We’ve all seen it, from one side of the counter or another. The consumer receives a call with a report on repairs his car needs. The service adviser carefully explains that the flux capacitor has fused with the transmutator. It’s terminal and must be done to the tune of $1895 plus taxes Mr. Smith. The good news is that we have the parts in stock and you can pick the car up at 5. It is now 3:30.
Upon arrival, Mr. Smith looks at the invoice and the repair indeed cost $1895 plus taxes. The trouble is that there is 4 hours labour included in that $1895. This is when Mr. Smith goes off his nut. “How can you charge me 4 hours, when you only called with an estimate an hour and a half ago?”
The service adviser explains that the first hour was diagnosis. That leaves 3 hours. Done in an hour and a half. “Well Sir, this is a flat rate shop & that’s how it is.”
Not much of an explanation.
First off, let me explain how the flat rate system works. At least in theory. The idea is that a flat rate time is set for most repairs that could be performed on a vehicle by an average mechanic with average tools. Say for example that the flat rate time to replace a flux capacitor is 2 hours. Technician A has 2 years experience and is working with standard tools. It takes him about 2 hours to replace that flux capacitor. Technician B has been in the trade for 12 years. Not only has he learned all sorts of little time saving tricks, but he’s got the latest flux capacitor removal tool that cost him $1000. Technician B replaces that same flux capacitor in under an hour. He still gets paid 2 full hours. Why? Because he is being paid for his years of experience and personal investment. Mr. Smith obviously had Technician B working on his car, otherwise he would still be in the shop at 6:30 waiting for his car.
At the other end of the spectrum is Technician C. Technician C may be a new guy who is still learning, or he may be an old guy who just plods along at his own pace, with no interest in rushing. Technician C replaces that flux capacitor in 3 hours. Just like Technician B though, C still only gets paid 2 hours.
In many cases, the flat rate shop that has experienced technicians with up to date training and tools will come out on top, but that is not always the case.
So where do these times come from? There are several industry accepted publications that put out labour Time Guides that are updated annually, which outline the times for most jobs. In most cases, shops will adhere to these times as it keeps their pricing in line with the competition.
The flat rate system isn’t perfect, but it at least provides a standard that shops and consumers alike can live with.
10 comments ↓
If I could teach customers only one lesson with regard to auto service/repair it would be an all out effort to teach them how important it is to stop shopping all over the place with respect to coupon type savings. I’m not against coupons and we all use them however when customers shop based on savings alone they seem to have “tunnel vision”. They tend to be so focused on the “cost” that they loose site of the “quality” of the repair.
So many times a “great deal” or “his labor rate is cheaper than yours” results in an un-qualified or un-skilled mechanic taking four hours at $65 an hour that would have only taken an experienced technician an hour at $125. By the way, how long have they been in business. How long will they be around? How good is their guarantee or warranty if something does go wrong? There is so much more to consider with regards to the price.
Some of the best advise I ever got was years ago when an old German mechanic friend of mine. He had just fixed a problem for me that I couldn’t figure out and it only took him a few minutes. When I asked how much I owed him he said, “Give me ten bucks.” I was surprised an I asked how he could possibly charge so little when I knew the part had cost more than that. He told me, “NEVER charge a customer the total price when he’s watching. They don’t understand that it took me years to learn all that I know and to buy all the specialty expensive tools that I own. Then they have the nerve to say, ‘I could have done that. It was easy.’ Well if that’s the case why didn’t you?” It’s always best to have the customer leave the car because they simply won’t understand.” Ironic, and unfortunate, but when a good technician makes something look simple (because he’s so good) all too many times it makes the shop look bad. Personally I would hope my customers would be excited that they have found the best place around knowing the techs really know what their doing. Thankfully, many of them do.
Whenever I have explained this to somebody their first reaction is always:
“Doesn’t this favor the mechanic who rushes to do the job as fast as possible?”
To which I always reply that you won’t take your business to a shop where work is done as quickly as possible and little details are missed.
Do you have a better answer?
– Henry
My short reply would be to ask, “Have you ever baked a soufflé?” A master baker makes it look simple don’t they. But I know they could do it far quicker than I because I don’t have a clue how to make one.
When I first began shooting skeet I wasn’t good at it at all. My gun movement was sloppy at best, my stance was pathetic, I didn’t know where to look and to anyone who was watching it would have been very obvious I didn’t have a clue what I was doing.
After years of training and I had earned the title of Master and became a world class athlete it was a different story. My form was perfect, gun mount extremely smooth, swing speed looked like a machine. The truth is I was a thing of beauty. LOL. Sound egotistical and conceited? You bet it does and that’s just a taste or how a world class athlete HAS to think. When you watch a world class athlete whether their a skeet shooter or a race car driver, they make everything look easy. They don’t make jerky, sloppy movements, they seem almost relaxed and they do things “deliberately” because they have done them over and over so many times that they don’t even have to think about it. It’s based on the principle of Psycocybernetics, or setting a goal for the subconscious to reach.
