I'm going to give you a quick and condensed overall view of how the auto shop business
works. This broad picture will give us a starting point to grasp the
flat rate concept and how the repair charges are calculated. Not
all shops use this method but it's very common in the industry. First a quick paragraph about why you should care.
A nice example of how this system of paying mechanics effects customers is the wheel alignment. This service is usually cheap and there for low paying to the mechanic. Often technicians will choose to upsell front end parts to increase the total compensation on the ticket. They can also perform a quick alignment sometimes sacrificing the quality of the service. It's called set the toe and let it go because that angle is easy to deal with.
The retail auto repair business is configured in a way to help assure that the auto shop owner makes money no matter what happens as long as customers keep coming in. It starts with the way the shop charges the consumer and this is based on an hourly rate. The rate is usually set high, somewhere between $60 - $130 an hour. This depends on what part of the country your in and economic factors in the area.
Some areas of New York City and Upscale towns and cities located in the failing state of California are even breaking the $130.00 an hour mark. If you are in a high wage area you can just about guarantee the hourly rate is near the top of this scale.
The charges assigned to the needed service is based on this hourly rate. The total hours charged multiplied by the rate for any given jobs are supposed to be obtained from a standardized automobile labor guide.
For argumentative purposes let's start out by using $110.00 an hour as a base line measurement. For example If you need a water pump replaced and the job pays 2 hours then the labor charge would be $220.00 plus parts, taxes, auto shop supplies and disposal fees. Join the discussion on the blog (above link) about unfair shop charges.
You can see how this system is designed to charge you the maximum on any given automobile repair. Now here is the evil part to me. The car mechanics gets paid on average of only about $20 an hour out of the auto shops hourly charge.
The technician works on a method of payment called flat rate. This means if the job pays 2 hours the mechanic gets $40.00. If it takes 3 hours to complete the mechanic still gets $40.00 if it takes 10 minutes he still gets $40.00. Mechanics use a popular reference to describe this. Sometimes you eat the bear and sometimes the bear eats you.
Explained this means sometimes you beat the flat rate
time and win. Sometimes (more often then not) the job takes
longer than the labor time allows and you loose. Loosing can be due to
various reasons like broken bolts, lack of experience, not following
proper diagnostic procedures, parts out of stock, the Boss forcing you to paint the walls and empty all the trash cans or not having the needed special tools
Putting in extra work while at the same time loosing money on the job is the down side of the flat rate system for mechanics. Using the winning real world example above if the mechanic replaces your water pump and it takes him 20 minutes he still gets paid his $40.00. This motivates him to rush through the job as fast as humanly possible.
He wants to move on to the next job and do the same thing over and over again. This is how they make money. Rushing like this the auto mechanic is most likely to take short cuts. This could reduce the over-all quality of the auto repairs. The mechanic might actually be concentrating on the money he can make instead of the cars he can fix.
In some cases mechanics are competing for the next job sitting in the auto shop parking lot. The first mechanic done his current task gets first crack at the next job. It is very easy for even the most trusted professional car mechanics to get greedy and push themselves way beyond their ability to perform quality repairs. I have seen some Good technicians skip the final quality control road-test to get the next car.
This can result in a comeback where the customer must once again return for an auto repair often related to the first repair. Again the facility tries to turn this in their favor by saying the comeback is unrelated to the original repair and charges you a second time.
The auto repair shop benefits from this on an accelerated scale. Using this example the auto shop made $240.00 in labor and paid the mechanic $40.00 and walked away with a labor profit of about $200.00. Then they mark up the price of parts on average of cost plus 30% and tack on shop supplies and disposal fee’s. The grand total of profit is about $350.00.
Next they will multiply this by adding more mechanics and repeating the process from open till close. Hence why most auto repair businesses are now open late and run 6 to 7 days a week.
This quick incite into the workings of a car repair biz covers the root cause of the problem. Of course this is just my humble opinion and your results will vary. The flat rate auto repair charges system motivates the mechanic to make the owner money. No where in my last sentence was customer satisfaction or quality repairs mentioned. Unfortunately this would often be a secondary concern.
Bookmark or share this understanding the auto shop page.
This is why I created a book for the auto service consumer. The education required to protect yourself is available. This next link takes you to information about my no charge eBook a guide to auto repairs.
This link takes you back to more story's and a video about the automotive business. Go from the page about the auto shop to auto repair stories.
A good way to verify fair auto repair pricing and the diagnosis of the shop is to check on them using the same estimating tools they often use. I made a screen capture video for you highlighting unique features of these Car repair manuals.
On the homepage you can find out more about the car mechanic that built this automobile site. This page might also lead you to more answers to your automotive questions.
Over at certifiedmastertech.com I put together a story about why the flat rate system needs change. There have been so many advances in automotive technology in the last 30 years isn't it time mechanics compensation evolve as well?
Search the Web and both of my websites for automotive information.