Optimize your auto shop's labor revenue
The article explains how auto repair shops can increase labor revenue by using a labor matrix, creating custom labor rates, and applying labor guide markups, while considering factors like vehicle age, geographic location, and technician experience to adjust labor times and pricing effectively.
Adjusting your pricing on parts to make a profit is pretty straightforward. But when it comes to labor times for auto repair shops, things can get a bit tricky. You need competitive labor rates, but you also need to keep those rates reasonable so you don’t scare off your customers with sky-high prices.
3 ways your shop can make more money on labor:
- 1.By using a labor matrix
- 2.By creating custom labor rates
- 3.By applying a labor guide markup
Before diving into the differences between these three methods for setting the best labor times at your shop, here’s a quick refresher on the one thing these methods have in common: the labor guide.
What is a Labor Guide?
A labor guide is like the gospel of labor times for auto repair shops. It tells you how long, on average, it takes to complete different types of repair work. The times listed in auto repair labor guides are averages, so it’s best to treat them as a starting point.
Factors That Can Affect Labor Times for Auto Repair Shops
Let’s take a look at some of the factors to consider when determining how much to mark up (or mark down) your shop’s labor rates.
- Age of Vehicle: Older vehicles are often trickier to fix, especially because finding parts for them can require a time-consuming hunt across parts suppliers. You can make up for the time spent hunting down uncommon parts by charging more for all repairs involving vehicles over a certain age.
- Geographic Location: Some areas lead to different types of repair challenges that can affect the time it takes for repairs. For example, shops in Syracuse, New York—the snowiest city in America—might find themselves working with cars that have rust, which can significantly add to the time it takes to remove or even clean certain parts.
- Experience of Technician: Chances are, you’re already paying experienced technicians a higher base salary or hourly rate. However, certain situations might call for cranking up those numbers, like if you really need to put their skills to the test for a tricky repair for a client who wants it done ASAP.
- Customer Needs: You can offer customers who need their cars back fast a “Pro Tech” rate, where your tech wraps up the job in record time. When you’re asking techs to complete a job faster than the time on the labor guide, and still do a good job, the customer is getting special service. Be sure to let customers know that speediness comes with a surcharge.
- Relationship With Customers: It’s a good idea to consider giving loyal customers a special rate as a token of appreciation. With that said, industry leaders advise sticking to your labor rates as much as possible, because if it becomes a habit, you risk financially harming your business.
How to Choose a Reliable Labor Guide
A reliable auto repair labor guide is foundational for your shop when you’re setting labor rates, so you’ll want to use a labor guide that stays up-to-date with the latest labor times in the industry. Many auto repair shops use digital labor guides that are constantly updated with the latest labor times.
When seeking out a digital labor guide, look for one that:
- Offers consistent, comprehensive data on labor times from industry leaders, so you can set accurate labor rates that will keep your shop profitable
- Adds labor times for new vehicles and jobs periodically, so your shop’s pricing can stay competitive
- Integrates with your auto repair shop management software, so you don’t have to dig through multiple systems
FAQ
No matter what your auto repair shop specializes in, chances are you're facing similar challenges:
- 1.New customers are hard to come by
- 2.It can be difficult to keep even the most loyal customers coming back
- 3.Repair work is frequently declined or pushed off
The reality is, people don't want to have to pay for an expensive fix when they don't directly see or understand the value or necessity behind the repair. Customers have become used to simple solutions to complex problems, and more often than not wish their cars were like that too.
Auto repair shops can also be intimidating: they're loud, usually covered in oil, and they can feel like a trap.
That's why transparency is so critical in the auto repair industry, and why digital vehicle inspections have become such an important tool for shops. Customers want to know that they're only being charged for necessary work, and digital vehicle inspections help your shop show them that.
Digital vehicle inspections are just one aspect of your entire shop's workflow, but are an incredibly powerful foundation that go a long way in making your shop more money.
Tekmetric is a huge improvement over a traditional paper process. Estimates are easy to draft, orders are easy to create, and work flows easily through the platform as cars move through your shop.
Canned jobs in Tekmetric are particularly powerful, saving service writers time by simplifying the process of building job estimates. Less clicks means more time to focus on the customer and offer amazing service while selling even more products.
When you have the right tool that helps simplify your work, why not use it? You wouldn’t use an open-ended wrench when a ratcheting socket wrench cuts the time in half and saves your knuckles.
In our effort to keep growing Tekmetric so running your shop is even easier, our latest update to canned jobs now includes even more canned jobs for BG Products and services right in Tekmetric. Just enable the canned jobs you want to use, and start selling even more BG services right away!
What are canned jobs?
Canned jobs are pre-saved job templates in Tekmetric that include labor and parts associated with common repair work done.
Instead of recreating jobs you perform on a regular basis, shops can create as many canned jobs as they like to build estimates in just seconds. Just apply the right canned job and you're ready to send for approval.
In fact, shops find canned jobs so helpful, one shop running on Tekmetric has created over 2,000 customer canned jobs, and even uses at least one canned job per repair order.
The value of canned jobs is clear: making it easier for repair teams to provide customers with the best of the best.
Simple, efficient, and reliable processes lead to more completed work and happier customers. And as we know, happier customers lead to even more customer retention, and better customer retention increases shop profitability.
In essence, canned jobs can even help you pay for Tekmetric. The profit generated from saving time, closing more repair orders and selling better service can cover the cost of the platform, and then some.
Just why are canned jobs so powerful for your shop? That's easy:
- Make your jobs easier by simplifying your workflows for common repair orders into just a few clicks
- Shorten the time it takes to operate, get estimates built and approved sooner and move cars faster
- BG Canned Jobs, using BG products in particular, enable your shop to offer more specialized service options for improved vehicle performance
However, it’s important to stay consistent in also attracting new customers rather than relying solely on the group of existing customers you build up as your shop expands its reputation for good repair work.
While walk-ins are certainly a thing, it isn’t the best bet to depend on them as your sole way of getting new customers. Instead, take proactive approaches to gain a steady stream of new customers coming through your doors.