What Should You Charge?
According to Quora.com, the labor rate for most private repair shops is somewhere around $70 to $90 an hour. We don’t know who the heck is giving them their information, but we’re here to tell you, that’s way off. Even on gasoline vehicles, labor rates have gone up, as vehicles have become more complicated and require more training to fix. So how much should you charge exactly as a shop?
Realistically, the labor rates for established reputable diesel shops across the Nation are anywhere from about $100 to $130 an hour. We checked with Brown’s Diesel in Riverdale, CA ($115 an hour), 805 Diesel in Moorpark, CA ($120 an hour), Haller’s Repair in Cheyenne, Wyoming ($110 an hour), and Central Iowa Diesel Performance ($100 an hour.) You would think that there would be more of a spread depending on the area, but we found that not to be true, just a gradual lessening of labor rates moving West to East. The type of work being done was more the deciding factor, and not just any shop can work on a diesel pickup especially a late-model one, and be able to do it right. Updates to items such as scan tools are a yearly headache and have to be factored into the labor costs. We have seen work from $70 to $90 an hour shops, some is good, some not so much. A lift pump hooked up to the turn signal fuse would be an example of a not-so-good install at a fly by night diesel shop.
It’s hard to talk about labor without mentioning the end result, which is a bill paid in full by the customer. Many shops will offer a discount for cash pays, as having the money immediately in hand is worth a lot when it comes time for paychecks. Waiting on a cashier’s or personal check to clear can be a nightmare, and sometimes they never will. It’s up to you as a shop to decide if you’re going to take personal checks or not, but with the existence of debit cards and credit cards that can be immediately verified it would be our suggestion that you don’t.
In addition to discounts on labor, there’s also surcharges. Working on a truck that’s 8 feet in the air can provide challenges, as do big box trucks, medium duty rides, or motorhomes. Don’t be afraid to charge 10% more for these types of vehicles, as that they will legitimately take longer and be much more of a pain to work on. Ambulances and construction vehicles also fall under this category.
On The Clock
When trying to figure out how long a job will take, the Mitchell Repair Information Company is pretty much the go to source “book rate.” Mitchell gives an estimation of how long a competent mechanic should be able to complete a given job provided that nothing goes wrong in the removal or the install. Book rate is hard to argue with, and can actually lead to your advantage as a shop, as specialty tools and a mechanic that specializes in certain types of jobs can really cut down on the actual time of the installation.
There are some type of jobs that rely more on knowledge gamed then actual time given. Installing a custom tune on a truck would be an example of this type of work, as an EFILive tune might cost five to six hundred dollars a truck, but only take a few hours to perform. Here the customer is not only paying for the work to be done, but for the license on the tune, and also the knowledge that the tuner had to gain before tuning the truck. Flat rate jobs like transmission rebuilds or tuning can definitely be very advantageous to shops looking to get the most buck for their bang.
A common question is quote when should labor rates be raised? This is sort of a million-dollar question for shops, as it’s hard to get realistic data as the economy and general climate can vary month to month and year to year. If there is a large demand in the area for work and a shop has a backlog of trucks, it might be a good time to look into raising the labor rates and hiring another mechanic. Having a low labor rate can be good especially when you’re first starting a shop, but as the business gets busier, you’ll have to start charging more. Most of the people we talked to also had the same advice, if business is booming there’s no reason not to charge more, as taking advantage of a busy Shop season can also help get you through the lean times.