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Are Your Using Multi Tier Labor Rates?

Joe Marconi
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Transmission Repair Experienced

Transmission Repair

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17 minutes ago, Joe Marconi said:

With labor rates going up, one concept me also need to consider is multi tier labor rates. For example, performing jobs on heavy trucks is different than work on a Honda Civic, or Toyota Corolla. Also, if you do complicated computer work, electrical and driveability, that requires your top tech with the most expensive tools and training. And those jobs have no part profit. Shouldn't this be billed at a higher labor rate?

Do you have a tier labor rate strategy?  I would like to hear from other shops. 

 

We had different labor rates for different jobs.  Sometimes it was because of the difficulty, and other things like risk.  We had our labor rates at the lowest, plain vanilla, straight jobs.  If the vehicle had been chipped, twin turbos, high flow heads, exhaust, or deleted emissions, part labor for those types of vehicles carried a higher premium labor rate.  For me, it's not just about the money as it was about managing risk.

We commonly found when customers make a horsepower/torque range change, the first thing that goes is usually the factory original transmission.  With diesels, this is especially true.  The transmission simply is the weak link in the drivetrain.  They were never meant to handle that much power.   Sometimes it was the extra hard parts/upgrades that drove the price up, which is additional parts on top of the increase in labor.  Our ARO for major jobs was about $3,600 as of 2015.

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Transmission Repair Experienced

Transmission Repair

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4 hours ago, Joe Marconi said:

Did you do wholesale work, work for other shops?  And also for warranty companies.  Were there different labor rates for these, and how did you maintain a decent profit margin?

 

No wholesale for other shops.  I avoided warranty companies like the plague, mainly because of the hassle factor of plugging up our production.  We only did retail jobs and left the rest to other shops to do.   We had plenty of work to do.

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  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Toolbox is Last to Leave, First is the Heart
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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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