Quantcast
Jump to content


Is Flat Rate the Future for Shops?

Joe Marconi
 Share

Recommended Posts

  • 2 weeks later...
Tom Ham AutoMN.info Contributor

Tom Ham AutoMN.info

Posted
Posted
More and more shops are adopting the flat rate pay model. Is this the future?

 

I don't like flat rate pay.

 

I have long paid my techs an hourly rate plus bonus based on performance. I feel this gets my techs motivated with security. Many think my plan creates a dead-beat attitude. I don't think so. My system rewards those who excel and are willing to work hard.

 

Am I wrong? What plan do you have for your techs?

 

A number of shops are having good success with a pay system that is about half hourly and about half flat rate....kind of the best of both worlds and fair to all parties.

  • 2 months later...
autoguy Rising Star

autoguy

Posted
Posted
Tom, could you go into more detail with real numbers about that plan?

 

I would also be interested in more of a description of how this would work. :D

  • 3 months later...
HTI.WERKSTATT Explorer

HTI.WERKSTATT

Posted
Posted

More and more shops are adopting the flat rate pay model. Is this the future?

 

I don't like flat rate pay.

 

I have long paid my techs an hourly rate plus bonus based on performance. I feel this gets my techs motivated with security. Many think my plan creates a dead-beat attitude. I don't think so. My system rewards those who excel and are willing to work hard.

 

Am I wrong? What plan do you have for your techs?

 

 

As well I'll agree, I to dislike flat rate pay. BUT, at this point in my business, it's my only choice, and with as many shops around that do the same, I'm okay with the fact, but not entirely. I would love to be able to do more for my guy, and sooner or later guys. I never once worked flat rate, I refused. So here I am paying my tech flat rate, and your right it has its ups and downs. I would be interested in atleast getting an idea of how you set up the hourly rate plus bonus based on performance. I may be to small at this point in time, but something well worth consideration for the future. I want to be able to reward good help, and offer incentives as well in the future.

CARMandP Proficient

CARMandP

Posted
Posted

Joe,

 

That is the way the dealership that I worked at was and that is the main reason that I left. When the work was there, the required 45 hr week wasn't bad when you were turning 50-75 hrs a week. I turned as many as 130 hrs one week (in six days) and set the shop record for the most hours turned in one week. That was a great plan when there was work but like you said, if there wasn't any work, there was no base pay so it wasn't uncommon to turn 30-40 and still have to be there the full week and a sat every 3 weeks. I always wondered how "legal" it was to require us to work hours that we were not paid for. Since I am the only tech here now I pay myself flat rate because its the easiest for me to figure for now. When I get big enough to need more help, I will have to change that.

Gonzo Grand Master

Gonzo

Posted
Posted

My point exactly, well said!

 

I can't tell my people to put in a 50 hour week and only pay them for 20. I understand the principle of rewarding hard work. But, hard work with no pay makes me wonder. And like you said; is it legal?

 

Many shop owners don’t agree with me but I pay a base wage with a performance bonus. The base pay is usually less than what the tech wants to make, this makes them a little hungry. In good times we all make money, in hard times we tighten our belts a little. But how can you ask a tech to take it on the chin in bad times and then ask him to go the extra mile when it’s busy. It’s the reason why I left the dealer in 1980.

 

If we are ever going to raise the level and image of the auto business we need to find ways to pay a decent wage in order to attract the right people.

 

I'm like Joe, I pay a base salary... (what I call... "just enough" to get by on $$) then the main focus is on the performance bonus or % of actual sales that they accomplish. I even have an incentive if you manage to stick it out on a slow week where there is very little in bonus/perfomance... be here a whole 40 hours, you get your base pay and a 100 to 150 bonus.. just for being here. That works on the busy weeks and the slow weeks too. It's worked well for years. However, now with the economy taking a dive, and... some of the other shops lowering their labor rates... I may need to come up with a new plan. Cause the guys are staying... and I'm a paying... and the work is off and on...

