Opinion: Know your worth and charge accordingly

GW columnist Andy Parsons shares his thoughts on garage labour rates

Opinion: Know your worth and charge accordingly
Image: Bigstock.

Independent garages are undervaluing their services and failing to cover business costs in their hourly labour rates, a recent study showed.

Andy Parsons of Shortfield garage in Surrey.

The findings acknowledge what any intelligent business owner will already know – too many workshops are in a race to the bottom.

The study by the Independent Garage Association (IGA) revealed that the average labour rate charged by an independent is just £47.47.

My wife pays more for her hair cut.

Although hair stylists have similar problems as our sector.

Huge salons that boast all the mod cons compete with Barbara, who comes to your house, drinks your coffee but offers her service for half the price.

My point is, a good technician will probably have gone to college for three years and then many more before learning their trade on the job.

Their job sheet for the day could include a three cylinder Volkswagen Polo, an old Fiat with the ‘FIRE’ engine lump and a Renault Zoe, so he or she will need to develop their knowledge through self-learning and on-going training.

The thing is, training costs time and money.

New technology requires more learning and invariably new tooling and equipment – just take a look at 1234yf air conditioning and ADAS calibration, for example.

How often does Barbara update her scissors?

Related: Average independent garage labour rates revealed

Of course, average labour costs take in a lot of variables.

Garage ‘A’ might say I’m going to need to change a ‘woggle’ valve, I charge £90pph and its going to take half an hour – £45 plus the dreaded to you Mr Smith.

Garage ‘B’, however, advertises a super low labour rate.

It’s going to take me an hour to change it, so that’s £47 plus a bit for the chancellor.

So is garage ‘B’ charging the same hourly rate in reality?

If garage ‘B’ is using “book” times and sells it to Mr Smith for £23.50, less the technicians wage (including NI TAX and pension), manager’s/owner’s wage, utilities, rent, rates, advertising, waste disposal… What’s left at the end?

Interestingly, a report in Fleet Industry News, back in 2017 had a combined average labour rate (main dealers, independents and fast fits) of £67 pph.

Opinion: Don’t under sell your time and remember to make a profit

Not surprisingly, Surrey was highest with an average of £81 and the lowest – also no surprise – in Selkirkshire, Scotland at £49.69.

The highest individual hourly rate was £234 but that was at a prestige sport dealership.

The cheapest, an independent in Manchester at £36 pph.

Franchise dealers have even more costs than us independents, so they’re always going to charge more but you need to know your worth and charge it accordingly.

So, what should you be charging?

You’ll need to figure out exactly how much you need to operate with all of those ‘extra’ costs that often get forgotten about – training, tooling, health and safety, recycling and waste management, for example.

If you don’t have key performance indicators (KPIs) such as workshop utilisation and technician productivity, do you at least know how many hours at what rate you need to sell a week?

Of course, the pie is only so big.

We’re all competing with quick fits, franchised dealers and each other.

Related: Repair and servicing sector still ill-equipped for “monumental” EV switch, IMI warns

But if your bit of the pie is actually costing you money, is it worth having at all?

First and foremost, I urge you to work out your ‘breakeven’.

IGA members will soon have a copy of its study on garage labour rates and will have access to a labour rate calculator, so that’s a good starting point.

Then look at your competitors but don’t think you’ve got to be cheaper.

Do the job properly, be honest and give good advice and your customers will keep coming back.

Look at your advertising, is it targeting the people you want?

You may want to consider having a labour rate for run-of-the-mill work and a higher level for in-depth diagnostics.

If we were all to increase our prices, everyone would win – even the customer because they’ll be paying for properly trained and equipped technicians.

Share your comments below.

Home Page Forums Opinion: Know your worth and charge accordingly

Viewing 18 posts - 1 through 18 (of 18 total)
  • Author
    Posts
  • #204024 Reply

    Independent garages are undervaluing their services and failing to cover business costs in their hourly labour rates, a recent study showed. Andy Pars
    [See the full post at: Opinion: Know your worth and charge accordingly]

    #205178 Reply
    Hooters
    Guest

    Couldn’t agree more with the author.
    Don’t take this the wrong way, but many of the independent proprietors are damn good mechanics but bad business men.
    Have you ever asked yourself why many of the main dealers do not MoT test?

    #205185 Reply
    Meat-Head
    Participant

    Recently at ‘Meat-Head-Motors’ we had a odd vehicle in
    Customer has dragged this thing outta a field, wantted us to
    Reweld the roof and floor where the tree was growing. New rad and fan where
    Had been peppered by the last farmer owner with 12 bore.

    The customer insisted on all this work, BEFORE getting it running.
    Turns out its got a bent conrod, cant get one, cant get another engine
    The vehicle came from some country which is now under a volcano etc etc

    The job was 35 hours worth how do you charge that when guy only
    Paid £100 for it!

    #206731 Reply
    Neil Skuse
    Guest

    We charge £64.00 per hour -work to manufacture service schedules and times. Unless circumstances dictate.
    Garages need to charge rates in accordance to their skills and capabilities.
    Investment is key-if you don’t invest in training and equipment you are going to struggle in the long term.
    Customers come to you for what you can offer and the services you provide.

