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Auto Repair Labor Rates Explained

Updated: Feb 28, 2020

(source via: AAA)


Though many people think auto repair shops' rates are very high, most are actually close to industry averages. To help you better understand auto repair labor rates, and so that you feel more comfortable handing over your hard-earned money, here are some of the factors auto shops use to establish car repair labor rates:

* Local labor and benefit costs (rural vs. urban location)

* Vehicle makes and models serviced (mainstream vs. luxury/exotic)

* Repair shop type (dealership, independent, etc.)

* Facility overhead (mortgage or rent, upkeep, utilities, etc.)

* Business overhead (tools, auto repair technician training, equipment, advertising, taxes, etc.)

* Skill levels and certifications of auto repair technicians

How Car Repair Shops Establish Rates

It should be noted right off the bat that a mechanic does not receive the hourly labor rate you are quoted. That rate reflects his/her pay plus a portion of the facility’s business expenses. Running an auto repair shop today is a costly undertaking. In addition to the cost of the physical facility, high-tech diagnostic tools and equipment needed to service modern vehicles can easily require a six-figure investment.



Most auto repair shops quote labor charges using a “flat rate” manual or computer program that provides the average time it takes an experienced technician to perform a given car repair. That flat-rate time is then multiplied by the shop’s hourly labor rate to reach the total labor charge for the service.

Some people think flat-rate pricing is a scheme to overcharge customers. Actually, it is a system that allows shops to give fair and consistent auto repair estimates while paying their technicians based on ability. For example, let’s say the flat-rate time to replace a starter is two hours. The shop quotes this rate to customers and pays its technicians two times their hourly wage for doing the work. If an experienced technician completes the job in less time, he or she effectively earns a higher hourly rate. If an apprentice takes longer, he or she effectively earns less. Either way, you pay the same amount.

Diagnosis Pricing

Not all services can be estimated using the flat-rate system. Diagnostic work is a good example because every troubleshooting process is unique. Many auto repair shops quote a basic diagnostic charge that includes certain procedures and a maximum time limit. If the problem cannot be identified within that time, they will contact you, describe what has been done to that point, and ask for more time (and money) to do further diagnosis. This can be frustrating for both you and the shop, but there is no practical alternative, especially when it comes to complex or intermittent troubles.

For some problems, electrical issues in particular, it is not unusual for the diagnosis cost to exceed that of the actual repair. For example, a shop may spend two hours tracking down an open circuit in a wire under the dash, and then fix the problem in five minutes with some solder and electrical tape. In these situations, you are mainly paying for the expertise required to locate the problem, not the repair itself.

Menu Pricing

Some auto repair shops advertise certain jobs using “package” or “menu” pricing. You have probably seen coupons for $24.95 oil changes that include the parts and labor required to do the job on most cars. Or maybe you have read ads that offer a “brake job” for $99.95 per axle – additional work extra. An amount for labor is included in the menu price you are quoted. Menu pricing is a legitimate marketing tool, but be sure to note any limitations and exclusions.

For example, if your car requires synthetic motor oil, more than five quarts of oil, or an uncommon filter, an oil change will cost more than $24.95. Similarly, most brake jobs will require more work than can be included in a $99.95 special. When you purchase menu-priced services, don’t be surprised if the auto repair shop calls you and requests approval to perform additional work. Before giving an okay, ask for a written estimate that details the parts and labor costs to help prevent any misunderstandings. If you have any questions, make sure they are answered to your satisfaction prior to approving the work.


(source via: AAA)

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