Hey, lean times, just hanging around waiting for spring... Gonzo

Tom Ham AutoMN.info Contributor

Tom Ham AutoMN.info

Posted
Posted

Tom, could you go into more detail with real numbers about that plan?

 

Joe:

 

Sorry to take so long to reply. The plans I am referring to pay the tech a basic wage for the hours they are at work, and then pay a progressive incentive based on production. The lows of flat rate are higher, and the highs of flat rate are lower. But, the system is still significantly tied to incentive enough to make good production critical to excellent pay. Similar systems can be created for advisors and parts managers.

 

Hope this helps,

  • 10 months later...
Brianp Enthusiast

Brianp

Posted
Posted

I have one tech whos flat rate and 2 that are salary. The flat rate guy averages over 40 hours in a week. He has been as low as 32 and as high as 55. Our buisness isnt slow so the work is not an issue. I dont have a "lube tech" I dont want my guys being paid on what they sell due to the possibility of it interfering with what is really needed or what they want to do. Aan air filter that is ok tell next oil change may be needed and brakes that have 5k left will be needed due to the bonus $. It creates to much possibilites for coruption in my opinion. Now in shops that dont have the work thats the owners responisbility to make it happen. The tech should be creating work. My guys are also some of the highest paid in the area and we are one of the buisiest shops.

Brianp Enthusiast

Brianp

Posted
Posted

My flat rate guys still make good money even on a slow week say they flag 30 hours. 30 Hours is still a decent salary. I could see changing my pay system if I could not keep a tech busy but at this point my newest tech(been here 13 years) is still on flat rate. His checks fluctuate a little like last week he got 52 hours and the week before 42 but either way I like it. I could switch him to salary but I feel I could possibly be screwing him on those weeks he flags 40 + hours and I wouldnt feel right in doing that.

  • 1 month later...
SCHOHAAN Rookie

SCHOHAAN

Posted
Posted

I agree with the flat rate module, I pay all my techs and customer service guys and all others a guaranteed base pay. I also give them an incentive, that is install an engine and get an extra $150, also we work on a percentage or commission. if the shop makes more, we all make more, if the shop is slow, I take the hit and pay everyone the base pay. As a result alll my employees are happy and hard working. I also give all of them a full Health Insurance paid by the shop. I have the best techs. in my shop and most of them came from dealerships. that I think is the fair way, (after all they also have to provide for their families). and they know what they will get what ever the economy does).

Kingsun Auto & Tires

Oklahoma City, Ok

Email me

My link

  • 1 month later...
CollinsAutomotive Apprentice

CollinsAutomotive

Posted
Posted

We also pay more than most shop and dealerships. But, I also feel I have the best techs because of it.

 

I know when I worked for flat rate in the 1970's, those lean weeks were tough. I was newly married with a new born baby. I had to work another part time job.

 

I think we should pay our techs a decent wage and reward them when they produce.

 

 

this greatly depends on the volatility of the shops cash flow and the local economy. If you go out of bussiness paying salarys, your not doing your tech any favors.

Habershaw Automotive Newbie

Habershaw Automotive

Posted
Posted

Joe, I have recently joined this website, due to what this topic is all about. I am a guy living in Sarasota, Fl where the work is all based on season. from May to late September/October, work slows down alot. I've decided to go out on my own, and try and run my own place. I feel that it's very hard to make a decent living here working for someone else, due to the whole flat rate trend. I say flat rate is good, if you live somewhere, where work is there throughout the whole year, but not in places where people vacation. I've worked for shops where I'd be there for over 40 hours, yet not make that pay due to the flat rate deal. It's just frustrating to work for people who make salary because they are management, and the techs make nada. Anyways that's my rant, on a side note, I could use some help from anyone willing to give me advise on the whole starting the business aspect, haha I can tell you now, I have only a business name, and a couple locations for a shop, I need more advise on the administration aspect. any help would be greating appricated, Thanks!

