Labor Rates are going up! Finally!

[Joe Marconi]

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[bantar]

I've increased my labor rate by $20/hr yesterday.   The main reason for doing this is to pay the best technicians what they are worth and maybe a bit more than that.   

Related, but a whole different beast is that I'm about to significantly increase my Quick Lube pricing.  This one will be harder to implement as it's somewhat of a commodity with many other nearby competitors that may or may not follow.   I've absorbed many COGS price increases without increasing the oil pricing in 4 years.   My strategy is to let gasoline pricing hit $3/gallon (not there yet here in Texas... about $2.75/gal).   Once it hits $3/gallon, we can commiserate with our customers about those high gas prices...   "it's the reason" that we had to raise our prices.  My goal will be a big enough bump to last 1-2 years (but with this rampant inflation, it might be short lived).   I'm somewhat nervous about this move, but it has to be done and it will be done.

[xrac]

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[Joe Marconi]

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[Joe Marconi]

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[Guest]

I raised ours $23/hr 4 months ago and gave the techs an $8 an hour raise. I think I was late to the party adjusting prices but we've gone up $50 an hour over the last year and a half. Customers haven't even noticed unless they are price shopping and those people will always find something cheaper anyway.  

[Joe Marconi]

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[xrac]

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[bantar]

On 8/1/2021 at 8:28 PM, xrac said:

Man you have balls!

 

Big balls, little brain.   Not sure which is more impactful in my decision making!   🙃

[Jeffrey]

We raised ours over the weekend from $89 to $110.  The big tire shops around are $120.

Independents are mostly still under the $100 mark. Looks like I may lead the way.

The tire shops are using mechanics. We employee ASE Certified Master Tech.

[Joe Marconi]

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[jfuhrmad]

I went up $5 2 months ago.  I’m higher than the chains right now.  Nobody blinks.

I’m going up another $5 this fall and another $5 in late winter.

I like doing it slowly.  The Euro shop right by me is $8 ahead of me and all the dealers are $40 higher than I am.

 

 

[Joe Marconi]

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[John Shanderuk]

Raised mine $54 in the last year no pushback. Don't care what others are charging need to make this money to pay techs bills and myself!

Edited September 12, 2021 by John Shanderuk

[Joe Marconi]

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[John Shanderuk]

Yeah had a garage door fixed. They put a link in the drive chain and adjusted it $300. Wanted a drain cleaned plumber was going to charge me $600 to take the toilet off the floor and put it back on! We do a heck of a lot more and need to know way more things than most trades but people think they don’t have to pay for it. I think the fantasy world is over the people in our trade want to be paid for what they do to and I think we should get it!

Edited September 13, 2021 by John Shanderuk

[xrac]

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[Joe Marconi]

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[bantar]

I've not had a single negative reaction to our labor rate rise.    We're higher than one of the local Honda Dealerships and some others too right now.   It did enable me to pay enough to steal a shop foreman from a local dealer.   Deal is done, but not consummated yet (vacation, and notice standing in the way).  I'll remain nervous until he's on board.   Having great people further supports our labor rate.   Price is only one variable in the value equation.

I did raise my European lube prices.   I'm only seeing reactions from 8-9.5 quart VW owners so far and had but a few declines.

Frank, $125 sounds the same as $129.99.   Push it a little more.  

[Joe Marconi]

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[Guest]

Why do independent shops always compare ourselves to dealers? Those guys can't hold a candle to a good independent shop. Isn't that why we do a large majority of the repairs and maintenance? We're better than they are at getting to the heart of the problem, caring about our customers and getting things done faster and less expensively. We aren't the ones that need to play catch up. We passed them by decades ago. Stop selling yourselves short! 

[bantar]

1 hour ago, Old and Tired said:

Why do independent shops always compare ourselves to dealers? Those guys can't hold a candle to a good independent shop. Isn't that why we do a large majority of the repairs and maintenance? We're better than they are at getting to the heart of the problem, caring about our customers and getting things done faster and less expensively. We aren't the ones that need to play catch up. We passed them by decades ago. Stop selling yourselves short! 

