Are Auto Repair Labor Rates Fair? -ETCG1

Are Auto Repair Labor Rates Fair? -ETCG1


[Music] greetings viewers Eric our guy here also known as eat ECG won on this year channel and on eat ECG won we talked about stuff we don’t do repair videos if you want repair videos head on over to air at the car guy and we’ll have plenty of repair videos for you over there I’ll put a link in the description to make it easy for you how about that however if you want to join in the discussion stick around today’s topic of discussion is sort of spawned from comments that were made to the last video I posted about the future of Diagnostics and the discussion that came about in the comments was basically about labor rates and what a customer pays and in some ways what a technician gets paid and I thought I might touch on that topic a little bit here and I guess we’ll call this video our automotive labor costs too high I mean it’s it’s a fair question it really is but there’s two sides to this this time I’m going to start with the side of the customer you have a vehicle maybe you bought it new maybe you bought it used and something’s going wrong with it something is happening to it you don’t quite understand you don’t know how to fix you don’t know how to repair maybe you don’t have the tools to do it but you’re gonna need to go to a garage and have some work done I think this puts a customer in a mindset to where they’re already at a disadvantage to where they are not capable of understanding or not capable due to tools or some limitation is holding them back from doing this work themselves so they need to go to another place and entrust their vehicle and in essence their safety to someone else and that someone else may be someone they trust if you’re fortunate enough to have a shop that you trust hold on to them because they’re like gold they really are they know you you know them you’ve got a relationship going on maybe they work on not only your car maybe your friends cars and you brought them repeat business everybody’s happy but say you just moved to a new place and you’re not familiar with the area you don’t have a relationship with the local garage and you’ve got to go out and find one well that is a or can be a very painful process for a customer because in all honesty there are a lot of shops out there that don’t necessarily live up to the expectations of the customer now part of that relies on the customer and their expectation it’s granted but another part of that relies on the people doing the work let’s say lazy people let’s say people who are looking to well basically turn every work order into a lottery ticket you know any number of things on both sides of that fence either the expectations or the shop itself doesn’t quite jive and a customer walks away unhappy well what makes them even more unhappy is when they look at the labor charge and they say you’re charging me $100 an hour for labor and it’s three hours worth of work to do the work that that needs to be done so that’s just in labor alone three hundred dollars not to mention the parts how is that fair that’s a fair question and now I’m gonna go on the technician side or shop owner side of things as a shop owner as a conscientious shopper you want to maintain and have the best equipment possible at your disposal so that you can get through your day and that’s no joke because a lot of what you do as a technician as a shop owner is you get through a day Auto Mechanics is not exactly the easiest profession to get into challenging rewarding but not easy and I say not easy because things that may seem easy in auto repair sometimes turn out to be very difficult and things that sometimes are very difficult turned out to be easy I think the line and one of my favorite movies is sometimes you eat the bar and sometimes the bar eats you well that is absolutely true especially when it comes to auto repair so you try to outfit your shop with the latest equipment say you’ve got the latest diagnostic equipment because let’s face it especially if you working in independent shop you have any number of things coming through the door it could be a European make Japanese make an American you know for five American makes well maybe an American truck to throw it and throw it into the mix you know something you know and they all have unique problems they all have unique designs they all have unique engineering they’re all different the analogy is with doctors you know mechanics I always often hear them compare themselves to doctors as a mechanic your model year changes you know less than every year whereas with as a doctor your model hasn’t changed since you know let’s argue two million years so as a doctor yeah you you keep up with the latest and greatest technologies and things like that and I’m not belittling doctors not in the slightest what I’m saying is there is a mixed bag of things and and also like a doctor as a technician you have to be prepared for whatever and the way you stack the deck in your favor once again is your purchasing you know sometimes from pretty high dollar equipment things that may or may not be available to you as a consumer say the latest and greatest scanner maybe that set you back somewhere between five and eight thousand dollars now this may come with some really great tech support and a scanner itself has some really great software that allows you to to understand problems with vehicles that you’ve never seen before because let’s face it you know there’s a new one that runs through the door all day long and you have to deal with that one that’s got this problem and this one that’s got this problem they all have different problems they all have different designs they all have different owners and they all are treated differently so it’s mixed bag of things that comes through the door so just in like say the scan tool you’ve got I would say at the very bare minimum like around five thousand dollars invested into that scanner then you got your tyre machine you’ve got your brake lathe you’ve got a toolbox full of thousands of dollars with the tools and in some instances special tools are required to perform certain operations and those special tools need to purchased it’s not like you know maybe you can figure out a workaround something like maybe you can make your own tool all those things are great because that puts money in your pocket but it is a never-ending onslaught of things that you need to buy it’s a never-ending expense and and things that are coming through the door that you neither are unprepared for or need to prepare for constantly so your investment in your Diagnostics and your toolset is substantial and ongoing in addition to that you need to stay up on your education because to have the tools is one thing but not to know how to use them is it’s just a crime in and of itself so you’ve got the latest and greatest scanner and you bought it well I know some companies out there that actually send out technicians when you buy these scanners so that they could teach you how to use them how to use them properly how to use them effectively how you can get your money’s worth out of that investment and they do this because they are that complex and vehicles that are out there particularly later Mahlon vehicles are pretty darn complex and they have they have systems computer-controlled systems talking to each other through communication lines you know they have their own language and you need to understand that language and you need to be able to tap in to that conversation I mean these are all things that you have to know as a technician has a diagnostician in particular and as a shop owner or that technician you have to make that continuing investment not only in you tools but also your education this is ongoing this never ends you as the customer pay a flat fee that flat fee is the