FROGFINDER Rising Star

FROGFINDER

Posted
Posted

We all get salary. If you are at work you get paid. If not you don't. We ALL work on shop upkeep when "slow". We can change if we have to but that has worked since 1978.

  • 2 years later...
Superman Apprentice

Superman

Posted
Posted

I know this is an old topic but thought I would way in anyway. I have been a mechanic for 13-1/2 years and have been paid flatrate and hourly plus commission. One job I made $10/hr plus 10% commission on labor, another job paid $7/hr plus 15.5% of parts and labor after the first $1550, but they also figured overtime into the commission. That job payed the tire/lube techs $10/hr plus 9% of parts and labor after the first $650, not including tires. All pay scales have there pros and cons. Whatever the pay scale I think commission/bonus needs to be some aspect of it.

5 Star Auto Spa Community Regular

5 Star Auto Spa

Posted
Posted

We also pay an hourly rate plus a percentage of labor and parts for jobs that were recommended and sold based off of a technicians recommendations. Joe, how is your performance bonus set up for your techs?

  • 1 month later...
Exclusive Auto Care Explorer

Exclusive Auto Care

Posted
Posted

Very interesting responses from all of you.

 

This is what we do at our shop please correct me if I am not doing it the correct way.

 

We use Real Time Labor Guide. I dont know how good of a system this is but it works for us now.

 

My husband is alone in the morning while my workers go to school. They dont get to the shop till 2:00pm.

Their rate is $16.50 an hour and we pay according to labor guide, for instance if a job takes 3 hours they will get pay for the 3 hours at their rate. If they take 4 hours they will still get pay for only 3. We always have work, so they are always busy. They clean their work area, and they also have their own tools. I would like to pay them hourly from the time they get here to the time they leave. That way I can have a little more control over them and I can set rules and regulations. Unfortunately, our shop is not there yet. I dont want to take the chance and pay them hourly when we dont make the money. By us paying them flat time, I know that we made that money for that week.

 

Is this a fair system? Am I doing something that Is not right or Ilegal?

 

I want to be fair to my employee they are good techs.

nmikmik Enthusiast

nmikmik

Posted
Posted

When a tech is hired we monitor and track the production hours sold against what the tech works. We do this for 4 to 6 weeks, depending on the level of the tech. We then get a base, (the average the tech produced in that time). For example; if a tech works 40 hours and is averaging 35, that becomes the base, or the min level of expectation, he needs to make before he makes a bonus. Anything after that he will get another hour of pay for each hour produced. So, if he books 40 hours in a 35 hour week, the tech will get another 5 hours pay.

 

But the goal is to get the tech to 100% - for every hour worked. We raise the bar each month until the tech reaches 100%.

 

We like this because the tech competes against himself. We don't set the min standard, the tech does.

 

The techs like it because they are motivated to earn more, but will also get paid for the hours they work. Again, if a tech works 40 hours and produces 45, the tech will get paid for 40 and a bonus of 5 more hours.

 

Hope this is clear, if not let me know.

Joe,

I am wondering how do you pay them during those 4-6 weeks of gauging their performance.

Thanks!

phynny Community Regular

phynny

Posted
Posted

Very interesting responses from all of you.

 

This is what we do at our shop please correct me if I am not doing it the correct way.

 

We use Real Time Labor Guide. I dont know how good of a system this is but it works for us now.

 

My husband is alone in the morning while my workers go to school. They dont get to the shop till 2:00pm.

Their rate is $16.50 an hour and we pay according to labor guide, for instance if a job takes 3 hours they will get pay for the 3 hours at their rate. If they take 4 hours they will still get pay for only 3. We always have work, so they are always busy. They clean their work area, and they also have their own tools. I would like to pay them hourly from the time they get here to the time they leave. That way I can have a little more control over them and I can set rules and regulations. Unfortunately, our shop is not there yet. I dont want to take the chance and pay them hourly when we dont make the money. By us paying them flat time, I know that we made that money for that week.

 

Is this a fair system? Am I doing something that Is not right or Ilegal?