    #206733 Reply
    Vikki Bray
    Guest

    So how do Warranty Companies get away with paying out £40 per hour when that is not a realistic cost for doing the job?

    #206734 Reply
    mr nathan
    Guest

    We charge £65 hour which seems to fit in with the area. But like many dont get paid that from lease work like 1link.

    #206735 Reply
    Snap Off
    Guest

    “The job was 35 hours worth how do you charge that when guy only
    Paid £100 for it!”

    Surely that’s the customer’s look out – obviously he was told how much it was going to be, before you started work, why should you be paying for his stupidity?

    #206736 Reply
    Ian Whitmore
    Guest

    Totally agree with the author, We do charge what we are worth, especially when we are fixing what others have failed to fix. The sooner certain garages within the industry stop using these 3rd party parasite comparison sites, the better everybody will be, all they do is devalue everybody. Creating a race to the bottom.

    #206737 Reply
    Dougal
    Guest

    Totally agree with the author.
    Vikki :- Because most will accept £40 rather than turn the work away, we just say NO.
    Nathan :- We threw 1 Link out 3 years ago and do not regret it.
    I am not claiming that the same actions would suit everybody but they worked for us.

    #206738 Reply
    Alastair Mayne
    Guest

    As an IGA member I read their report on labour times with great interest. I don’t see how anyone can charge book times to carry out work at such low hourly rates and still make a profit (unless they have some other additional ways of boosting their income).

    #206739 Reply
    Meat-Head
    Participant

    Alastair Mayne:- Well if your an iga member moan about their 0845 number.

    All well and good charging what it is worth.

    We got one at mhm now, been jumped off backwards, took most of the obslete
    Modules with it, Had it running for 7 days then now not starting again
    What do you charge!

    #206740 Reply
    Joe
    Guest

    Couldn’t agree more

    #206741 Reply
    Spanner Man
    Guest

    I fully agree with the author, our trade lacks professionalism when it comes to charge out rates. it would help if our trade bodies got behind the workshop side of the business but alas most are too busy patting themselves on the back for spurious accolades in sales and administration.
    You’ve never herd of a solicitor or an accountant not charging for every hour. So Mr Meat Head charge the 35 hours, it’s not your fault the farmer bought a dead donkey that only cost £100.. . . . We should indeed know our value and charge accordingly. An example for you, a trainee solicitor in a city firm could expect a salary of £26,000 to £28,000 per year, the firm would typically charge the trainee out at £100 to £125.00 per hour and they would expect around 75% productivity. Compare that to our average charge out rates. Sure the trainee had 3 years at Uni’ and 2 year LPC ( competency certificate ) before they started working, but my point is they know their value and charge it without fear or favour and typically they don’t rush to undercut the firm down the street.

    #206742 Reply
    dave bevan
    Guest

    I couldn’t agree more, whilst we were not the most expensive in town we certainly weren’t the cheapest, but when we put our labour rate up substantially a few years ago, we noticed our customer base actually increased, we attracted better customers who, whilst wanting value for money just wanted a good job done and decent customer service, and stopped getting the ones that wanted everything for nothing.
    This has given us the confidence to say “right, we are very good at what we do, and we will charge for it accordingly”.
    We have gone from strength to strength since then, by charging what we’re worth we have been able to attract a better standard of technician, improved our facilities and equipment and now stand proud in our community with an excellent reputation and an ever increasing customer base.
    I urge others to do the same, I think you’ll be pleasantly surprised by the results.

    #206875 Reply
    R.J. Russell
    Guest

    play 1link at there own game
    we only do what they ask for
    if they say investigate , we agree a time before we do the job to investigate or simply ask them what to fit
    we respond with “dont until investigated ” or ask them to book to a dealer to investigate if they wont pay us
    we charge them for late responses as ” ramp time ” just like they charge us
    we tell them car is delayed due to failed response times and force them to hire cars for extra days
    we now get paid for all investigations and we add ramp tome and get paid if they fail to respond in time
    we have made them wait a week for a car stripped on a ramp on purpose because they messed us around stating we dont have time to do it they sent a mobile guy out and we refused him axcess based on on his insurance was unacceptable after making him wait 2 hours for it to checked
    dont let them rip you STICK TOGETHER

    #206990 Reply
    Dougal
    Guest

    R.J.R.
    The problem is they should really be called :- THE 1 AND ONLY LINK.
    Competition drives efficiency, it applies to us but not to them.

    #206877 Reply
    info@w-c-c.co.uk
    Participant

    We decline warranty work-and we don’t do fleet work for less than £48.00 per hour+vat.Not viable to carry out this type of work when there is demand for your workshops services.

    #207226 Reply
    Lesley Anne Thorne
    Guest

    Absolutely agree with the author. We charge £60.00 per hour, so are not the cheapest around, but we have heavily invested in equipment and training, so I feel it is a fair price for the knowledge we have and the quality of workmanship we deliver.
    We don’t bother with one link, or who can fix my car etc…if someone wants a cheap job, you find they will get what they pay for. We have recently started turning down some car sales work, as they try to drive down your prices and you end up being busy fools, being put under time pressure, for less money. We have found that we are busier with private customers, less stressed and making just as much profit, without the pressure and more importantly, without feeling devalued. definately KNOW YOUR WORTH!!

Viewing 18 posts - 1 through 18 (of 18 total)

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