Auto repair shops usually calculate the hourly labor cost according to information published in several national labor guides. National labor guides survey auto mechanics in the U.S. And publish information such as the average amount of time required to perform certain repair jobs and how much mechanics typically charge for these jobs. Our integrated Smart Search Auto Repair Labor Guide includes detailed resources for repairs, trouble codes, and TSB information. This feature gives you the latest updates to keep your team on track. Give your mechanics the support they need to complete repairs quickly and adequately with labor time estimates, repair procedures, potential.
- Auto Mechanic Labor Rate Guide Ontario City
- Auto Mechanic Labor Rates
- Auto Mechanic Labor Rate Guide Ontario California
Like any business, finding the right price is always a challenge. Lots of questions may run through your mind:
Brake Pads Replacement - Front, Disc Brake Caliper Overhauling. 2008 Kia Sportage LX 4 Cyl 2.00L. General Diagnosis - Up To 1 Hour. 2014 Jeep Cherokee Limited 4 Cyl 2.40L. We’ve included the powerful features developed in the legacy Mitchell OnDemand® Auto Estimator, plus many powerful enhancements. Labor times and parts pricing for domestic and imported vehicle models going back to 1983 are included, giving you a huge vehicle selection to produce more estimates. May 08, 2015 But in both states, Kevin’s career has been marked by hardship because of the complicated way mechanics get paid. Generally, mechanics make a decent living, earning a median annual salary of $36,600. But most are paid according to a “flat-rate” system, meaning that they only make money when there is actual work to be done.
Am I charging too much?
How do I factor in taxes?
Should I keep up with competition?
Is there a simple equation?
As an owner, you want to give a great value, but to give that value, you need to charge fair wages.
“I used to be the cheap guy in town and I was oblivious to it,” says Tatsu Tsuchida, acting manager of Tokyo Automotive in Placentia, Calif., a seven-employee, 5,000-square-foot, $1-million-per-year business. “Determining the proper labor rate is important to keep up with technology, pay your guys right, make the shop look like a million bucks, and to attract the right customer—and to pay yourself properly.”
The entire 32 years that Evic Svedberg, owner of European Autowerks in Virginia Beach, Va., has been in business, he's always charged what he believes is fair.
“Your labor rate is 50 percent of the equation,” Svedberg says. “When it comes to auto repair, 98 percent of it is labor and parts. If it’s half of the equation and usually 55 percent of sales, then it’s hugely important to have the right number.”
Tsuchida’s current labor rate is $140, while his diagnosis rate is $160. And for Svedberg, his labor rate is set at $129.22.
But how did these shop owners come up with their labor rate? Ratchet+Wrench sat down with the two auto repair shop owners for tips on how they determined their rate while ensuring maximum profitability.
SHOP STATS: Tokyo Automotive Location: Placentia, Calif. Operator: Akio and Tatsu Tsuchida Average Monthly Car Count: 87 Staff Size: 7 Shop Size: 5,000 sq ft. Annual Revenue: $1 million
1. Change your perspective.
Unlike Svedberg, who was never shy about charging what he needs for the job, Tsuchida went through a period of trying to believe in the value of his work and his shop.
Tsuchida says owners not charging enough and being scared to charge more aren't doing enough to warrant the expense. He says those underpriced shop owners are usually the ones content to pay the rent and feed themselves. They likely employ family, college students, and themselves to take advantage of the cheap labor, he says.
“We would balk at how expensive the dealer was, and how they would charge exorbitant prices for services customers didn't need, and we would cut corners because of it,” Tsuchida says. “After a while, we decided that we were shooting ourselves in the foot.”
2. Hold on to your ideal customer.
After recognizing he didn’t charge enough—or what he calls the second step of the “awakening process”—Tsuchida realized that he was scared that raising his labor rate would scare off customers.
Tsuchida says the frugal customer—which makes up 15–20 percent of the population—is roughly 30–40 percent of a cheap shop’s customer makeup.
“Our shop tanked during this stage, but somehow my parents stuck with my vision, and some of my better customers stayed,” Tsuchida says. “The better customers who stayed were generally the people who would randomly stick an extra $40 on our counter and walk away. Later, when we questioned why, they said, ‘You deserve more.’”
Although a lot of his frugal customers left, some did stay on to support (for more information on filtering out your bad customers and determining your ideal ones, head to ratchetandwrench.com/idealcustomer).
“I learned that if you work with some of them, they responded well,” Tsuchida says. “They might have to break the bigger tickets into two or three visits, but despite their budgets, they would rather have me working on it because they trust no-one else.”
SHOP STATS: European Autowerks Location: Virginia Beach, Va. Operator: Eric Svedberg Average Monthly Car Count: 200 Staff Size: 7 Shop Size: 6,700 sq ft. Annual Revenue: $2.2 million
3. Do the math.
Svedberg has never used an exact formula when trying to figure out his labor rate. He suggests instead to use a coach to help with rate. With the coach, you will discuss labor rates, the business as it was, if the business is profitable and if the rate needs to be changed.
