I’m going to give you a quick and condensed overall view of how the auto shop business works. This broad picture will give us a starting point to grasp the flat rate concept and how the repair charges are calculated.
Not all shops use this method, but it’s very common in the industry. First a quick paragraph about why you should care. A nice example of how this system of paying mechanics affects the customer is the wheel alignment.
This service is usually cheap and therefore low paying to the mechanic. Often technicians will choose to up sell front end suspension parts to increase the total compensation on the repair order.
They can also perform a quick alignment without making many real adjustments. This set the toe and let it go method sometimes sacrifices the quality of the service. We call it toe and go, because this angle takes little effort to adjust.
The retail auto repair business is configured in a way to help assure that the auto shop owner makes steady money as long as cars and customers keep coming in. This begins with the way the shop charges the consumer and this is based on an hourly rate.
The rate is usually set high, somewhere between $60 – $130 an hour. However, this depends on what part of the country your in and economic factors in the area. Some areas of New York City and Upscale towns and cities located in the state of California are even breaking the $150.00 an hour mark.
If you are in a high wage area you can just about guarantee the hourly rate is near the top of this scale.
The charges assigned to the needed service are based on this hourly rate. The total hours charged multiplied by the rate for any given jobs are supposed to be obtained from a standardized automobile labor guide. Unfortunately, some businesses don’t follow the labor guides, because the hours are to low.
Example of Auto Repair Charges
For argumentative purposes let’s start out by using $110.00 an hour as a base line measurement.
For example, If you need a water pump replaced on your V6 Chevrolet engine and the job pays 2 hours then the labor charge would be $220.00.
However, don’t forget to add the parts, engine coolant, taxes, auto shop supplies and disposal fees. Sidebar: Join the discussion on my personal blog from the last text link so we can talk more about unfair miscellaneous shop charges.
You can see how this system is designed to charge you the maximum on any given automobile repair. Now here is the evil part to me. The car mechanics gets paid on average of only about $20 an hour out of the auto shops hourly charge.
The technician works on a method of payment called flat rate. This means if the job pays 2 hours the mechanic gets $40.00.
If it takes 3 hours to complete the assignment the mechanic still gets $40.00 if it takes them 10 minutes they still get $40.00. Mechanics use a popular reference to describe this.
Sometimes you eat the bear and sometimes the bear eats you. Explained this means sometimes you beat the flat rate time and win. Sometimes, more often then not, the job takes longer then the labor time allows and you loose. Loosing the game stems from a few of the following reasons.
Broken bolts, lack of experience, not following proper diagnostic procedures, parts out of stock or the boss forcing you to paint the walls and empty all the trash. However, a lack of training and not having the needed special tools required are the most common reasons to go over the allotted time.
Why Consumers Should Hate Flat Rate
Putting in extra work while at the same time loosing money on the job is the down side of the flat rate system for mechanics. Using the winning real world example above if the mechanic replaces your water pump and it takes him 20 minutes he still gets paid his $40.00.
This motivates him to rush through the job as fast as humanly possible. He wants to move on to the next job and do the same thing over and over again. This is how they make more money. When the technician rushes like this they might take some short cuts.
This could reduce the over-all quality of the auto repairs. It’s likely the mechanic will start concentrating on the money they can make instead of the cars they can fix. In some cases mechanics are competing for the next job sitting in the parking lot.
The first one done the current task gets first crack at the next job. Even the most trusted professional car mechanics to get greedy and push themselves way beyond their ability to perform quality repairs. I have seen some good technicians skip the final quality control road-test to get the next car.
What if The Car Isn’t Fixed Properly
This can result in a comeback where the customer must once again return for a repair often related to the first visit.
Again the facility tries to turn this in their favor by saying the comeback is unrelated to the original procedure and charges you a second time. The auto repair shop benefits from this on an accelerated scale.
Using this example the auto shop made $240.00 in labor and paid the mechanic $40.00 and walked away with a labor profit of about $200.00. Then they mark up the price of parts on average of cost plus 30 percent and tack on shop supplies and disposal fee’s. The grand total of profit is about $350.00.
Next they will multiply this by adding more mechanics and repeating the process from open till close. Hence why most auto repair businesses are now open late and run 6 to 7 days a week. Once you perfect the system you can then scale it to make more.
This is just a quick look into the life of a car mechanic. Nevertheless, it covers one of the the root causes of the problem that automotive service consumers face every time they want to get their car fixed. Of course this is just my humble opinion and your results will vary.
The flat rate auto repair billing method motivates the mechanic to make the owner money. No where in my last sentence was customer satisfaction or quality repairs mentioned. Unfortunately, this would often be a secondary concern.
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More Help for the Automotive Consumer
This is why I created a book for the auto service consumer. The education required to protect yourself is available. This next link takes you to information about my no charge eBook a guide to auto repairs. This link takes you back to more story’s and a video about the automotive business. Go from the page about the auto shop to auto repair stories. A good way to verify fair auto repair pricing and the diagnosis of the shop is to check on them using the same estimating tools they often use. I made a screen capture video for you highlighting unique features of these Car repair manuals.
On the homepage you can find out more about the car mechanic that built this automobile site. This page might also lead you to more answers to your automotive questions.
Over at certifiedmastertech.com I put together a story about why the flat rate system needs change. There have been so many advances in automotive technology in the last 30 years isn’t it time mechanics compensation evolve as well?