Why Auto Repair Shops Need a Labor Guide to Maximize Revenue

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April 7, 2023

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Read time: 3 min

Your auto repair labor revenue and parts margins are critical for enhancing your shop’s profitability. Adjusting your pricing on parts to make a profit is pretty straightforward.

But when it comes to labor times for auto repair shops…that’s where things can get a bit tricky. 

Yes, you need competitive labor rates, but you also need to keep those rates reasonable so you don’t scare off your customers with sky-high prices. 

3 ways your shop can make more money on labor: 

  1. By using a labor matrix 
  2. By creating custom labor rates 
  3. By applying a labor guide markup 

Before we dive into the differences between these three methods for setting the best labor times at your shop, here’s a quick refresher on the one thing these methods have in common: the labor guide. 

What is a Labor Guide? 

A labor guide is like the gospel of labor times for auto repair shops. It tells you how long, on average, it takes to complete different types of repair work.

Remember that the times listed in auto repair labor guides are averages, so it’s best to treat them as a starting point.

Factors That Can Affect Labor Times for Auto Repair Shops 

Let’s take a look at some of the factors to consider when determining how much to mark up (or mark down) your shop’s labor rates. 

1. Age of Vehicle

Older vehicles are often trickier to fix, especially because finding parts for them can require a time-consuming hunt across parts suppliers. You can make up for the time spent hunting down uncommon parts by charging more for all repairs involving vehicles over a certain age. 

2. Geographic Location

Some areas lead to different types of repair challenges that can affect the time it takes for repairs.

For example, shops in Syracuse, New York—the snowiest city in America—might find themselves working with cars that have rust, which can significantly add to the time it takes to remove or even clean certain parts. 

3. Experience of Technician

Chances are, you’re already paying experienced technicians a higher base salary or hourly rate.

However, certain situations might call for cranking up those numbers, like if you really need to put their skills to the test for a tricky repair for a client who wants it done ASAP. 

4. Customer Needs

You can offer customers who need their cars back fast a “Pro Tech” rate, where your tech wraps up the job in record time.

When you’re asking techs to complete a job faster than the time on the labor guide, and still do a good job, the customer is getting special service. Be sure to let customers know that speediness comes with a surcharge. 

5. Relationship with Customers

It’s a good idea to consider giving loyal customers a special rate as a token of appreciation.

With that said, industry leaders advise sticking to your labor rates as much as possible, because if it becomes a habit, you risk financially harming your business. 

How to Choose a Reliable Labor Guide 

A reliable auto repair labor guide is foundational for your shop when you’re setting labor rates, so you’ll want to use a labor guide that stays up-to-date with the latest labor times in the industry.

Just like many people use online directories instead of the Yellow Pages, many auto repair shops use digital labor guides that are constantly updated with the latest labor times. 

When seeking out a digital labor guide, look for one that: 

  • Offers consistent, comprehensive data on labor times from industry leaders, so you can set accurate labor rates that will keep your shop profitable 
  • Adds labor times for new vehicles and jobs periodically, so your shop’s pricing can stay competitive 
  • Integrates with your auto repair shop management software, so you don’t have to dig through multiple systems
👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]

FAQ

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Today’s vehicle owners look for shops that prioritize their evolving needs, and many gravitate towards shops that take care of their entire vehicle in the most efficient manner, from the engine to the tires. As vehicle owners look for a one-stop auto repair shop, shop owners have the unique opportunity to expand their business by also selling tires. This is where Tekmetric’s Tire Suite comes in — a solution that simplifies tire management, letting you save time while leveraging the opportunity to expand your service offerings.

Tire Suite is a feature that your shop can add onto your existing Tekmetric plan. With this add-on, you have access to tire-specific features that allow you to view data specific to your tires and in turn make informed decisions to support that area of your business. By maximizing the information in Tire Suite appropriately, you can open the door to this new business stream – without losing efficiency in your shop. Here are three ways you maximize tire management in your shop:  

1. Time is money – streamline processes to maintain efficiency 

Effective shop management saves you time and money – and there are several simple ways you can apply this strategy to the tire portion of your business. For instance, with Tire Suite, you can reduce the amount of time it takes to register Department of Transportation (DOT) numbers when you sell a tire. DOT registration with Tire Suite registers DOT identification numbers electronically with the appropriate tire manufacturer via the Tiremetrix integration. In addition, you get real-time feedback when entering a DOT number in the system to ensure the validity and recall status of the tire.

