Understanding labor times is the key to providing customers with accurate car repair estimates.
However, mapping out the labor time for an auto repair service can be tricky, especially if you have just opened a new auto repair shop.
This is exactly why we have put together the ultimate guide to understanding and finding the best labor rates for auto repair shops.
You can use this guide to:
- Understand the labor cost for car repairs
- Understand how to calculate an accurate car repair estimate for customers
- Learn how mechanics calculate their labor cost
- Win over and retain customers for your auto repair business
- Learn the different methods for calculating auto repair labor times
This guide will be the go-to for everything related to auto repair labor times.
What are auto repair shop labor estimates?
An auto repair shop labor estimate is exactly what it sounds like; an estimate for the amount of time and cost incurred for car repair.
Essentially, auto repair labor times predict the amount of time it takes to perform or complete certain car repairs for customers. A car repair estimate is similar to a repair quote.
Auto repair quotes give customers and insurance companies an estimate or expert opinion on the total cost of repairs.
More often than not, disputes arise over car repair billing. This is exactly when auto repair quotes and estimates come in handy.
The key to generating estimates is through accurate labor times. Let’s look at some of the factors that affect labor time.
Factors that can affect labor times for auto repair shops
Generating accurate labor times can be tricky, especially because it involves several different factors in the mix.
Here are a few factors that affect labor times and need to be factored in for calculating the hourly labor rate for your team of auto mechanics.
1. The average time of job
The most important and obvious factor in labor times is the time it will take for auto repair labor to perform the repair.
For example, if a technician opens the hood of a car to replace the engine but discovers that the car also requires more repairs, it will take him a long time.
The average time for the repair job is going to increase. To offset the repair work cost that wasn’t included in the original estimate, you can charge customers more for all jobs over a certain amount of labor hours.
2. The age of the vehicle
When analyzing auto repair labor times, you have to look at the age and condition of the vehicle that has arrived at your auto repair shop.
Usually, the older the vehicle gets, the more time it will take for your auto repair labor to perform the repair and maintenance.
This is because it is trickier and more time-consuming to fix older cars. You might also need to look for repair parts that are harder to find for old vehicles. This will also increase your auto repair labor times.
3. Technician competence in car repairs
Different auto repair shops employ technicians or auto repair labor with varying levels of competence and experience. The more experience and competence a mechanic has, the less time it will take to fix the vehicle.
That is the rule of thumb. However, you might have to bump up your auto repair labor rates for trickier repair jobs that take more time and effort than usual.
4. Geographic location
Believe it or not, your geographic location also impacts the time it will take for your auto repair labor to perform a task.
For example, if your auto repair shop is based in Pheonix’s dry area, your auto repair labor and technicians will need more time to perform bodywork at your repair shop.
5. Customer needs
Another thing that you will have to factor in is customer needs. For example, if a customer walks into your auto repair shop for an urgent repair, you will have to get your team to complete it quickly.
At the end of the day, it is the customer experience that makes an independent repair shop stand out from the competition.
Using an auto repair labor guide
An auto repair labor guide is one of the most useful tools for calculating labor rates and times. It is the foundation for setting labor rates.
But while picking out an auto repair labor guide for your business, you must be careful to pick the best one. So how do you even know which one is the best for you?
It’s recommended to pick a reliable guide because the industry is evolving, and so are repair costs. While the industry still has physical labor guides for repair jobs, digital ones have become more popular at auto repair shops.
When it comes to labor guides, you should choose the one that:
- It offers you consistent and comprehensive data on estimated labor times from industry leaders so you can come up with labor rates that will keep your repair shop profitable
- Updates and provides accurate estimates for labor times from time to time so your shop can update operating costs and maintain competitive pricing
- It is easy to integrate with your automotive shop software so you don’t have to waste time managing different systems, simultaneously
After picking our labor guides, you can easily calculate labor rates and times. It will help you keep an eye on your labor costs and ensure that they remain updated per industry standards.
Understanding the labor matrix, labor rates, and labor guide markups
If there is one thing that auto shop owners are always on the lookout for, it is driving down costs while increasing profitability.