Makes sense, but I believe that this is an implicit belief that the independents are cheaper than the dealer.  As they say, Perception is 9/10's of reality. 

When you compare door rates and the dealer is cheaper, then there is a natural inclination to think it's a better place to take your vehicle... They know my vehicle very well and are priced right.    This is when rate alone is considered.    You said "and getting things done faster and less expensively."   Labor Rates <= Dealer are easier to understand.   Labor Rates > Dealer are tougher to explain.

Some actually understand that independents are working in their best interest and value this over rate.   We are less expensive when we are not selling them unneeded services, but not all customers recognize that as a needful concern.   Often, over/pushy sales is the impetus to abandon the dealer.

And there's a group that just hates the dealer, so we win by not being the dealer.

I meet a lot of people that do ALL of their services at the dealer.  Occasionally, we are given the opportunity to be the first one with whom they "cheat" the dealer.  These folks are often nervous and need reassuring. 

I'm in alignment with the spirit of your message.  I'm doing my part to win over as many customers as I can, knowing that I have to sell against giants.

 

[Grace Automotive]

On 7/31/2021 at 3:23 PM, bantar said:

I've increased my labor rate by $20/hr yesterday.   The main reason for doing this is to pay the best technicians what they are worth and maybe a bit more than that.   

Related, but a whole different beast is that I'm about to significantly increase my Quick Lube pricing.  This one will be harder to implement as it's somewhat of a commodity with many other nearby competitors that may or may not follow.   I've absorbed many COGS price increases without increasing the oil pricing in 4 years.   My strategy is to let gasoline pricing hit $3/gallon (not there yet here in Texas... about $2.75/gal).   Once it hits $3/gallon, we can commiserate with our customers about those high gas prices...   "it's the reason" that we had to raise our prices.  My goal will be a big enough bump to last 1-2 years (but with this rampant inflation, it might be short lived).   I'm somewhat nervous about this move, but it has to be done and it will be done.

I took a different route with regard to Quick Lube pricing.

I decided to "un-commoditize" it.  

When people ask me "how much for an oil change on my car", I tell them..."Hold on a second I'll work up a quote... we don't have one pricing fits all we only charge based on what your car actually needs"

(Customers actually respond well to this even if it ends up being a dollar or two more than my competitor)

Rather than have a flat X number of dollars for Synthetic Blend up to 5 quarts and X number of dollars for Full Synthetic up to 5 quarts, I charge $14 labor, and then charge for the oil and filter with a 30% markup above my cost.

At my current costs for Synthetic Blend Oil, this still comes out to roughly $30 for the small car that only takes 4 quarts of Synthetic Blend which is competitive around here.

However, on the cars that require Full Synthetic but only use 4-5 quarts at my current costs it comes out to a little over $40 which is better than the $69 many of my competitors are charging for Full Synthetic. 

Those customers REALLY appreciate this, because they know by looking at the shelves at Walmart and Costco that there isn't really THAT big a difference in the actual cost of Synthetic Blend and Full Synthetic like there once was.

This gives me a competitive price advantage while I'm still making the same amount of profit as I do on my Synthetic Blend oil changes.  (More importantly it sets me apart from my competition in a way that to most customers seems more fair)

Of course those that need 8-15 quarts of expensive oil already understand their oil change will cost more and rarely complain. 

This also makes it much easier for my customers to understand why their oil change costs more this time than last time when they can see the increase is directly attributable to rises in the cost of oil....because they already know they are basically just paying $14 plus the Oil and Filter.  


 

[Joe Marconi]

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[Grace Automotive]

On 10/28/2021 at 4:40 AM, Joe Marconi said:

Ok, please read this and have an open mind. 

I just had my fireplace chimney cleaned, along with my oil burner flue pipe. The entire service took 55 minutes (let's round up to one hour). The labor charge.....ready.....$325.00.   This is how it was itemized on my invoice- $175 to clean the chimney, $150 to clean the flue pipe. 

How many of us get $325.00 per hour? 

I have been using this company for a number of years now, they are reliable and do a great job.  AND, they charge what the job is worth, not by the hour.  How do I know this? I asked! 

