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#1264023 - 10/23/08 12:05 AM Re: Reasonable Shop Labor Rate [Re: tom slick]
PandaBear Offline


Registered: 08/05/02
Posts: 12335
Loc: Silicon Valley
 Originally Posted By: tom slick
they aren't friends to any business

or renters, or home owners, or anyone other than those who make $200K and more.
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#1264026 - 10/23/08 12:13 AM Re: Reasonable Shop Labor Rate [Re: kingrob]
PandaBear Offline


Registered: 08/05/02
Posts: 12335
Loc: Silicon Valley
 Originally Posted By: kingrob

But to reiterate, if you're charging me 75.00 an hour labor, then I expect all of that to go to the mechanic that did the work. If you're only paying him ten-twenty dollars an hour, then I should only have to pay him twenty dollars an hour. Fair is fair, and I don't want to pay for the shop owners tools and equipment. I want to pay for his labor, which is what I was charged with. I mean you don't go into the barber shop and get a bill for 100.00- 25.00 shampoo / scissor and 75.00 labor?


The shop may pay the tech $20 an hour, but if you add all the tax and insurance, idle labor that he may not use, etc. That usually double the cost.

Usually as a rule of thumb the salary is 50% of the labor cost to the employer. Now you add the business cost, that is probably going to be 3x the salary just to break even.

I assume most businesses want a reasonable profit, so you probably have to charge 3.5-4x the salary.

Think of it this way, if there are many mechanics charging the similar price, that means that is the reasonable cost plus reasonable profit for the trade. You are more than welcome to do it yourself or bring the car to 50 miles away to be worked on (I did that when I need a rebuild), or just shell it out if you are too busy/lazy to do so.
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#1264096 - 10/23/08 05:31 AM Re: Reasonable Shop Labor Rate [Re: kingrob]
Spector Offline


Registered: 06/10/02
Posts: 3203
Loc: Chattanooga, TN
It does irk me that the shops, especially dealers, no longer stock the inventory of parts that they did years ago and I understand why. What irks me is the 100% mark up on the part when they have to get it from the warehouse. The dealer did not stock it, he did not have the carrying cost, he just ordered from another source and marked it up. Although independents are similar, they call NAPA have it delivered and mark it up. Just not right IMO!

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#1264116 - 10/23/08 06:24 AM Re: Reasonable Shop Labor Rate [Re: The Critic]
rjundi Online   content


Registered: 03/16/04
Posts: 6156
Loc: New England
It all depends on what the shop offers and their work. A decent honest independent in my locale (Seacoast NH) charges around $85/hour. The dealer (Subaru) is $100/hr and very good at work but the service advisers push unneeded maintenance on owners.

I found an ex Subaru tech of 35 years in a small place that has no frills for $60/hr who is honest and fair. I hope he survives.

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#1264128 - 10/23/08 07:03 AM Re: Reasonable Shop Labor Rate [Re: The Critic]
kaboom10 Offline


Registered: 09/17/08
Posts: 731
Loc: royal oak, mich
There are compitent repair shops here at $60 $80 and $100/hr. The lowest priced one only does fast jobs but the others will do anything you want. Quality work in a timely and professional manner by all.
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#1264145 - 10/23/08 07:58 AM Re: Reasonable Shop Labor Rate [Re: kingrob]
TooManyWheels Offline


Registered: 02/21/03
Posts: 3675
Loc: Houston, Tex
 Originally Posted By: kingrob
I don't want to pay for the shop owners tools and equipment. I want to pay for his labor, which is what I was charged with. I mean you don't go into the barber shop and get a bill for 100.00- 25.00 shampoo / scissor and 75.00 labor?


I guess the solution here would be to only hire services performed by people who work out of the trunks of their cars. You could probably get that for the rates you are asking. Even then though, you are probably paying for their time, gas and vehicle wear to troll parking lots looking for customers, as well as allowances for lost tools, etc. I was about to add an allowance for customers who stiff them, but in this case it is more likely that they would be taking advantage of you. But you get what you pay for.

On the barbershop analogy, you do pay for the materials, overhead and tools, it just is not itemized on the bill - in the same way that most garage costs are not itemized.