And there are three main ways that a shop can make more on labor:
- By using a labor matrix
- Through custom labor rates
- By applying a labor guide markup on the labor rate
So what is a labor matrix, and how can it help you? A labor matrix is a tool that can help you amp up the labor rate at your shop depending on how long a repair job takes.
It then uses this information to put the money back into your shop.
You can automatically apply markups or multipliers to jobs based on time ranges and how long the job takes to complete while using a labor matrix.
Let’s not forget that time is money. You are on the road to better profitability if you manage your labor time well using the many factors we discussed.
You can easily use the labor matrix to bump up the labor rate using different calculations, including a simple one and a compounded one.
Here’s how both of the different types of work help you with bumping up your labor rate:
1. Simple calculation
The simple calculation is just like what it sounds – simple!
For example, you can bump the total price by 15% for any job between zero and three hours. For any job between three and six hours, you can bump up the total price by 25%—and so forth.
This is a very common way to calculate labor rate and labor time as it keeps things straightforward for everyone, experienced mechanics, shop owners, and customers.
2. Compounded calculation
Calculating the labor rate through this method is a little more complicated than the previous method. So how does it work?
Suppose there is a job between zero and four hours, then you could mark up the first hour by 5%, the second hour by 7%, the third hour by 9%, and the fourth hour by 11%.
Each hour within a range gets marked up by a slightly different amount.
This helps shop owners make the most of their labor time, especially if they have hired experienced mechanics to complete the job.
Using custom labor rates
Suppose you decide to put an extremely accomplished and experienced mechanic on a job. Then it wouldn’t make sense to use the labor matrix or charge a flat rate for the repair.
In such a case, you can use a custom labor rate for the experienced and qualified professional. The hourly rate for more experienced team members is usually higher than the market rates.
Although this may sound a bit tricky at first, you can use custom labor rates to charge a fair price for the time of your technicians and service advisors. This makes the repair job worth it for the team too.
Using a labor guide markup
Labor guide markups are best used when a job seems to take longer than the estimated time, and the technicians must deal with it most of the time.
Using a labor guide markup instead of the labor matrix or a custom labor rate makes sense in such a situation. It’s unfair to give technicians more hours for no extra pay. But they deserve it for the work they do.
There can be other situations too, that require a labor guide markup for the hourly rate.
It’s astonishing but possible for an older vehicle to stop by your shop for repairs; however, they’re indeed a lot of work, and there are some things you can do to make them go more smoothly.
Maybe your shop offers custom repair and maintenance services, so your technicians must be paid to take great care in making the finest suits for your clients.
You should expect the technicians to slow down to keep dents and scratches at bay. This means it will take them much more time and even more auto parts to fix the old vehicle and get it back in shape.
In such a case, using the labor guide markup will make sense.
Labor times: Additional things to think about
By adjusting your shop’s pricing structure and labor costs, you can ensure that you reach your desired profit goals in a balanced manner. That means that both customers and staff are happy.
In making your choices, keep these pointers in mind. Your first instinct may be to raise prices at the end of the month.
Don’t do this. Customers will quickly learn when repairs are more expensive, and they’ll tell everyone else about it, and word will spread.
Being fair to your customers and the shop technicians is also very important. Good judgment comes into play when choosing a method to use.
If your labor rates go up, so will your shop’s ARO. But there is a danger in only sticking to the labor matrix or custom labor rates.
Your shop’s technicians will be unhappy if they see their bottom line growing, but they’re not making more money for their hard work.
The more experienced service advisors at your shop will naturally know when it’s appropriate to adjust prices and which methods are most appropriate for any given situation.
They will likely only need to follow the written guidelines and instructions the first few times they use their new tools and equipment for common auto repairs, but then they will begin to figure out how to get the most use out of it.
If you want to be successful as an advisor, train all the new service advisors and coordinate with them to create a streamlined process for applying each method.
This way, you can minimize the chances of misunderstandings and miscommunications at your shop — and keep everyone there happy to be there.
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