We need to have a serious change in how we bill out our repairs and services.  The Chimney service company has little training, no continuing training to consider, little tool investment, low skill required and no overhead expenses like we have.  Compare that with all the tools and equipment we need, our overhead, our payroll, our training and continuing training, our information systems, on and on and on. 

Why are we, as an industry, so far behind with what charge per hour?  

 

I understand where you are coming from, and don't at all disagree with the general idea that pricing needs to change in our industry. 

However, just to play a little devils advocate:

1.) You said: " they charge what the job is worth, not by the hour."
 
Isn't that what flat rate is all about?   

We can argue that our flat rates aren't high enough, that's a different discussion.

However, the idea that a job that is rated for 2 hours gets billed at 2 hours even if our mechanic can do it in 1 hour is pretty much the same as what the Chimney sweep does with regard to charging for the job, not just by the hour.

2.) Yes, there are differences that in theory should make our profession pay even higher. As you pointed out little training, no continuing training, little tool investment, less overhead, etc...

However, there are several reasons they can charge more having to do with market forces:

a.) They come to you, rather than you coming to them.

If you were doing mobile auto-repair and coming and working on their car in their driveway you could charge a lot more for that convenience. (There are companies that do this, and they do charge a lot more.)

b.) They have less competition. How many companies in your town perform that service? Compare that to how many auto repair shops are around that can under-cut your prices if they choose to. 

When you have Brake shops offering $14.99 Oil changes and $99 Brake Jobs, it's already difficult enough to convince the average Joe that your service is worth 2-4 times that.

Many of our loyal customers understand that and will pay the extra for service from someone they fully trust.

However, unless we can get EVERYBODY on board with raising prices, there's only so much higher you can go before you are viewed as charging too much.

If there were two dozen chimney sweeps in your town and several were offering a $99 special for the same service, how long do you think your guy could continue to charge $325/Hour?

 

[Joe Marconi]

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[Gary Childs]

We went from $90.00 per hour to $110.00 6 months ago and not one customer said a thing. I'm thinking of going to $125.00 soon, the dealers around here are $135.00 and up, chain stores I'm told are around $125.00 already too. 

[Joe Marconi]

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[Gary Childs]

We went to 124.00 per hour last Monday and I also talked 3 other shop owners I know and respect to do the same thing and they did. 

 

[xrac]

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[Stevo]

Customers are going to go through a harsh reality very soon. The auto repair industry has been sadly underpaid for many years now. The technological advances in vehicles are out of control, and to find a guy that is willing to fix these things while kneeling on a dirty wet shop floor, test evap systems while having salty snow fall down their neck, be strong as a bull to change tires, and as smart as a rocket scientist to diag that intermittent gas pedal position sensor along with a mosquito stuck on the hot wire of a MAF is near impossible. Not to mention the 100 grand++ investment in tools. 

A stat I read 18 years ago stated that for every new technician coming into the field, 42 were retiring. The local trade schools are dropping the automotive curriculum due to lack of interest. Lots of better good paying jobs out there.

I'm at 90 right now, but I mainly charge by the job. The problem around me is the renegades charging 50 bucks an hour to do a crappy job. 

Kinda like how the tow-in customer has complete faith in what the wrecker driver told him was wrong with his car, but looks at you sideways when you tell them what's really wrong.

I wish us all luck in this. If only we could get everyone on board, even the renegades. Thankfully, the renegades are on their way out as they are being buried by technology, but I'm tired of waiting.

[Joe Marconi]

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[John Shanderuk]

I'm charging $169.00 and keeping $17 an hour just for myself on the entirety of the labor hours of all techs when I do payroll, that's how I am paying myself. So if there are 200 billed hours I get paid $3,400. So figure out how much YOU want to get paid and go from there kind of backwards thinking but I got tired of being pooch screwed. Got tired of insestual labor rates (to want to look to those within your industry as your sole source of inspiration and best practices for building your business). I work hard for my money, I'm actually going to work now for awhile (Saturday) so I should get paid. Mike drop...

Sorry about the rant!

