is, are the shops that have done quite well.  

In today's auto repair shop world; Getting the right labor dollars is no longer a buzz topic or debate- Labor dollars will be the salvation of your business. Labor translates into profit, and will also allow you to build for the future and to attract the quality people we need in our industry. 

If you don't know what your labor should be, you need to find out.  Don't call ABC Auto, down the street to ask him. The odds are he did not do the math. Plus his expenses are not the same as yours.

Depending on what you pay your techs, your overhead, and knowing your numbers will determine your labor rate.  I can tell you that there are shops that are paying techs a very good wage and those shops are getting $135 to $150 per hour, and more.  That is not a typo.  And there are shops that have multi-tier rates. So, for Diag and labor jobs that have no parts associated with the repair, their labor is much higher than their standard labor.  It's fair, it's honest and it's time we all raise the bar. 

Please, do the math, get help and make sure your labor is right for your shop. 

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Posted

I want to clarify something.  I stated in the above post that many shops are getting $135 to $150 per hour.  I am not implying in any way that this is too high or unreasonable. In fact, as an industry we need to raise the average labor rate across the board in this nation.

What I am saying is that you need to sit down and do the math.  Find out what your labor rate should be by determining your overall cost of labor and your expenses; and then adding your desired net profit. Also, I recommend you have multi-tier rates.  So, a C-level tech performing oil changes and general service is billed at your standard labor rate and an A-level Master Tech performing complex driveability and other onboard diagnostics is billed at a much higher labor rate. 

If you are not sure how to do this, you need to get help from a professional, such as a coach. 

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  • Have you checked out Joe's Latest Blog?

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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