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How are tech paid


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I'm looking at opening an auto repair shop with a partner who is the mechanic and possibly another mechanic. I will be the sole investor in the venture never before been in the auto rapair shop business. I will most likely manage the whole thing. I need lots of help.

 

How are mechanics paid?

How do I pay myself and recoup my investment?

Shop management software? Looked at MaxxTraxx, Alldatapro.

What types of insurance must I carry?

 

I've found a nice place with three bays to rent but will need to install lifts. Should I shop used or new?

Etc etc etc.

 

Thanks for any help you can offer.

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Techs are normally paid flat rate or salary/hourly. Flat rate is a per book hour rate similar to commission.

 

Pay yourself? Talk to your accountant. Depends on the type of entity you establish.

 

Shop software, I use garage partner pro. It's cheap and decent, but I haven't used others.

 

Insurance... May be a fun one it was difficulty for me to get with no ownership previously. We have general liability, personal property, and garage keepers.

 

Good luck.

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How are mechanics paid?

How do I pay myself and recoup my investment?

Shop management software? Looked at MaxxTraxx, Alldatapro.

What types of insurance must I carry?

 

I've found a nice place with three bays to rent but will need to install lifts. Should I shop used or new?

Etc etc etc.

 

Thanks for any help you can offer.

Since I was just in your shoes a few months ago I'll share what we've learned so far that could help you out.

 

We pay our mechanics hourly and do a quarterly profit share of some of the shop profits. You can pay yourself from profits or a salary or hourly. If you're the sole investor, then it's your investment so I suppose you can pay yourself whatever you want!

 

Insurance: This is something you usually buy locally from a "broker" in your area. I recommend you go visit a few of the best local shops and ask who they are using.

 

Shop Management Software: We use mitchel simply because that's one of the few that were highly recommended here on this forum. We bought the addon's by Bolt on technologies which adds some additional features. We just signed up for mobile manager by bolt on technologies and it supposedely integrates with Mitchel. It's an android tablet system that can be used by techs in the shop. We should have the tablet portion up and going later this week. I've been happy with the mitchel product so far. It's not super user friendly or intuitive in my opinion but it does do everything we need and plus some. It's typical of industry specific software I suppose in terms of user interface. It's not really pretty but it is highly functional. We've really benefited from the local sales rep of the software, John Heffernan. He's spent a ton of time training me on the software and sharing industry specific tips that other shops do that I would have never known without him. I suppose that's an advantage of using a large national product like mitchel.

 

Equipment: I'm always a fan of buying used stuff in general but when it comes to shop equipment I've found that the used equipment on the market is so old and heavily used that it hardly seems worth it. And with the reasonable prices of new equipment and access via the internet to so many different suppliers and products, I've decided to simply buy new. Manufacturing overseas seems to driven the price down on new equipment.

 

I hope all this helps and best of luck to you!!! Scott

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Pay your main mechanics on flat rate per labor hour. If you have the budget then get an hourly general service for inspections, shop helper, driver, etc. decide if you are 50/50 partners or what and do it with certified accountant even if you guys are friends! Word of caution though: if you have no mechanical experience get to learning some fast. Otherwise you are at the mercy of the other mechanic and things may be unnecessarily stressful. Id recommend hiring another mechanic that isn't a partner so if things dont work out you can continue to do business. I have been in similar shoes and had to learn that opening a,shop without being a mechanic can be a trying road especially if your pockets arent deep. As for lifts, you can go either way. But if you dont personally know the biz,you getting it from, you might as well go new. If economcs is a factor then start with 1 heavy duty 10 or 12k lift like rotary, challenger,etc and 2 economy 9k lifts, like eagle($1600). Hth

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We pay an hourly rate and a production bonus for each hour of production. If our tech is standing around on his smart phone all day he's only getting the minimum hourly rate which most people would jump at the chance for that job. But if he's not hitting at least 60% production rate for the week he won't be here long.

 

We had Mitchell for shop management and I wasn't impressed. Started using Alldata in December and I regret ever switching.

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We used Alldata Manage - not much there. Used Napa TRACS, - . Don't want to talk about it. Settled on RO writer. Expensive but worth every penny if you use it right.

NAPA provides us with labor reimbursement for defective parts. NAPA Autocare is a great program. We pay our techs based on a matrix that encompasses certs and production hours. It was set up with the help of our coach. Mostly, it insures that we can still be profitable if a tech goes into overtime. Make employees punch a timeclock and pay overtime. Don't bother trying to find tricks to bypass the OT requirement. If an angry employee decides to file a wage - hour complaint, you are guilty until YOU prove you are innocent.

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  • 5 years later...

Pay is tough flat rate pay is the tech racing the clock and they must keep a flag hours if they beat the clock great if they take to long then they loose and sthe same goes for when there is no work great for the shop because you don,t have to pay them but bad for the tech. hourly is good for the tech but if your not busy then tough on  the shop.  Hourly plus incentive anything over x hours  produced tech gets a bonus,I do anything over 10k a week and each tech gets a bonus that week.  A time clock is also important   I anything happens any dispute  you will proof .eShop insurance in super important the more the better plus workman comp

We also use Mitchell shop management great system and with add ons like bolt on gives you a lot of options

Buying shop lifts just be careful some can have problems but buy new when you can. 

Paying yourself  put yourself on a salary  but check with a accountant  on how to do this.

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  • Have you checked out Joe's Latest Blog?

         3 comments
      Got your attention? Good. The truth is, there is no such thing as the perfect technician pay plan. There are countless ways to create any pay plan. I’ve heard all the claims and opinions, and to be honest, it’s getting a little frustrating. Claims that an hourly paid pay plan cannot motivate. That flat rate is the only way to truly get the most production from your technicians. And then there’s the hybrid performance-based pay plan that many claim is the best.
      At a recent industry event, a shop owner from the Midwest boasted about his flat-rate techs and insisted that this pay plan should be adopted by all shops across the country. When I informed him that in states like New York, you cannot pay flat-rate, he was shocked. “Then how do you motivate your techs” he asked me.
      I remember the day in 1986 when I hired the best technician who ever worked for me in my 41 years as an automotive shop owner. We’ll call him Hal. When Hal reviewed my pay plan for him, and the incentive bonus document, he stared at it for a minute, looked up, and said, “Joe, this looks good, but here’s what I want.” He then wrote on top of the document the weekly salary he wanted. It was a BIG number. He went on to say, “Joe, I need to take home a certain amount of money. I have a home, a wife, two kids, and my Harly Davidson. I will work hard and produce for you. I don’t need an incentive bonus to do my work.” And he did, for the next 30 years, until the day he retired.
      Everyone is entitled to their opinion. So, here’s mine. Money is a motivator, but not the only motivator, and not the best motivator either. We have all heard this scenario, “She quit ABC Auto Center, to get a job at XYZ Auto Repair, and she’s making less money now at XYZ!” We all know that people don’t leave companies, they leave the people they work for or work with.
      With all this said, I do believe that an incentive-based pay plan can work. However, I also believe that a technician must be paid a very good base wage that is commensurate with their ability, experience, and certifications. I also believe that in addition to money, there needs to be a great benefits package. But the icing on the cake in any pay plan is the culture, mission, and vision of the company, which takes strong leadership. And let’s not forget that motivation also comes from praise, recognition, respect, and when technicians know that their work matters.
      Rather than looking for that elusive perfect pay plan, sit down with your technician. Find out what motivates them. What their goals are. Why do they get out of bed in the morning? When you tie their goals with your goals, you will have one powerful pay plan.
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