What is Your Labor Rate?
Our Labor Rate is one of the most talked about topics in our industry. Why does the guy who cuts the lawn at our shop charge twice as much per hour than we do? Why does the sublet mechanical shop we use down the street charge double what we do per hour while working on the same car? I think we all know the answers to these questions. It is because of third-party involvement between the repair facility and the vehicle owner. The real question is: what can be done about it?
How do you determine your Labor Rate? Did you calculate your rate based on your costs, or are you just arbitrarily accepting some fictitious "survey" rate that a third party offers you? Remember, you are the seller and the vehicle owner is the buyer, so it doesn't matter what insurers say they are paying in your area. What they are really saying is that this is the rate they reimburse their insured. So, now the ball is in your court. Where do you go from here?
In creating this tab of labor rate resources, we hope you’ll find the calculations and frankly the motivation to correct the imbalances within this industry. Below are links and forms to help you work through your labor rate setting.
BY completing the excel labor rate worksheets you’ll better understand what YOUR rates should be. How you implement that information is up to each individual shop.
Your association has also created a task force of individuals that can discuss ideas and strategies in implementing YOUR rates. Email your request to firstname.lastname@example.org
In the book Matsushita Leadership:
Matsushita says that if you take society’s people and society’s resources and you fail to make a profit, then you’ve committed a crime. If you do make a profit and you don’t improve conditions in society, then you’ve committed an even bigger crime. People trusted you to come to work for you, vendors have chosen to give you a credit line, a bank has loaned you money, someone has agreed to rent to you-whatever the case may be. You have an obligation to make a profit. “Profit is not a dirty word”
Links to Labor Rate Articles
Workable Labor Rate Sheets - Excel File Downloads