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Joe Marconi

How Does $5,700 Labor Per Hour Sound?

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The other day, the alarm panel at the shop displayed a message that said, “Low Battery”. I called my alarm company and got the owner on the phone. He said that means the battery in the panel needs to be replaced and he would be over in a few hours.

 

A few hours later, the alarm company owner arrived with the battery in his hand, walked over to panel, opened it, pulled off two spade terminals, removed the old battery, put the new battery in place and push on the two terminals. All of this took about one minute, which included saying hello to me and complaining about the Knicks losing to the Pacers.

 

Then he handed me the bill:

Labor: $95.00

Battery: $45.00

Total: $140.00 plus tax

 

I did the math and the labor works out to $5700 per hour. What do we get to install a car battery? I know, I know, it’s a ridiculous analogy. But hold on for a second, is it really? Installing a car battery is a lot more difficult than a little alarm battery with push on terminals. Isn’t it?

 

We have the battery hold down to deal with, corroded terminals, corrosion on the tray to clean, a memory saver to hook up to the OBDII connector. And on some cars, like BMWs, we have to register the battery in the computer to insure it will charge properly. And, we have to sell the battery after we spend time testing the battery and the charging system. And what’s the average labor charge for installing a car battery? 25 bucks? 35 bucks? Some charge no labor, just happy to sell the battery and make the part markup.

 

I am having a little fun with this, but the truth is the alarm company owner did the math and knows what he needs to charge to remain profitable. He knows what every service call costs him in time, gas, insurance, workers comp, payroll costs, and other overhead expenses. If this is what he truly needs to remain profitable, then so be it.

 

I only wish we can be as brave at times to charge what WE need to remain profitable.

 

 

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The other day, the alarm panel at the shop displayed a message that said, “Low Battery”. I called my alarm company and got the owner on the phone. He said that means the battery in the panel needs to be replaced and he would be over in a few hours.

 

A few hours later, the alarm company owner arrived with the battery in his hand, walked over to panel, opened it, pulled off two spade terminals, removed the old battery, put the new battery in place and push on the two terminals. All of this took about one minute, which included saying hello to me and complaining about the Knicks losing to the Pacers.

 

Then he handed me the bill:

Labor: $95.00

Battery: $45.00i

Total: $140.00 plus tax

 

I did the math and the labor works out to $5700 per hour. What do we get to install a car battery? I know, I know, it’s a ridiculous analogy. But hold on for a second, is it really? Installing a car battery is a lot more difficult than a little alarm battery with push on terminals. Isn’t it?

 

We have the battery hold down to deal with, corroded terminals, corrosion on the tray to clean, a memory saver to hook up to the OBDII connector. And on some cars, like BMWs, we have to register the battery in the computer to insure it will charge properly. And, we have to sell the battery after we spend time testing the battery and the charging system. And what’s the average labor charge for installing a car battery? 25 bucks? 35 bucks? Some charge no labor, just happy to sell the battery and make the part markup.

 

I am having a little fun with this, but the truth is the alarm company owner did the math and knows what he needs to charge to remain profitable. He knows what every service call costs him in time, gas, insurance, workers comp, payroll costs, and other overhead expenses. If this is what he truly needs to remain profitable, then so be it.

 

I only wish we can be as brave at times to charge what WE need to remain profitable.

 

Joe will this ver change where we can charge what we shold for battery installation or diagnosis"

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Xrac...I don't see it. Wal-mart, A_Z, Advance. Just last week I got a call form my NAPA store...they had installed a battery for a young lady and it wouldn't start. Spins just fine. I grabbed the scanner and took the ride up the street. After getting a no response and hearing all the relays going crazy I went back to the battery. Installed properly, cables cleaned. Then I noticed a bit of crud on the aux. ground wire at the neg post. This is the ground for the ECM and PDC, Pulled the neg cable bolt out, scrapped the end clean and re-installed. Fired right up. gave the young lady my card, spoke to the manager about the possible consequences of this type of "courtesy" and came back to the shop. Shoulda got an hour labor but I hope it pays more in goodwill..Karma if you will. Kinda got offtrack here but just goes to show why we SHOULD get a fair rate for an installation!

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When the day comes that collectively we realize all the true costs of being in business, and when we realize that as an industry to attract the best we need to offer a decent salary, then things will begin to change.

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The key word there Joe is "collectively". We are "independent" business owners. Yes we agree for the most part but the guy that thinks he will get more people in the door by advertising the "free" will, in my opinion, never change.I tried the free scan, free battery install, free....! It just jammed up the bays with a lotta folks that couldn't afford to own a car! Till the consumer realizes nothing is "free" they will continue to expect it!

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It just jammed up the bays with a lotta folks that couldn't afford to own a car!

 

Very well said!

 

We tend to worry about alienating customers, but if they cannot afford your service, they were never customers.

 

That is why I always quote the job. I know people that come to the shop with the sole purpose of trying to nickle and dime me, I will not have it. I will give them a very expensive price and have them out the door so they will not waste my time.

 

The customer dealing scars run deep with me, as I when I began in the business people took advantage of my knowledge and skill because I was a noobie tech. I did many favors that came back to bite me in the butt, which I soon learned that it was better to charge full price and then if they had a problem, I would gladly honor my warranty. If everything went well and no issues, I was happily taken care of.

 

I have seen excellent mechanics go out of business, just because they really did not know the true expense of running a successful business.

Edited by HarrytheCarGeek
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A lot of the hardest jobs pay the least amount of money. Think manual labor. The problem right now with our industry, as I see it, is that we are caught in the middle between being a "manual labor" industry and a "technical knowledge" industry. Up until recently, automobile repair was more about brawn than brains, these days not so much. A lot of the old timers who could wrestle the transmission out of an 76 Chevy are having difficulty adjusting to sitting at a computer researching wiring schematics and system operation theory for these newer vehicles before they can ever even touch a wrench or screwdriver. As you stated, you didn't pay that guy for the amount of TIME he spent working on your alarm system, what you actually were paying him was reimbursement for all the money he had to spend to gain the knowledge required to work on your alarm system. You felt cheated because his invoice was inaccurately itemized....which leads to my next question: Is the way we are itemizing our OWN invoices contributing to our customers feelings of being ripped off by US?

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A lot of the hardest jobs pay the least amount of money. Think manual labor. The problem right now with our industry, as I see it, is that we are caught in the middle between being a "manual labor" industry and a "technical knowledge" industry. Up until recently, automobile repair was more about brawn than brains, these days not so much. A lot of the old timers who could wrestle the transmission out of an 76 Chevy are having difficulty adjusting to sitting at a computer researching wiring schematics and system operation theory for these newer vehicles before they can ever even touch a wrench or screwdriver. As you stated, you didn't pay that guy for the amount of TIME he spent working on your alarm system, what you actually were paying him was reimbursement for all the money he had to spend to gain the knowledge required to work on your alarm system. You felt cheated because his invoice was inaccurately itemized....which leads to my next question: Is the way we are itemizing our OWN invoices contributing to our customers feelings of being ripped off by US?

You make great points! I don't think I felt cheated, if that's what he needs to remain profitable, so be it. Yes, I agree, he could have prepare a better invoice to show value. In my shop I emphasize a lengthy explanation for the customer, for that reason. Bottom line, everyone needs to track the numbers and truly know what it cost to be in business and charge accordingly.

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