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#1264159 - 10/23/08 08:17 AM Re: Reasonable Shop Labor Rate [Re: TooManyWheels]
oilyriser Offline


Registered: 04/30/03
Posts: 7077
Loc: Ontario, Canada
Labor rates should be different according to how long a job takes. Small jobs should be billed more per hour, because a lot of the time is spent waiting for the customer, putting the car on the hoist, taking it off, cleaning up etc. Staying at a hotel at daily rates is higher than weekly rates.

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#1264168 - 10/23/08 08:29 AM Re: Reasonable Shop Labor Rate [Re: Saturn_Fan]
JHZR2 Offline



Registered: 12/14/02
Posts: 33529
Loc: New Jersey
$100/hr as a full, burdenedd rate means that the service guy is probably making $35-40/hr take home. That is $70-80k/yr. Pretty low if youre the owner of the business.

But what people dont understand is that at least when dealing with an independent shop, the rate needs to cover ALL expenses, overhead, healthcare, social securit by 100%, etc.

In reality, someone charging $50 in a shop is likely living below the poverty line if they are actually reporting their income and paying all their taxes. I would suggest that nobod in their right mind would charge such a low rate, as it would not be a sufficient rate to have a reasonable living.

My indy charges $85/hr or $120/hr if you bring your own parts. That said, he will typically use only OEM parts from the dealer, and his prices are better than I can get b a longshot... Im not sure how much he makes on parts, though Im sure it is something...

JMH


Edited by JHZR2 (10/23/08 08:29 AM)

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#1264173 - 10/23/08 08:37 AM Re: Reasonable Shop Labor Rate [Re: JHZR2]
Tornado Red Offline


Registered: 06/01/05
Posts: 1735
Loc: Saint Paul (ex-San Diego)
 Originally Posted By: JHZR2
In reality, someone charging $50 in a shop is likely living below the poverty line if they are actually reporting their income and paying all their taxes. I would suggest that nobod in their right mind would charge such a low rate, as it would not be a sufficient rate to have a reasonable living.

You might be pretty close to the mark. I had some work done at the beginning of this year, and while the labor rate wasn't noted on the invoice, the total labor charge seemed too low for the amount of effort that was expended. I was so appreciative that I wrote my check for more than he was asking. (I have never done that before, and probably never will again... it was a one-time gift.)

In some low-cost markets, a shop run like a real business may be profitable at $70/hour... so $80-100 is not out of line in the higher-cost areas. I don't want to pay more than that unless I see some added value, like exceptional diagnostic skills.
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#1264208 - 10/23/08 09:40 AM Re: Reasonable Shop Labor Rate [Re: Tornado Red]
JHZR2 Offline



Registered: 12/14/02
Posts: 33529
Loc: New Jersey
Absolutely agree about paying extra unless some extra value is required... and sometimes it is.

Unless it is a friend with no shop or overhead (unreported, but its just a favor, I guess), an "off time" favor (unreported), etc., I just cant see how it would work. All of it leads to being unreported, i.e. untaxed.

Id imagine that for an actual shop, lets call it a single owner/operator, so all income turns into business expenses or their income. Id guess that by the time they pay tax on gross receipts, full social security, etc., it is at least 50%.

So that means that a shop charging $40/hr is maybe netting $20/hr before anything else... $20/hr, if they took it all home would be $40k/yr. But then one has to pay for rent, heat, property taxes, retirement benefits, healthcare... WHat does all that result as a true net take home? $10/hr? $20k/yr?

Doesnt add up to me, unless its undocumented.


Edited by JHZR2 (10/23/08 09:41 AM)

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#1264225 - 10/23/08 10:06 AM Re: Reasonable Shop Labor Rate [Re: JHZR2]
bretfraz Offline


Registered: 06/21/02
Posts: 2756
Loc: CarMax
My former employer was a small family-owned company that did some light construction work as part of their business.

I was reading a construction industry trade mag one day and read an article stating that if you ran a small company with less than 20 employees, you could not operate it profitably unless your labor rate was $100 an hour. At the time my company's rate was $85 an hour. Needless to say, I was a little surprised at the difference so I did some calculating and internal researching.