Edited December 4, 2021 by John Shanderuk

[jfuhrmad]

2 hours ago, John Shanderuk said:

I'm charging $169.00 and keeping $17 an hour just for myself on the entirety of the labor hours of all techs when I do payroll, that's how I am paying myself. So if there are 200 billed hours I get paid $3,400. So figure out how much YOU want to get paid and go from there kind of backwards thinking but I got tired of being pooch screwed. Got tired of insestual labor rates (to want to look to those within your industry as your sole source of inspiration and best practices for building your business). I work hard for my money, I'm actually going to work now for awhile (Saturday) so I should get paid. Mike drop...

Sorry about the rant!

Hells yeah!

[Guest]

I'm really enjoying reading about all of us making rates higher and more reasonable so we can pay employees (and ourselves) what they deserve. I might have to change my name from Old and Tired to Experienced and Optimistic. 

[xrac]

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[Jeffrey]

On 11/14/2021 at 9:33 PM, Gary Childs said:

We went from $90.00 per hour to $110.00 6 months ago and not one customer said a thing. I'm thinking of going to $125.00 soon, the dealers around here are $135.00 and up, chain stores I'm told are around $125.00 already too. 

We were at 89 and went to 110 the beginning of August. Only 1 comment since we adjusted our hourly rate and that was from our supplier when I turned in warranty paperwork.

[Joe Marconi]

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[jfuhrmad]

Based on what I was seeing here I took the gamble and raised mine $30.  Nobody has complained.  I just tell them how much the job costs to do and they say yes or no.  We are in a wealthier area so that may be a contributing factor, but it's working out well so far.

[southendautocare]

In my region of the country, most all good quality independent shops have gone from the $110 to $160/ hr range over the last 2 years, including tire/mechanical shops. Dealers are $180 & up. Advanced, complex diagnosis is charged by the job to adjust for low parts sales and guarantee diagnostic techs good income.  Also a trend to charge by the job, sometimes adjusting parts prices down to near cost(sometimes below cost), and raising the labor cost to achieve the same gross profit goal. This helps some with challenges on parts pricing and customers wanting to buy own parts. I've always advocated for this.   The best part is being able to pay good technicians WAY beyond what they have ever seen. This is very necessary to attract & retain good technicians both in your shop and the industry.

[Joe Marconi]

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[Jeffrey]

On 11/30/2021 at 6:58 PM, Stevo said:

The problem around me is the renegades charging 50 bucks an hour to do a crappy job. 

Those customers who receive that price break and poor work end up being some of my best customers. 

[Eric Bernhard]

We are sitting at $135 CAD which is $108 USD and customers are happy with that price.

We also now constantly charge a $20 shop supply fee for every job unless its just an Oil change.

[Joe Marconi]

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[Eric Bernhard]

1 hour ago, Joe Marconi said:

How is Canada responding to the cost of labor, the tech shortage, and part shortages?  

Labour is really tough, we are lucky that we have deep roots in the Latin community so hiring has been ok but only based on word of mouth referrals.

Tech shortage hasn't impacted us.

Part shortage is a real pain.  Three months ago EGR values just disappeared off the face of the planet.  Prices are fluctuating like crazy, some weeks filters are $13 while other weeks are $8.00....for example NOX sensors, right now there is a huge sale for us at $250 per sensor last month those exact same NOX sensors were $800. 

[John Shanderuk]

Just raised mine again to $181.09 and paying techs $60 per flat rate hour. No tiered labor bonuses just $60 per hour. They write the estimates so they live with what they quote for labor. 

Edited July 25, 2022 by John Shanderuk

[Joe Marconi]

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[John Shanderuk]

I am an import shop hence the name "Uptown Imports" been in business  35 years.

The techs start the estimate by adding the labor line with what and why it is needed. Prioritizing it, we use "R" Recommended "S" Severe or "SS" Super Severe and lookup the labor time. It would look like this "S-Brake flush (fluid black)"

The why is in there so the advisor has something to tell the customer about why it needs to be done,

Tech prints it and writes in the parts that are needed for each labor item. Then it goes to the Advisor. Advisor interacts with the customer.

 

[TTP]

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[Joe Marconi]

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