 

I want to be fair to my employee they are good techs.

If you go strictly by the guide then you are doing them a serious disservice. The labor guides are a starting point for a new clean rust-free vehicle and even then they can hardly ever be met.

Exclusive Auto Care Explorer

Exclusive Auto Care

Posted
Posted

If you go strictly by the guide then you are doing them a serious disservice. The labor guides are a starting point for a new clean rust-free vehicle and even then they can hardly ever be met.

What do you suggest Phynny? They are very hard working individuals and they also have a family I want to be able to pay them fair.

nmikmik Enthusiast

nmikmik

Posted
Posted

What do you suggest Phynny? They are very hard working individuals and they also have a family I want to be able to pay them fair.

Let me try and Pynny (or anyone) can correct me.

He is suggesting not to follow the labor guide strictly because then you will NOT be fair to your mechanics and/or yourself.

The point here is that you must charge the customer more money per job especially if you know that it will take longer, more involved work for your mechanic to do that job.

For example the labor guide will say 2.3 hrs to replace "whatever that is" but your mechanic and hopefully you, see that it's an old car, rusted bolts, "rusted" customer that will require a 1/2hr explanation of the job been done. You need to increase the above 2.3 hrs, to let's say 3hr or 3.2 hr, depending on above difficulty.

This way you are not shortchanging (underpaying) your mechanic because they will get paid for the amount of time it took them to perform the replacement of the part.

I am going to sound like a broken record, but what you really need right now is training for yourself as an owner/service writer/office manager - that I suspect you are serving as right now. I do not suggest the coaching at this point, but a day or two of "business jump-start" would be very beneficial. If you suspect that you are easy to sell to, don't go because most of these companies are in business of coaching rather than seminars. I saw Mspecperformance gave you a very good suggestion of taking a parts supplier training, they should have less interest in selling you anything else other than training. Maybe find a course on-line you can take, but take something. You will have a much better understanding of the process, terms and your future plans after you take the training.

hope this helps,

phynny Community Regular

phynny

Posted
Posted

Exactly, I've wrenched for a long time so I have a realistic labor time in my head already. On a small 1-3 hour job I would up the time 25-30%. On a large job, IE an engine, I charge by days and a 2-day or 16 hour minimum. So if the book says 10 hours, I'm charging 16. If it says 18, I'm charging 24. His has worked very well for us and we have never had complaints.

 

We pay a small salary plus a % of labor and I do not want a job rushed. By using these times we are normally always within an hour of my estimated time. On tranny jobs I add 50% on to the time and again it works out perfect. On electrical troubleshooting I charge by the hour.

 

If the job calls for 10 and I charge 16 and do it in 8 I will charge around 12. Customers LOVE getting a lower bill than they were quoted.

  • Like 1

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share
Go to topic listing

  • Available Subscriptions

    See all Subscription Plans

  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Toolbox is Last to Leave, First is the Heart
      By Joe Marconi in Joe's Blog
         0 comments
      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.

  • Similar Topics

    • Joe Marconi
      Why Should We Settle for Discounted Pay From Warranty Companies?
      By Joe Marconi

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

    • Joe Marconi
      Business Slowing Down? Before You Spend More Money On Advertising, do this...
      By Joe Marconi

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

    • Joe Marconi
      Money Isn’t The Motivator We Think It Is
      By Joe Marconi