But how does Svedberg track these numbers to determine this? Each week and each month, Svedberg puts everything about the business into a spreadsheet. This way, owners can see the issues and look at the trends to determine if the labor rate could be adjusted. Any price increase needs to be done through your labor rate, not parts prices, and Svedberg says to make sure to look at your effective labor rate and ensure that labor rate increases aren’t simply being made to make up for a low ELR.
3. Import the underlying factors.
Auto Mechanic Labor Rate Guide Ontario City
“Go by the job and have a different labor rate for different things,” Svedberg says.
After you get the right number, owners have to consider other factors that affect this rate. Some important factors include: cars over 10 years old, market competition, cars over 20 years old, classic cars or over 30 years old, lower rate for friends and family, and specialty vehicles, such as motorhomes or Lamborghinis.
Tsuchida’s general policy for model year 2000 to 2012 vehicles is that his labor rate drops between $125-$140 from his initial cost of $140.
4. Check the competition.
To keep up, Svedberg cold calls dealerships and other auto repair shops to ask what their rates are. However, he suggests being smart with your tactics and using an outside source, as dealerships are getting wise about this tactic.
“Look at the market competition and look at what you work on,” Svedberg says. “Remember, European is usually at a higher rate.”
For Tsuchida, he checks the competition, but it’s not a part of the whole equation.
Auto Mechanic Labor Rates
“Neighboring garages labor rate is a consideration, but not the only criteria,” says Tsuchida. “I don't mind being the more expensive shop, as most of my customers are not the price-conscious variety.”
5. Gage customer reaction.
When you have the right price point figured out, how do you implement it without customers getting upset? Svedberg says he’s never had to explain his rate; he only explains the price by the job and that the auto repair shop expects to make a profit and to make enough money to warrant the job.
Svedberg also advises a shop should rethink its labor rate every year, usually going up about 1 to 3 percent. And if you find you are really underpriced and need to go up a lot after looking at the numbers, Svedberg says to just increase it all at once—the customer won’t even notice such a change, as long as the job is explained correctly.
Tsuchida doesn’t have a problem raising his labor rate going forward and will adjust the price here and there to where it should be. If customers do make a comment about the price, however, he simply rattles off the benefits of why they do business with them—loaner cars, OEM quality parts, and a promise to not cut corners, for example.
“If they do not understand at that point, they are not likely my ideal customer,” Tsuchida says.
Posted April 16, 2014 by Ken Kupchik
Auto Mechanic Labor Rate Guide Ontario California
A sculpture made entirely of auto parts.
Mechanics make their money by charging for labor, as well as marking up the parts used to repair your car. This combination ensures that a shop is profitable and a mechanic can stay in business and pay his or her employees, rents, utilities, insurance, taxes, overhead and everything else involved in running a legitimate business. Some people are surprised when they learn that parts are more expensive when bought through a mechanic than when they buy them on their own, but this is a completely normal part of mechanics doing business and nothing unusual for the industry.
Here is the way it works: you bring your car to the mechanic for a diagnosis after you start having some sort of problems. The mechanic inspects your car and then determines what parts are needed in order to fix it. He then checks his inventory for said parts, and if they're not available, he will order them from a local parts distributor, or from the manufacturer if that is the only option or if you specify it. The arrangement between the parts distributor and the mechanic can vary, with different incentives available depending on how much business the shop does, what brands are available and other factors. But the customer never has to deal with the parts distributor directly.
The markup occurs when the mechanic charges you more for the parts than he paid to the distributor. Some mechanics may charge a higher markup for parts, with a lower labor rate, while some may charge a lower markup for parts, with higher labor rates, but nearly all mechanics will mark up parts to one degree or another. This markup will vary depending on the type of shop it is, and the job, but an average markup for parts by a mechanic is between 25% to 50%. This means that a part that a mechanic pays $100 for will cost you between $125 and $150 on your bill from the mechanic. Don't forget, this is in addition to the labor charges, which average between $85 to $110 an hour for independent repair shops and between $115 to $135 for dealerships.
Another commonly used mark-up system is on a scale, depending on how cheap or pricey the part is. A cheaper part will be marked up much more significantly than a more expensive part. For example, a $2 to $8 part will be marked up 100%, or will cost you, the consumer between $4 and $16 dollars. A $10 to $30 part will be marked up 50%, or cost you between $15 and $45 dollars. A $30 to a $300 part will get a 30% markup and a part over $300 will get a 10% markup, costing you $330 and so on.
It's important to remember that every shop will have their own system for marking up parts, and if the shop is reputable, the markup and labor rate will end up bringing the total price within an acceptable range for the work performed. Some people purchase their own parts and bring them to shops in order to save on the markup, and many shops will complete the work, but it's important to remember that the warranty for the parts will be void in these cases. There will also be mechanic shops that will not perform work if you are not purchasing the parts from them, and while that can be discouraging for a savvy customer, it's important to respect the shop's decision as for them, marking up their parts is an important source of revenue, without which the business will not function properly.