Instead of having to worry about compliance or losing hours of time to DOT# entry, your service advisors can gain time back with Tire Suite’s automated registration process. Typically, DOT number registration is a manual task, and the time it takes to enter each number can add up to hours of labor time depending on your shop’s sales. Tekmetric’s Tire Suite allows your service advisors to spend less time entering information and more time with the customer.  By streamlining manual processes like DOT registration, your shop can handle more work in less time and maximize profitability – all while offering a more convenient and comfortable process for vehicle owners.

2. Leverage accurate data to maximize tire shelf life

In addition to tire compliance, it is also important to set up a system where the tires are used in a timely fashion. Tire Suite allows your team to track inventory and maximize the use of available tires while also making sure tires do not sit too long on the shelf. This requires a bit of finesse, and that’s where Tire Suite comes in. Now, service writers can quickly look up all tires for preferred brands that will fit a vehicle and source them directly from inventory or add as a needed job part. 

In addition, tire fitment data allows you to access detailed tire specifications in the RO sidebar for a specific vehicle. For example, if you have a vehicle that needs staggered tires, the data will ensure you get two tires of each type rather than four of the same size. That attention to detail is made possible by leveraging tire-related data – and it can make a significant impact on growing that portion of your business.

3. Build and retain customer loyalty

Once a dealership warranty ends, 70% of customers will seek a repair shop they know they can trust and remain loyal to. Customers value convenience and comfort. When those needs are met, they are more likely to trust your shop and return to do business with you time and time again. 

Shops with the highest retention rates often make tires a part of their business because customers are looking to kill two birds with one stone. Conversely, by not selling tires, you can even hurt your retention rate. When you choose to offer tire management services and provide them in an efficient manner, you are more likely to maintain your customer retention rate because vehicle owners will have everything they need in the hands of their favorite shop.

Adding tire services to your auto repair offerings may seem daunting – but the opportunities far outweigh the challenges. When you leverage the appropriate tools for tire management, such as Tekmetric’s Tire Suite, you can maintain your shop’s efficiency and meet vehicle owners’ needs without missing a beat. The result? Happy, returning customers – and growth in your bottom line over time. 

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The list of service advisor responsibilities can seem endless. You might find yourself being pulled in many directions at once. You have to be there for customers, technicians, the shop owner, and even other service advisors. But it’s important to remember that you’re not alone.

Traditionally, there are four pillars to an auto repair shop that all support one another: the shop owner, technicians, customers, and service advisors. The integrity of the shop depends on each of these pillars in different ways. The shop owner needs to make the right calls and put the right systems in place for technicians and service advisors to do their jobs. Technicians must stay focused on their repairs and be diligent to catch all vehicle issues. And loyal customers keep the lights on.

As a service advisor, you’re uniquely positioned to support the other three pillars of the shop. By working with technicians, you can help customers better understand what needs to be repaired and why. By working directly with customers, you can gain a deeper understanding of what the shop does right and what the shop can do better. With a clear perspective of all facets of the shop, you’re one of the best people to advise the shop owner on ways to transform their business.

Whether you’re just getting started with your career or you’ve been a service advisor for a while now, the good news is that this is a career path that encourages ongoing learning and development. Being intentional about how you support the other three pillars of the shop—and remembering how they support you—can help you achieve balance and improve the quality of your job.

How to Fuel Your Shop's Growth as a Service Advisor

February 15, 2023

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As an auto repair shop owner, you know how important accurate labor times are for locking in your profit margin on labor and growing your business. But how do you find a labor guide that you can trust and that works with your shop’s estimate process?

Switching to a newer labor guide can be tough for some shops. Many shop owners already trust their physical, paper labor guide; they’ve been using it for years! But that guide probably doesn’t include labor times for repairs on newer vehicles—not to mention it takes up a lot of space.

Digital auto repair labor guides are becoming standard across the industry because of how accessible they are and how they can be continuously updated with labor times for newer vehicles.

If you’re still using your old labor guide, or even a digital labor guide that isn’t working for you, it might be time to find a labor guide that will better meet the needs of your shop. Here are some key features to look for to narrow down your search.