Reasonable Parts Markup?

[kythri]

Maybe shops should stop writing the hours on the quote? Still use book time to come up with a total price on the quote but not tell the customer what book time is for that car. Just let the customer choose to do the repair based on a total price. Then they can't ***** about how long it took.

Makes one wonder why they don't do that already.

One could make the argument that by quoting out exorbitant parts markups and hours for a flat rate job that takes less, it's an attempt to obfuscate how difficult the job is, and discourage people from attempting to DIY.

Not that I'm making that argument, but one could do so...

 

[Parrothead]

Like any other field the better you are, the more you expect to be paid. So you can either charge a higher hourly rate and take less time or the same rate as local competitors and finish the job quicker. Usually the latter is the game, since many customers shop around on the basis of hourly rates... not necessary how well or quick shops can perform the work.

Interesting. I’m in the same category. If it takes you a week to fix it, no problem. Because of this we order parts from Amazon. Yes, the shop too. I have multiple cars, so taking a different one while you fix mine isn’t a big deal to me. In fact, the shop that normally takes care of things when I don’t fix it myself, knows this and will actually tell me when they’re busy. “How soon do you need this, I’ve not been leaving till 8pm. Okay, just when you get a chance. He had my truck for 2 weeks. Whereas I average 2,700 miles a year on it, who cares? One time I needed a car to go on vacation, so I did push the issue and he got it done.

 

[Shane6377]

You cant expect the shop to gift you their 15% parts discount and the 15 minutes the tech managed to shave off the job time, it's just not reasonable after all the training and expenditure on tools.

If your shop is charging you 4hrs for a 1hr job and billing more than the rrp price of genuine parts

Look elsewhere!!!!

I agree. I don't expect a shop to pass on a discount that they get from a vendor. They've earned that discount because of the relationship with that vendor.


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[kythri]

I agree. I don't expect a shop to pass on a discount that they get from a vendor. They've earned that discount because of the relationship with that vendor.

Has anyone in this thread advocated at all for a repair shop to pass on their sub-retail discount, or is this just another straw man being propped up?

 

[lis2323]

Has anyone in this thread advocated at all for a repair shop to pass on their sub-retail discount, or is this just another straw man being propped up?

I think you need to go into business for yourself.

 

[richfinn]

Has anyone in this thread advocated at all for a repair shop to pass on their sub-retail discount, or is this just another straw man being propped up?

No, your correct they haven't

Some posters were advocating not marking up prices at all though like it was a hidden charge!!!

The whole point of the trade discount on parts is it gives the shop something for dealing with parts admin etc and being a loyal customer to the parts supplier

The level of discount the shop gets from parts suppliers is irrelevant to the end consumer, its a business to business deal, as long as the billable parts price is competitive or at RRP

The parts discount does not belong to the customer

Time saved on a job does not belong to the customer

They belong to the business doing the work, if the shop likes the customer and decides to pass on some of the savings to the customer, thats fine

Dont demand it though, it wont end well!!!!

 

[Shane6377]

This is the same concept as auto repair. The only difference I see is that for some reason repair shops write these book time hours on the estimate. Not sure how that came about, maybe it was in an effort to be transparent with how they came up with the quote total? Who knows but it's how it's done. But the fact is the shop just uses that number to get his quote total. It's not an actual number to stick to as to billable hours.

...
Maybe shops should stop writing the hours on the quote? Still use book time to come up with a total price on the quote but not tell the customer what book time is for that car. Just let the customer choose to do the repair based on a total price. Then they can't ***** about how long it took.

I appreciate your explanation. I think you touched on a few things that are so confusing/frustrating about 'book time'.

You mentioned that the book time doesn't actually represent the hours that it takes to do a job but just a number that shops use to quote a total. Others have said it does actually represent the average time to do a job. Every mechanic claims he can beat book time because he "has the skills and tools" to do so. Shouldn't every mechanic have the skills and tools? I beat book times on the jobs I do DIY.

I'm not trying to pick a fight so please don't take it that way. Just trying to understand the other side of things.