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

    • carmcapriotto
      Artificial Intelligence: We Have Some Concern! With Dan Vance [E016] - Speak Up!
      By carmcapriotto
      Our world is rushing head first into an A.I. future and we want to encourage our listeners to remain vigilant in these exciting times, as there is some legitimate cause for concern with the changes brought by A.I. Technology.
      Joining us as our guest is Dan Vance from Shop Dog Marketing.
      Craig has known Dan for a few years now and it was at ASTA in 2023 that he first heard Dan Speak Up on the topic of AI to a group of shop-owners on the promise and peril of AI…and he saw Dan deliver a presentation on the topic again at the MARS marketing conference with the Institute for Business Excellence in (beautiful) Ogde, UT earlier this year.
      In this episode Dan acknowledges many of Craig's concerns regarding AI, while they both align on the actual benefits. 
      Craig states regularly that the last skill machines should ever be able to take from us is our ability to communicate interpersonally and … but in some areas - A.I. is far more capable of outperforming certain tasks.  While that is happening - there remains a disconnect between AI’s ability to generate data and present the data in a way that can produce more effective interactions with real people. 
      Our listeners who may share in Craig’s concerns will no doubt appreciate Dan’s calm and reassuring thoughts on the topic.  
      Watch the YouTube Video
      Topics include:  
      Early AI and Machine learning The concept of Human Capital. Authenticity as a new focus Communication tendency becoming less synchronous Efficiency vs. Authenticity and what we lose AI Strengths and practical uses Social Proof - and a word on Reviews and AI Google quality rater guidelines - EAT - Experience Authority and Trust
      Join Our Virtual Toastmasters: https://remarkableresults.biz/toastmasters
      Thank You To Our Partners:
      The Institute at WeAreTheInstitute.com.  "Stop stressing over your business, you deserve a good night's sleep. The Institute’s coaching helps you achieve success and financial peace.
      AutoFlow at AutoFlow.com. Your partner in technology, Autoflow consolidates your client interactions - before, during and after the visit to a single thread. Learn more at Autoflow.com
      AutoLeap at AutoLeap.com. Are you tired of juggling multiple tools to manage your auto repair shop? Say hello to the streamlined efficiency of AutoLeap, the #1 all-in-one Auto Repair Shop Management Software!
      Shop Dog Marketing at Shop Dog Marketing.com. "Want to see your auto repair shop thrive? Let Shop Dog Marketing be your guide. Our customer-first approach, combined with AI-driven creative content, ensures top rankings.
      In-Bound at CallInBound.com. Cover your communication needs and revolutionize your auto repair business with AI-driven call analytics from InBound.
      Contact Information
      Email Craig O'Neill: [email protected] Join Our Virtual Toastmasters Club: https://remarkableresults.biz/toastmasters
      The Aftermarket Radio Network: https://aftermarketradionetwork.com/
      Remarkable Results Radio Podcast with Carm Capriotto: Advancing the Aftermarket by Facilitating Wisdom Through Story Telling and Open Discussion. https://remarkableresults.biz/
      Diagnosing the Aftermarket A to Z with Matt Fanslow: From Diagnostics to Metallica and Mental Health, Matt Fanslow is Lifting the Hood on Life. https://mattfanslow.captivate.fm/
      Business by the Numbers with Hunt Demarest: Understand the Numbers of Your Business with CPA Hunt Demarest. https://huntdemarest.captivate.fm/
      The Auto Repair Marketing Podcast with Kim and Brian Walker: Marketing Experts Brian & Kim Walker Work with Shop Owners to Take it to the Next Level. https://autorepairmarketing.captivate.fm/
      The Weekly Blitz with Chris Cotton: Weekly Inspiration with Business Coach Chris Cotton from AutoFix - Auto Shop Coaching. https://chriscotton.captivate.fm/
      Click to go to the Podcast on Remarkable Results Radio
    • JustTheBest
      It’s like a Car Count Cheat Sheet!
      By JustTheBest

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.



  • Joe Marconi

    Money Isn’t The Motivator We Think It Is

    By Joe Marconi, in Automotive Management,

    0 comments 83 views
    Joe Marconi

    Five Proven Tips to Improve Your Bottom Line

    By Joe Marconi, in Selling Automotive Repair,

    0 comments 105 views
    Joe Marconi

    Isn’t It Time We Rethink What a Master Level Technician Is?

    By Joe Marconi, in Automotive Industry,

    1 comment 120 views

  • Our Sponsors

Main Sections

More Sections

Discussion Forums

×
×
  • Create New...