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Staggered Hourly Rates
Up here in the Northeast we are seeing most dealerships using staggered hourly rates . For instance , $ 70 an hour for basic services. Filters , flushes , tune up etc services that would be acceptable for a C tech to do . A higher rate for B level type work aprox $100 an hour and another higher rate for A tech level work $ 120 – 130 an hour . I believe this is how dealerships are competing on price now . The new Dealership model of lowering the payroll in the shop and breaking up the hourly rate into 3 segments in order to strongly compete against everyone else in the industry is very aggressive . Are any of you trying this type of thing or just holding true to 1 solid hourly rate ? Any thoughts ?
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7 Replies
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We have the same set up as you mentioned. We’re in Toronto Canada. We’ve done this due to pay structure and to maintain proper GP% & $$
Multiple labour rates and a process of allocating work to the shop based on skill and task.Rates 99.50 / 115.00 / 125.99Skill in Shop junior apprentice – Lof’s, Tires and mentored under shop foreman for improving his inspection skills. Senior apprentice gets fluid flushes, general repairs easy, mentored under 2 in command technician. Then there is licensed General tech for all repairs and Lead foreman for all diagnostics and complicated work.Work dispatched to apprentices for the LOf’s and inspections and they feed the 2 techs in an ideal day.Wages vary depending on which person handles file. All job tracked electronically. Were hourly and salray in our shop.I feel 1 flat rate tech doing the job start to finish can not compete in the cost came the dealer and lube shops are playing. -
I believe you shouldn’t compete on price. You should sell your value. Can you create a business that can command 15-50% more because you offer a better product? Short answer: yes.
The dealerships can do this pricing model fairly easily because of one thing: capacity. They have lots of techs to work with, so they’ll always have a C tech doing C-tech work.But if you have say, 3-8 techs, and mixture of all types, you might HAVE to put an A tech on some C-tech work when the schedule demands it. Then you could be actually just lowering your gross margin, and not increasing sales at all.Think about this, too. I came from a background of home service, where there are just as many competitors as automotive service (think plumbing / air conditioning). We provide the best guarantees, warranties, and service in the business. We decided to do a price test. Running 9 branches in this price test, we kept 5 branches at the same pricing level, allowed 2 managers to lower their pricing to what they felt to be competitive, and in the last 2 we raised prices about 20%, on average. The difference in volume / close rate? NOTHING. The branches with lower pricing sold nearly EXACTLY the same amount of jobs, at a lower price. So did the branches that raised their pricing.What does this tell us? A small change in price is unnoticeable to the uneducated end consumer. Consumers don’t shop around, especially if they like you and trust you. Does a non-shop owner / non-mechanic know what it takes to do a ball joint on a 1993 Jeep Cherokee? Of course not! Can people tell if they’re being “sold”? Do they research your reputation before coming to your shop? You bet.Maybe you have some loss-leaders or jobs priced low that are highly shopped, like oil filters or tire rotation / wheel alignments. Get the customer in the door, get them to love your business, and they’ll pay more. Be Apple, not Dell. -
Mostly just the one rate for most work here, however do have a lower rate for strictly maintenance services, a higher rate for Diagnostic only, and I apply a highter rate to extended warranty contract work to cover the extra paper work and haggling.
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I would not be able to run my shop with a staggered labor rate . Not without replacing my techs . I have 2 A level techs on flat rate at $31.50 an hour . I do not see how I can currently compete with the dealers either
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There seems to be a lot of good points made on how much to charge per hour but does everyone follow the labor guides to the tee I’m looking for something that would be fair to my customers and my shop, diagnostic being the hardest to up with ie the equipment we have to buy has to be in the price any help would be appreciated
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I have been in the auto repair industry for nearly 30 years . In recent years I am not a fan of Alldata labor times at all . For the most part I think it cheats the average technician . Dealer techs can beat the clock but only because they work on the same makes and models all day .
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I agree with our assumption on the new dealership model. I have noticed service prices between the dealers and us is more price competitive. I agree with staggering shop labor rates. We use a $33hr for lof’s, $63hr for tire rotation, $75hr for tire mnt/dsmnt, $99 for diagnostics and maintenance services (flushes), $114hr repair with a labor matrix. I did this mainly to be more price competitive on shop-able services. We are still more expensive than dealers and franchise operations, and I’m ok with that. On the diagnostics, I wanted to be able to get the vehicle in using a lighter diagnostic charge. We also do use our General Service tech to help control cost on services.
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