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[M6erfan]

What's wrong with Rockauto?

Yeah, great question. More elitist horseshit from the typical crowd.

I've ordered some stuff from them. Not bad but they have horrible customer service. Once they sent me the wrong part and they wanted me to send it back on my dime. Contacting them was a chore too. Now I just go to NAPA or AZ locally.

 

[larry_g]

Has anyone in this thread advocated at all for a repair shop to pass on their sub-retail discount, or is this just another straw man being propped up?

Anyhow, it's fixed, all is said and done, but examining the receipt, I see that I was charged $97.15 for the tie rod - a Moog EV455. For what they charged me, I can buy 4 of those things.

I believe that you did think the discount should be passed on in your opening post. I'd be curious where the bottom line is on this repair. Did they give you a break on time and make it up on parts but the bottom line is equivalent to what another shop would charge. Was the part in town or did they have to make a run to Albany to fetch the part? Did you question why the markup was so much allowing them to maybe correct a mistake?

lg
no neat sig line

 

[signcrafter]

I appreciate your explanation. I think you touched on a few things that are so confusing/frustrating about 'book time'.

You mentioned that the book time doesn't actually represent the hours that it takes to do a job but just a number that shops use to quote a total. Others have said it does actually represent the average time to do a job. Every mechanic claims he can beat book time because he "has the skills and tools" to do so. Shouldn't every mechanic have the skills and tools? I beat book times on the jobs I do DIY.

I'm not trying to pick a fight so please don't take it that way. Just trying to understand the other side of things.



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Book time is a number that someone came up with and says that is what a certain repair should take to do on average. It's not a perfect way to do things but so far it's the most fair way to both the customer and the shop and mechanic to quote, charge, and pay techs for jobs. Yes some jobs you can beat time very easy, especially if you do the same repairs multiple times. Or spend your own money on a specialty tool that cuts time off doing the job. But on the flip side some jobs are way low on book time numbers. So the tech and up taking longer then book time and ends up loosing money on the job because the customer pays the same no matter how many hours it goes. Also a first year tech isnt going to have the skills or experience or tools that a 30 year tech does. So that 30 year tech is most likely able to do the repair faster then a first year. That is where this number of average time comes into play. Like I said it's not a perfect system.

This is no different then any other business. If I go to the doctor they charge me based on the service they provide. Flat rate. Somebody at some time said this service takes this long to do so we have to charge this amount. Now, if everything goes good and the doctor completes that procedure faster they still bill the same as if it takes twice as long. Same with construction and just about all aspects of business. Unless you do strictly time and materials. Then you punch the click when you start and punch out when job is done. But when you do that you cant give the customer a quote. So they have no idea what the bill will be until the job is done. This can be a bad thing for customer if you get a lazy tech or something comes up because he is paying by the hour.

 

[epmills]

Interesting. I’m in the same category. If it takes you a week to fix it, no problem. Because of this we order parts from Amazon. Yes, the shop too. I have multiple cars, so taking a different one while you fix mine isn’t a big deal to me. In fact, the shop that normally takes care of things when I don’t fix it myself, knows this and will actually tell me when they’re busy. “How soon do you need this, I’ve not been leaving till 8pm. Okay, just when you get a chance. He had my truck for 2 weeks. Whereas I average 2,700 miles a year on it, who cares? One time I needed a car to go on vacation, so I did push the issue and he got it done.

Unfortunately, you are in a very small %. MOST of our customers want it fixed right then, right now. Doesn't matter if they get a loaner car or not. You wouldn't believe how many people bring cars in on a Thursday afternoon, with multiple complaints and/or a major service and want it done by Friday morning because they are going on a trip with the family. That is before any of the complaints have been diagnosed or parts ordered.

I can think of 1 customer that routinely drops his car off, leaving it for a week every time while he goes on his monthly vacation. He is a PITA, and knows it, but at least he gives us time to fix it.

For what its worth, most of the customers we get have multiple vehicles in the higher end of the spectrum. It isn't like they are bringing in their one and only vehicle.