Let me take it a step further. When you are going to tie your shoes you don’t have to watch what you’re doing do you? On the other hand if someone was to ask you over the telephone how to tie their shoes, it might seem difficult to explain. Why? You do it all the time don’t you? It’s because the subconscious has seen you do it so many times it knows exactly what to do.
This is the same basics that allows a “good” technician to “know” what’s he or she is doing and yes, in my way of thinking good technicians can be compared to world class athletes that make things look easy.
Good mechanics don’t rush… They just perform well. Once again I will say this is why customers should stop looking for “the deal” and begin looking for “world class” mechanics instead. Good shops with good technicians can reduce the amount of time on a job thus charging the customer as much as the shop down the street with the con-man service writer. Finding a good mechanic is like any other job or like buying a house. You have to put forth an effort to find the right one for you.
Here is another favorite example in many shops… Customer calls and ask, “How much to remove a broken bolt in my watchyamacallit?” The shop with the cheapest estimate will probably call back and say, “We have been trying for two hours but now it’s so buggered up from the impact chisel that we will have to replace your watchyamacallit.” On the other hand, the shop that put a quality technician on the job may very well call and say, “It was a stubborn job but we put Joe on it who has years of experience at these things and he got it right out.” Any good tech who has performed this type of repair will take his time and very carefully tap the bolt with a sharp punch or use some penetration oil and so on until he get’s it or has to carefully drill it out. The bottom line is his tools, time and knowledge will make it all look easy…. just like a world class athlete.
Would have been much simpler to tell the customer that 2 techs worked on the car to make sure he got the car by closing time.
The “average customer” will not comprehend flat rate, and has absolutely no desire to comprehand what “flat rate” is all about.
In a new vehicle dealer much simpler to say that the shop adheres to the manufacturer’s time guides, and the DMS system applies the time guides for the various operations on a work order.
The time guides are a fair/equitable way to sell and charge for labor, it has nothing to do with how long it actually took to repair the vehicle, flat rates, and how tech work.
An independant shop can use time guides from other sources, be it Mitchell or others…
How do you explain to a customer that the manufacturer time guides are “tight” and Mitchell are “generous” since most shops that use Mitchell have a lower labor rate.
Strada, with your first comment, you hit the nail on the head…almost! The responsibility lies with the service adviser. The pro will deal with the time issue beforehand, so there are no silly questions after the fact. The reality is that often that important issue isn’t touched upon beforehand, for reasons of time, training or well…life.
As for explaining to the customer that a shop uses manufacturer times…good luck. I don’t know how things work south of the border, but dealerships typically use warranty time plus 30% or even more here in Ontario. That rough guideline is still often less than Mitchell or Motors.
I just realized you are indeed north of the border Strada! In fact, your shop is very close to The Garage!
At our shops we have never had a lower labor rate than dealers. The average dealer here only charges $115 per hour whereas we charge $125 per hour. One very important thing to point out is rarely does anyone call asking what our hourly rate is however they will ask how me we will charge for a particular repair/service. I cannot recall the last time I lost a customer over the phone because of our labor rate and when they do ask I reply with “Why do you ask? If it takes my shop a half hour to repair at $125 but it takes the shop down the street one and a half hours at $115 who is saving money? We thrive on that challenge and customers eat it up. It’s called putting their money where my mouth is and we do not have to tell them two tech’s worked on the car simply because customers also have respect for repair facilities who are honest. Sometimes it takes us longer than we quoted and that’s when we have to decide if we should just pass on the savings to them which we do when we feel as if we are “Making an investment in our customer” which will get us a return at a later date. This way of doing business has proven to be one that has done very well for all my shops.
As far as service writer go… They can make or break a business if upper managment allows them too. A “GREAT” service writer knows how to explain things ahead of time even before the customer can ask the question.
If I understand this, for CP (customer pay), the dealer takes the manufacturer’s time guide and ads 30%, and then pays flat rate?
ex: Manufacturer’s time guide 1.8 hours, a good tach takes 1.5 hours, and gets paid for 1.8 from your comments the 1.8 becomes (1.8×30%) = 2.34 the customer pays 2.34 and the tech gets paid on 2.34?
As ugly as it sounds, you are correct.
The reality is that in most cases the manufacturer’s time guide is the amount the manufacturer is willing to pay for warranty repairs and is not intended to be a retail guideline. Where it sometimes comes into play is when there are items like trim or electronics that aren’t dealt with in Motors or Chilton.
Generally speaking if a dealership is going to succeed they have to charge those types of rates. Unlike general/basic repair/service facilities, dealerships sit on prime real estate locations, they are huge, have lots of payroll, a vast amount of equipment, parts and supplies, insurance, taxes and overhead and if any one part of the entire operation is slow (parts, service, new and used auto sales) the rest of the business must pick up the slack. Personally I far prefer to know a dealer is adjusting their labor rates in that way rather than performing in some less ethical way.
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