Auto Repair Flat Rate System

flat rate mechanicThe following article is just my opinion on the flat rate system. After being involved with automobiles for just shy of 30 years I have seen a lot of things change in the retail auto repair business. As a matter of fact I have seen huge changes in the world that surrounds this ecosystem.

I could write an entire article on just how the automobile has changed in the last 30 years and maybe I will in the near future. But not only has the car changed but so has the people who drive them and the tools used to fix them. The economy has changed as well. The way that businesses conduct themselves has also changed over the years. But one thing has not changed since I’ve been in the business of auto repair and that is the flat rate system.

Sure a few shops pay mechanics by the hour but by and large dealerships and aftermarket repair centers are still sticking to some type of flat rate system to compensate mechanics. What I don’t understand is in this modern environment of adapting and changing to better service customers why this antiquated system still remains. In my opinion it’s stopping this business from evolving into a customer focused and value driven service that people could embrace instead of loath.

Automotive flat rate pay

Just a quick explanation of how this system works. The mechanic is paid a set time for a specific repair. If the repair is to replace an automotive A/C compressor the shop will look the time up in some kind of labor guide. The specific repair is assigned an amount of time that is multiplied against a shops labor rate.

automobile engineThis is where all the problems begin. If it pays two hours to replace this A/C compressor then the technician receives his hourly rate x2 no matter how long it takes him to complete the repairs. The very nature of this system pushes the mechanic to rush the job and try to finish below the allotted time. Pushing so hard it is easy to get caught up in the money that can be made instead of focusing on a quality repair that will stand the test of time.

Another thing that further complicates this pay system for mechanics is the labor guide used to reach the labor figure in estimating repairs. When I first got in the business there were three labor guides and these are still the most popular ones. AllDATA.com repair information, Mitchell’s, and Chilton were used almost exclusively by all auto repair centers when I was a young man.

Now many chain automotive centers have their own version of labor guides. Some of these cut the labor times in half compared to the guides mentioned above. Automotive dealers also have their own set of labor times for warranty repairs. These are also considerably less than the big 3 guides provide. As an example to replace an engine short block at a dealership can pay as little as eight hours. The actual repairs can take as long as three days depending on the situation. As the owner of this vehicle how would you feel about the mechanic’s attitude as he entered Day three and his second day of working for free on your automobile.

Why can’t we change automotive retail?

What got me started on this subject is I was looking for a second job to help close the gap on my bills. The economy in my town is in sorry shape since 2008. I don’t know what the current unemployment rate is but it was over 20% the last time I checked. A local aftermarket shop has been advertising for mechanics for about two months. I was surprised the job wasn’t filled because our unemployment is so high in this area.

When I went online and typed the name of the repair shop into the search engine I found some interesting results. A few mechanics that use to work there posted about their experience at this tire and auto center. I don’t need to include the details here but let’s just say mechanics are not working at this place because there is no money to be made. It’s not because of lack of business as the parking lot is exploding with vehicles sitting waiting to be worked on. There is a 10 day backlog of appointments at the service center.

But even though the only thing that is stopping this place for making big money is the lack of mechanics they refuse to waver from their exclusive flat rate pay system. When I say exclusive this auto Center is paying less per hour and less per job than any other shop I have ever heard of regardless of the mechanics experience and willingness to perform quality repairs to satisfy customers.

automotive warning labelIn closing my point of this article is we still need qualified personnel to fix cars. The economy has changed, the automobile has changed, the customers that drive these vehicles and their lives have changed. The automotive service center has not changed the way they pay mechanics in 30 years. If other businesses are able to change and adapt to the current conditions that surround them how come these automotive centers can’t do the same?

I heard there is a shortage of automotive mechanics in the United States. Training automotive technicians has become a big business. Many schools exist to provide this profitable service of training people to turn a wrench. Upon graduation these students realize they have just entered a dangerous game that could shave quality years off their life, coupled with a compensation game that is hard to win. Harder at the beginning because of lack of tools, money to buy them and experience to fall back on.

Maybe it’s not the experience of all graduates? I’m sure a few still make money. This is just my opinion about where the business is heading. If you doubt what I’m saying maybe you will poke around a few forums for automotive mechanics and read the writing on the wall. Of course you could also head back to my automotive blog home page and read other stories about the retail automotive business.

5 thoughts on “Auto Repair Flat Rate System

  1. Mark Post author

    Scott: Interesting concept. I know I could benefit from such flexibility. I work on a lot of peoples cars and it comes in waves of feast or famine. I would probably be more interested in the short term bay rentals as opposed to monthly or longer terms.

  2. Scott Brown

    Let me ask you this. If I provide you the mechanic, a bay with a two post lift and air, and rent it to you for $20.00 an hour, would you be interested? You keep all monies and charge what you feel your customers will pay you. I just collect $20.00 an hour. I also will have a weekly and monthly rate which will be lower per hour. You can be your own LLC and push as many vehicles through as you want and can have as many helpers you want. You will have no overhead other than coffee. I aslo would like to hear from other mechanics.

  3. Brian Kissel

    Well, I don’t know anything about Plumber pay, but I’m assuming they also get paid by the job – especially those in business for themselves. Lawyers are also a bad example, as they get paid in ‘billable’ hours, much like flat rate technicians – although the incentive is the reverse, in that they want to take as long as possible on a job.

    Hourly pay just by itself does not provide any incentive to perform a better job than your peers. Just like salary, your only incentive is to work just hard enough not to get fired. I think the answer is the way wait staff and some salesmen get paid; pittance of an hourly pay, with sliding commissions based on performance. You also I feel, need to offer other incentives, other than just pay. Maybe profit sharing, as I don’t really think there’s a ladder for career advancement.

  4. Mark Post author

    Thanks for the question Brian. I think that mechanics should be paid in the same way that other trades pay there technicians. Work an hour and get paid an hour. If someone dogs it then they are replaced. In the case of auto mechanics it can bring back a sense of pride and quality in there work. I worked for local Government where we all got paid by the hour. No one argued about who was getting all the gravy because it didn’t matter. The comebacks in the shop where so low they almost couldn’t be tracked. I guess my point is… if it’s good enough for plumbers and lawyers why not mechanics?

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