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  • The REAL labor rate

    Posted by Tom Piippo on September 21, 2011 at 11:44 am

    This was inspired by a recent post on iATN.

    What would your labor rate be if there were NO profit in parts; stop the silly discussions on parts profit??? Eliminate the arguement with customers that they can get parts cheaper from their cousin. Either sell quality parts (at cost) that have a manufacturers warranty, or install customer supplied parts with no warranty; the labor would pay all the bills in this scenerio.

    Lets keep this discussion in per-centages as the anti-trust laws may get us and the moderator in trouble if we talk $$$$.

    I find this an interesting concept, I think by a technician who wants to see higher labor rates.

    What do you think?

    Tom Piippo replied 12 years, 9 months ago 7 Members · 7 Replies
  • 7 Replies
  • Tom

    September 24, 2011 at 1:23 pm

    Increase of about 50% in labor rate, depending on the stats in a particular shop.

    However, it makes more sense to me that our industry move to total job pricing like so many other service industries. If I have a deck installed at my home, I get a bill for a deck: $1,800. I do not get a bill listing individual prices for 6 different types of boards, 3 different sizes of nails, concrete, shop supply, labor, sublet labor, hazmat, etc.

    Auto repair bills should look like this:

    Brakes total $XXX

    (all individual items are listed, but not with individual prices)

    Oil change total $XX

    Engine performance total $XXX

    Grand total $XXX

    This would eliminate the majority of pricing rabbit trails.

  • John Shanderuk

    September 27, 2011 at 2:50 pm

    We’ve been doing this for years. I just got a bad review on my Google Places page because of it but I think it is the way to go. If you give a client and estimate and it is within what you told them it should be that much. I had a long discussion with my Service Advisor about this issue. He told me he has people asking about it all the time, my response was that when I sold at the front counter I very rarely (almost never) had anybody ask me about this. I think menu pricing is the way to go, when your at a resteraunt or a doctor or a vet ect. they don’t itemize out what everything costs the client.

    Just my two cents

    P.S. Here is the comment below from Google Places

    “They don’t break out the price of parts and labor, they just give you a total for the repair, so it’s hard to compare to other shops. I wasn’t impressed by their lack of transparency”

  • davesgarage

    September 27, 2011 at 4:32 pm

    In the Mitchell Manager system, which I use, there is room for 10 different labor rates. I uses 6, and one is for “customer supplied parts” which is $42.85 higher than my “regular” rate of $87.18. When questioned why the labor is higher for supplied parts, I tell the customer that’s what I need to make to stay in business. If I don’t have parts to mark up, I can’t pay the bills. 17 years and I’m still providing excellent service. I plan to be here for as many more. This topic can go a lot deeper but what is comes down to is giving your customers value by doing superior work compared to what they can get elsewhere.

  • thetrustedmechanic

    September 28, 2011 at 2:13 am

    I can understand the feeling of violation from a negative review like that, but I think most people will look at that review and see it for what it is, a cheapskate just looking for something to complain about. Regardless this is the type of customer you DO NOT want or need.

    Unfortunately I believe in Michigan we are required to itemize parts and labor operations. Then again I have misread the motor vehicle repair facility manual before.

  • robc

    September 28, 2011 at 6:15 pm

    That is how we quote jobs to people: here is the price…. we will be done on …… We do very few quotes over the phone. We only break it out to parts and labor when asked, which is rare. We quote our labor rate as a range depending upon the type of work, say from thirty to one and a half and never exact to anyone. That is only the concern of the price shopper or the gotcha shopper who are not our target customer. We are the ones who run our operations, not the potential customers. In fact when I get a price shopper I ask up front what they are looking for and if they say lowest price, I quit there with them as we are not the lowest, ever. When they demand do know the price anyway, I politely decline and suggest they keep calling around and not waste my time or theirs. They are then pissed off enough that I never have to take another call from them again. Awwww. There are plenty of great customers out there who just want to know the price and when it will be done.Those are the ones we want to attract and keep.

  • prairietire

    October 4, 2011 at 1:19 pm

    How is sales tax figured? Cost or retail?

  • Tom Piippo

    October 11, 2011 at 3:08 am

    Dale Gervais wrote:

    > How is sales tax figured? Cost or retail?

    That depends on your state’s tax code. In Michigan, sales tax is charged on the $$ amount for parts listed on the bill. Labor is not taxed. (The simple answer. Tax codes are never simple)

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