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Are you paying the correct labor rate for repairs?

by Sam Dillinger

How many times have you gone to your local repair shop and gotten an estimate of several hundred dollars. Then when you ask for an explanation of the charges, your mechanic says “that’s for parts AND labor” as if that should answer all of your questions about why you’re spending this money? Well you’re not alone. This is a pretty common practice. Not many repair shops, dealerships included, want the consumers to know that there is a specific amount of labor for each and every repair that can be done, for each and every vehicle. This is true for warranty repairs, too. The manufacturer pays the dealer for every repair that’s done to a vehicle under warranty. Let me explain how the system works, and how your mechanic gets paid. This information will help you understand what the correct labor rate should be, when you do have to pay for the repairs to your vehicle.

The mechanical repair industry’s whole pay scale is based on breaking an hour of billable labor into 10 equal parts, or tenths as they’re referred to. Just for reference, one tenth of an hour is 6 minutes. As I mentioned, there is a set labor time that is to be charged for each repair that can be done to your vehicle. For example: an oil change is .3, or 3 tenths of an hour, of billable labor. So the way this works is, once the service has been agreed upon (in this case an oil change) the shop gets paid .3 hours of labor to change your oil. That number doesn’t change if it takes them 4 minutes or 4 hours, they get .3 hours. As you will notice, this is only 18 minutes allotted to write the repair order for your car, get the mechanic to come get the car, do the actual work to it, and for good measure, do the multi-point inspection for free. This is the major reason that everywhere you go to get your oil changed, they will try to sell you everything under the sun. They actually lose money on changing your oil. The average labor rate for repairs across the country, is $80 per hour. In rural markets it will probably be more in the $45-$65 per hour range, and in the major urban markets, the labor rate will be $100-$120 per hour. So, by using $80 per hour as the base rate of the shop, the labor alone for an oil change would be $24, and then the parts would be added to that. A quart of regular oil is $5 on average, while synthetic is $8 or even more. You can see that the price of the oil change is definitely more than what you pay. The rest of the maintenance, and minor repairs, they can sell you from the multi-point inspection, are where they will make the money back that they lose on the oil change. Hence the reason that you suddenly “need” an additional $300-$500 worth of maintenance and repairs.

Most independent shops pay their mechanics an hourly wage, and sometimes will offer a performance based bonus. The larger shops, and all dealerships, pay their mechanics “flat-rate”. This means that if the mechanic shows up for work, punches in, and then sits down to do nothing for the day, he gets paid just that: nothing. Every job he does, he will be paid exactly how many billable labor hours that are collected from you, or from the manufacturer warranty. If he does 10 oil changes he gets paid 3 hours. This is a key way they motivate the mechanics to do a thorough inspection to the vehicle for any and all needed maintenance and repairs. This is also the main reason that you’ve been told you needed your front brakes replaced when they were just done 2 weeks ago. A front brake job pays 2 hours labor and will normally only take half of that time, or slightly less. Don’t misunderstand, I don’t mean to say that you’re not getting your money’s worth. You are, but that’s what the job pays, and since it takes less time than that to accomplish, everyone wants to put brakes on your car and make some easy money.

How is this information helpful to you? It’s another way to help keep your mechanic honest. If you know how many hours he’s charging you for the repair that’s being performed, you can check it out to make sure it’s correct. There’s an important point to realize here though, this information is available to the public, but it’s easier to accurately measure how many inches it is from here to the moon, than it is to read the labor manual. They don’t make it intentionally vague, in fact it’s not vague at all. Rather it’s detailed to the point of seemingly being beyond what’s necessary. It has to be though. An alternator for a 2004 Dodge Caravan with a 3.8 litre engine, is in the back of the engine bay, under the wiper cowl, and is not easy to replace at all. The alternator for a 1999 Chevy 1500 truck, is front and center in the engine bay, and is at or near the top of the belt system. It’s significantly easier to replace, so it will pay less. And for each of these 2 examples, you need to know if it has A/C, or power steering, or sometimes they even want to know if the vehicle is equipped with ABS. It may seem silly, but there are certain vehicles that a component of the ABS system could be in the way of replacing the alternator. The best thing you can do to find out the right labor, is ask them to show you the specific entry in the labor manual for the repair they’re trying to sell you. If they don’t want to show you, it’s because they’re over-charging you, and they don’t want you to see it. Any reputable shop will produce this info, when asked, with no hesitation.

Another way this information will help you keep your mechanic honest is by reading the estimate, and doing the math for yourself! I’ve seen estimates before that went something like this: parts are $200, labor is $275, the shop labor rate is $50 per hour, and the labor hours being charged are 3. Do you see what’s wrong here? $50 x 3 doesn’t add up to $275 when I count it out, no matter how many times I check it. Unfortunately, a lot of people will just look at the total, and resign themselves to paying $475 for a repair that they should’ve paid $350 for. It’s sad and dishonest, however it’s a reality. So if you go to the local repair shop and ask for an explanation of the $475 you’re being charged, and the mechanic says to you “that’s for parts AND labor” make sure that you get the full break down. Tell him you want to know how many hours of labor you’re paying for, how much the hourly rate of the shop is, and how much the parts are. When he gives you that information, if it still seems a little shady, ask to see the entry in the labor book where it says how many hours that job pays. Then you will know that you are paying the fair price for your repairs, and not just allowing someone to help themselves to your hard earned money. Thought? Comments?

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