hourly labor rate also in that hourly labor rate is keeping the lights on paying the rent the the water bill waste removal oil waste removal you know and the list goes on and on payroll taxes social security insurance all of these things eat into your labor rate and you figure up your labor rate based on the amount of time that you’re open based on what you’re paying your technicians or what you’re paying yourself and you come up with what you believe to be a fair number to break-even and I say that you know those labor rates you’re looking at for the most part those shops are breaking even maybe less so at dealerships and I’m just gonna throw that out there because dealerships have a different set of circumstances then say the independent shop / owner a dealership is gonna have well a dealership has to pay to be a dealership in a way a dealership you know has has to pay some kind of homage to the manufacturer or a dealership is an independently owned franchise it’s not like the car make car maker owns that dealership no they have an agreement with that dealership and the owners of that dealership so that they can exchange proprietary information put their their badges out on the front of the place that kind of thing there’s an arrangement that happens there and it’s a financial arrangement between both people and you come up with a labor rate based on that so labor rates as expensive as they are to use the customer and as frustrating as they can be sometimes are really not all that much because I’m gonna say like the top the top-tier technicians in the United States I would say on average are getting paid twenty five twenty six dollars an hour some get paid more and major major metropolitan areas and things like that but I’m talking about a general average and correct me if I’m wrong in the comments if you’re getting paid more or less than that let us know but but I’m just gonna throw that out there as a ballpark figure so for the sake of argument we’ll say 25 dollars an hour just to make it easy numbers the labor rate for easy numbers a hundred dollars an hour so that leaves you 75 dollars for every work our build to use for that overhead that you have that I talked about and I’m gonna say that that overhead pretty much breaks even with that labor rate I don’t really think that shops are getting rich on labor rates I don’t think they’re raising labor rates so that they can make money I think they’re raising labor rates that can keep up with the cost of operation where they really make your money in the shop and this may or may not be the best kept secret in the industry is your parts markup the better relationship you have with your parts distributor and maybe the better their list prices are the better off you’re going to do because the parts markup want to call it free money but is the closest thing to free money you’re gonna see in this industry in this business that is where the money’s at so if you’re gonna yell at anything if you’re gonna be you know like this is so unfair look at the parts markup that’s where you’re gonna see the most and apps I’ve seen markups and I’m not gonna say we’re you know in the neighborhood of 80 percent and that’s business okay that’s capitalism at work how you whether or not you’re getting take advantage taken advantage of as a customer it’s a difficult set the only time I’ve ever owned my own shop is here and I don’t run this like a shop this is a production studio so it’s really not fair of me to come in here and say this I’m speaking from my experiences working for these shops both independent and both dealership and that’s what I’ve seen I’ve seen the money as far as labor goes as breaking even I’m seeing the money as far as parts markup goes that’s where it’s at and I think that’s the reason why some places have a commission based pay scale because they’re really not making the money on the labor they’re making their money on the commissions on the parts that they’re selling so they try to sell a certain brand of parts or something like that or some distributor comes out and says I’ll give you a deal if you can sell you know a hundred of these I’ll sell you a pallet and dirt cheap and make it make it really worth your while that’s where the money is in this business so don’t blame the labor rate take a look at the parts prices in the parts markup we’ll get into that and a whole other video but I’m really trying to speak towards the labor rate and the discussion that was was started in the last video and and in the comments of the last video and that you know Labor’s too darn expensive you guys are just ripoff artists bla bla bla bla bla I’m gonna tell you I understand how frustrating it is as a customer how frustrating it is to hand your keys over to somebody else and have them do work for you and how nervous that can make you so one of the reasons I’m a technician today is because I never felt comfortable in that situation my choice was basically to become an automotive technician so I never had to worry about that again go for it if that’s you I say go for it go go out into the world learn your trade you know go go through the day-to-day do it for 20 years and get back to me and let me know how I feel about the labor rate then but right now you’re on the other side of the counter and what I’m telling you is is we’re not trying to rip you off of the labor rate we’re probably just barely breaking even with the labor rate if there’s any profit in there it is it’s small it’s really small and the technicians at best are probably seeing 25 percent of that labor labor rate that you see so don’t look at that technician and say he’s rolling in it because he’s not he’s probably staying late he’s working out in a hot shop sweating his balls off or you know cold in the winter time with ice and junk dripping down the back of your neck it’s it’s it’s a difficult thankless job sometimes you have to really love it you have to really really love it to get into it and after a few years you may not love it so much anymore you may become to see it as a job and you’re just trying to collect that cheque you’re just trying to break even so food for thought for you dear viewers please respond in the comments but even more so head on over to my website at the car guy comm there’ll be a link in the description to a discussion about this very video click it come on over join us in the conversation of all things that we talk about here or you know feel free to make your comments below either way it doesn’t matter as long as you’re participating we value your opinion here hey Derek the car guy Andy TCG 1 and that’s a fact and even if it’s an opposing opinion doesn’t matter it’s an opinion it’s value it’s it’s valid when we respect it so long as you show that respect to each other I American car guy you can always find me over eric the car guy dot-com where if you have automotive questions I would ask that you what type it a couple of keywords to the search function at the top of the page there if you don’t get an answer to your problem keywords by keywords I mean you know like brake noise engine blew up something like that if something doesn’t come up that you find useful there feel free to sign up for a forum absolutely free all you need is an email address just be sure to respond to the confirmation email that should show up in your inbox if it doesn’t show up in your inbox check your spam folder boat folder that kind of thing look around for it it got sent to you and just somewhere got somewhere sign up for a forum ask a question over service and repair and we will do our best to try and help you with that issue you can connect with me socially on Google+ Facebook and Twitter and I close each of my videos with be safe have fun and of course stay dirty I will see you next time


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