These shops raised their rates. Did anyone complain?
A recent poll has found that shops raising their labour rates have received no complaints from customers.
In February, Auto Service World asked readers how they were handling labour rate in their shops. The poll was placed in a story about a shop coach who predicted few, if any, customers would complain if rates were increased.
Readers were asked if they raised their labour rate since January of last year, if so, by how much and the reaction of customers.
Overwhelmingly, shops said they have raised rates, some by double-digit dollars and none reported losing a single customer over it.
When asked if they’ve raised rates, 91 per cent of respondents said yes; the remaining said they haven’t but are thinking about it. No one gave a flat-out no to doing so.
Then respondents were asked how much they’ve raised their labour rate. Nearly two-thirds (63 per cent) said their rate went up by up to $10. Breaking it down, almost two in five (38 per cent) said between $6 and $10. A quarter of respondents said it was under $5.
Another 17 per cent said their labour rate went up $11-$16; 14 per cent said theirs was raised 14 per cent. Five per cent made a $20 or more increase to their labour rate.
So how did customers react? Pretty well, it seems — 93 per cent reported that customers didn’t say one word to the shop. The remaining 7 per cent who said they got a reaction noted that the customer kept their business with the shop.
Notably, none of the shops that reported the highest jump in labour rate ($20 or more) reported any feedback on the change.
When asked for comments, one respondent noted that they’ve been steadily increasing their labour rate and will soon put it up to $140. That would be up $25. No one has complained to them so far.
“The equipment required and the ability to attract and pay a good wage to qualified diagnostic technicians who are able to use the equipment and repair the vehicles we have out there and for the future will require higher door rates for shops outside of dealerships,” said another respondent who has raised their rates by $5. “Low door rates do not allow us to do that. I read about poaching going on with techs. That doesn’t help matters. Let’s start trying to attract techs.”
One commented that the feedback they’ve heard is about how much less expensive automotive trade rates are compared to others. They’ve raised their rates between $6-$10.
“Most clients who noticed would remark that, at $129.95 per billable hour, we were the most affordable amongst common trades, however, the increase in base parts suck as oils and lubricants, simple filter and everyday parts was excessive,” they said. “$139.95 independent shop charge is not unlikely in the near future as cost of operation and wages are outpacing incoming revenues.”
One respondent who upped their labour rate by $16-$20 said labour rates needs to be thought of differently when talking to customers.
“We can talk about labour internally in our industry but we really need to start talking to clients about our ‘service rate’ not labour rate. Your service rate is based on our facility rate, not just technician labour. Facility rate includes service advisors and what it takes to be in business these days,” they wrote.
“It is a longer conversation but if a business needs to charge $150.00/hr for service and $220.00/hr for diagnostic service then provide the ‘service and value’ to the client. Value doesn’t mean cheaper and catering to price shoppers. It means charging a facility service rate that supports a service experience that clients will appreciate, come back for and refer other like-minded people.
I compare it to going out for dinner on a special occasion. If it’s Italian, Seafood, Greek, etc, you already know where you’re going, and it’s not about the price. It’s about the waitress, the atmosphere, the convenience etc. If it were solely about price, there would only MacDonalds out there. Your customer is coming to you for a specific reason, none of which is price.
HOWEVER if they think that they just got screwed over, it will be all about price after they start comparing what you’re charging. If you’re charging $149.95 / hour you better be giving $149.95 / hour service and conversation. So charge what will pay the bills and not a penny less.
I have always and will continue selling the service as a dollar value and not hourly rate. I have raised my labor rates $30/hour over the past 3 years. Nobody has said anything, Infact some have commented I’m still cheaper than most ships and offer better service. The quality of service speaks for itself. Everybody knows car repairs are expensive, take care of the individual and their concerns on the vehicle and all will work out.
If you think you have it bad, try being in the collision repair industry where the insurance companies are paying us anywhere from $74.00 to $81.00 per hour.
We did get a $2.00/hr rate increase at the start of this year but it’s been the only increase they’ve given us since 2014. And you think you have it bad!
Joe it has been terrible for years in the auto collision side of business.
Yes you folks take apart most everything & have to put it back together . Your an auto repair employee in every sense of the meaning
I say all shops close their doors together to insurance companies & leave insurance companies with no where to go . It is despicable how you folks are treated. I know because my husband worked for a VW dealership & it was the same 30 years ago .
Best of luck
There is no one willing to stand up against this, which is very painful