I figured that our "break even" hourly rate was $107 an hour. Anything less than that and we were losing money (and we were, the company was in a terrible financial position). Due to local market competition I could not raise our labor rates so I found other ways to generate more revenue to make up the $22 an hour difference. In the end that wasn't enough and the company was sold, a good thing in this case.

Ultimately, it's up to the business to determine what it takes to turn a profit and stay viable. Every customer wants to pay as little as possible for goods and services but if you let the customer dictate your finances, you'll be out of business in no time. So, what's a "reasonable shop rate"? It's whatever it needs to be in order for the business to remain viable and profitable. Plain and simple.
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#1264235 - 10/23/08 10:20 AM Re: Reasonable Shop Labor Rate [Re: bretfraz]
PandaBear Offline


Registered: 08/05/02
Posts: 12335
Loc: Silicon Valley
A few things I observed in many independent mechanics in the bay area:

1) successful shops have a very smart owner who could figure out problems that others couldn't figure out. Therefore gain a loyalty among the customers, and could charge the same or more in labor rate than competitors.

2) they buy fixer uppers for idle labor during slow hours

3) many are family businesses to provide employments to family members that couldn't find a higher paying job. They stay open despite not the best way to make money, the owners make salaries/wages.
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#1264291 - 10/23/08 11:34 AM Re: Reasonable Shop Labor Rate [Re: bretfraz]
Gary Allan Offline


Registered: 09/28/02
Posts: 39806
Loc: Pottstown, PA
 Quote:
Ultimately, it's up to the business to determine what it takes to turn a profit and stay viable. Every customer wants to pay as little as possible for goods and services but if you let the customer dictate your finances, you'll be out of business in no time. So, what's a "reasonable shop rate"? It's whatever it needs to be in order for the business to remain viable and profitable. Plain and simple.


At one time "ROI" wasn't really a rational terms for many small businesses. It was the cost of creating your own job. It's sorta still that way if you look at a franchise. The difference being that anyone doing it now is ONLY looking for ROI in some manner of either gain or avoided losses.

When my parents bought a 2 family house (multi-unit) back in the late 60's ..it wasn't an investment, per se~ , it was a way to pay the taxes and water and sewer when they were in retirement. It cost xx $$ for that utility.


You also can't just run a business on mark up from cost. If you want to see how that gets turned inside out, go to a local hospital and see how they "make very little" at an extreme price. They have the options of writing themselves off to death ..but being immortal at the same time. It ends up being a blank check.

Most of your high hourly rates are due to credit cards. If real cash was exchanging hands ..the whole industry would slow down quite a bit. Real cash would pay for the tools ..the machines ..the labor ..the parts.

Right now you have a mechanic/facility that has tool/machine debt ..a 30 day net parts bill ..blah-blah-blah ..all that include a little fluff in the migration. NAPA charges more for carrying the parts tab ...the tools/machinery costs more to cover the extension in use ..and the customer ends up the whiplash recipient of it all.
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#1264411 - 10/23/08 02:43 PM Re: Reasonable Shop Labor Rate [Re: JHZR2]
Spector Offline


Registered: 06/10/02
Posts: 3203
Loc: Chattanooga, TN
In a stealership service dept. though we must remember that they may be subsidizing the new car sales or used car sales if the manufacturer has a poor product to sell, sales down etc, lousy sales personnel or the manufacturer was dumb enough to give the public what they wanted, big SUVs and trucks that now have become lead anchors. In that case is it right to charge a larger hourly rate to subsidize a poor manufaturers product and or push unneeded services like injection cleaning, coolant flushes every year etc, etc.

As noted in todays paper, there are far too many new car dealers out there, especially domestic and we need for them to fail to get the market back into shape. Sorry, I have no sympathy for banks, financial institutions, car dealers who rape you when things are going their way and complain complain when things are bad and then want to rape you again. You reap what you sow!

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#1264439 - 10/23/08 03:22 PM Re: Reasonable Shop Labor Rate [Re: Spector]
oilyriser Offline


Registered: 04/30/03
Posts: 7077
Loc: Ontario, Canada
One cause of high prices is the number of different models of cars out there. Maybe a shop could cut costs by only taking in a limited variety, and having techs who are really fast at certain jobs.

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