Knowing how many hours are needed to complete a repair is key to providing customers with accurate estimates. And this is where an auto repair labor guide comes in handy as it empowers you to give customers price quotes that match the final bill.
As per our expertise, using an auto repair labor guide earns you a positive business reputation and wins you customers. Keep reading to learn:
An auto repair estimate is a contract between the repair shop and the customer. It kicks off with an auto technician predicting how long it takes to complete the repair and adding up the costs involved.
An estimate should contain the above details and a disclaimer stating that the final costs may be different.
This document is shared with the customer who signs it as authorization for the shop to begin the repairs.
An estimate is just that — an estimate or prediction of the timing and cost of a job. As a result, estimates may not cover all the expenses needed to finish a repair.
In this sense, auto repair quotes are similar to estimates. However, our research indicates that the purpose of auto repair quotes is different as they give customers and insurance companies an expert opinion on the total cost of auto repairs.
Auto repair quotes are referred to if disputes arise over service or billing, which happens more often than you think. Through our practical knowledge, even experienced mechanics can’t see all the damage until they disassemble the vehicle.
Upon vehicle inspection and disassembly, it’s common to find more areas for repair not included in the original estimate.
Based on our firsthand experience, the best way to handle this situation is to communicate any updates on repair progress so your customer knows there is additional work to do and isn’t surprised when you send your invoice.
This brings us to what a bill refers to. While the document of final costs you create is known as an invoice, it’s a bill to the recipient. In this case, a bill to your customer.
A bill recaps the actual costs of a job, where an estimate predicts how much the job will cost. In short, a bill lets your customer know how much money they owe you for a repair.
Another difference is that your customer needs to send you payment for the bills you give them. Based on our observations, in contrast, most estimates only require a customer’s signature as an indicator of approval.
Auto repairs are done to fix normal wear and tear. Our findings show that are the most common repairs:
Based on our observations, mechanics often don’t need an auto repair labor guide for these services as it’s common to price these jobs at a flat rate.
Through our practical knowledge, when it comes to estimating the cost of auto repair labor and materials, things can seem straightforward enough.
However, it often takes more than multiplying your hourly rate and adding the price of parts. As per our expertise, this auto repair labor guide simplifies this process, so you make a profit on every job.
Labor costs significantly impact the total auto repair cost. So it’s crucial to predict an accurate time for labor on each job.
Don’t forget that longer projects come with more complications. This will factor into your rate if you price your hourly fee higher for complex repairs.
You can reference an auto repair labor guide, like this one, if you’re unsure how long a job will take.
But remember, time only accounts for half of your labor cost equation since you have to set an hourly rate that makes financial sense.
The first step is to figure out the minimum labor charge to break even. This is known as your shop rate like it is in other trades.
To do this, total all your expenses and divide the sum by the number of hours you work. For example, if your monthly overhead is $10,000 and you work 40 hours a week, your shop cost is:
$10,000 / 4 weeks = $2,500/week
$2,500 / 40 hours = $62.50/hour
In the above example, you’ll need to charge $62.50 to cover all your expenses and not lose money on jobs.
However, to be an auto repair pro, you need to charge more than your shop rate to make money.
Our research indicates that you should include a markup of 50 – 60% in your hourly rate. This brings our example rate up to $94-100 hourly.
If the profit margin seems high, remember that car dealerships’ labor rates are around 20 – 25% higher than auto shops’ fees.
Not to mention that you can reinvest the extra cash into your business to fuel growth.
When it comes to pricing repair jobs, you should add a markup to auto parts and materials like paint, sandpaper, screws, etc.
Based on our observations, a rule of thumb is to increase your discounted cost so that the price to the customer is what they would pay themselves.
However, always consult your state regulations to stay within the pricing laws for auto parts and repairs.