 

[kctyphoon]

I think you are hung up on the fact that a shops quote has hours written on it, shops are not billing by the hour unless they are doing time and materials. Yes, the quote your receive and agree to before a repair says 4.7 hours @100 bucks an hour. Shops have a couple ways to come up with quotes and it's really no different then how a utility company quotes jobs they do. I believe you work in that industry if I'm not mistaken so I chose that as an example. Any company, be it a utility company bidding a underground wire job or an auto repair shop bidding a water pump replacement, tries to guess the amount of time it will take to complete the job. Then multiplies that by an hourly rate they need to make to keep the doors open. Pretty simple concept actually in business. So a utility company uses experience and other factors to guess how long a job will take on average and then send out a quote. An auto shop is doing the same exact thing, except they have a "book" that tells them how long the job should take on average.

Now, when it comes time to do the job it really doesn't matter how many hours it takes. Lets use the utility company example of running some underground lines. Two companies give quotes and come in close to each other and one company gets the job. They both based those quotes off how many hours they thought it would take to complete the job and how much they have to charge per hour to keep the doors open. Company A buys a bunch of shovels and hires a bunch of guys to start digging. It takes longer hours but no expensive machines. Company B buys a boring machine to bore underground and pull the wires. This is a LOT faster then digging a trench by hand and tearing up all the yards. But the machine was a huge investment. So since company B got the job done in half the time they should only get paid half of what company A would have got paid according to your theory right? Even though they used experience and invested in machines to get the job done faster.

This is the same concept as auto repair. The only difference I see is that for some reason repair shops write these book time hours on the estimate. Not sure how that came about, maybe it was in an effort to be transparent with how they came up with the quote total? Who knows but it's how it's done. But the fact is the shop just uses that number to get his quote total. It's not an actual number to stick to as to billable hours. If that's how you want to do it then find a shop that will do time and materials, because that's basically what you're asking for. Then if the job takes 2 hours then you pay for two hours labor, if it takes 10 hours then you pay for 10 hours of labor. It's a gamble, you are betting on the shop finishing before the estimated time, may work out, may not. But when you go by book time you don't pay more then that time, even if it does call for 4.7 hours and it takes 10 hours.

Maybe shops should stop writing the hours on the quote? Still use book time to come up with a total price on the quote but not tell the customer what book time is for that car. Just let the customer choose to do the repair based on a total price. Then they can't ***** about how long it took.

Yes - (and didnt get a chance to read everything you wrote - cause I have ice cream to eat and Netflix to watch) but yes - they aren't selling "the job" - they are selling the time for the job - where THEY estimate the time. Both parties are coming to agreement "in food faith" that "yes - if this will TAKE YOU 4 hours, I will PAY YOU x amount for the TIME you spent"

If their estimate is miscalculated by any reasonable margin - then the price should fluctuate in either direction since it's the TIME being sold. That's WHY it's called an ESTIMATE. Who in their right mind would AGREE to pay 4 hours of the labor rate if they said upfront "this will probably only take an hour or two"?
Customers just walk in and say "please - allow me to pay you for TWICE the time it took you. Please guys, just shut up and take my money "

And to answer whoever was saying "why should I be punished for finishing early" or " why shouldn't 'I' make more for being faster " good point - That's a conversation that SHOUKD take place between you and your boss about your hourly wages and how much THEY pay you.

- That "reward" shouldnt be paid for by overbillling the customers "CLAIMING" that it took more time to do the work then is STATED ON HIS BILL.

Guys, guys - I got the sale of the century going on. For an unlimited time we are prepared to sell you ONE hour of labor - for ONLY THREE TIMES THE HOURLY RATE!! Act fast, dont let this deal get away!!!!!

 

[dr_clyde]

Yes - (and didnt get a chance to read everything you wrote - cause I have ice cream to eat and Netflix to watch) but yes - they aren't selling "the job" - they are selling the time for the job - where THEY estimate the time. Both parties are coming to agreement "in food faith" that "yes - if this will TAKE YOU 4 hours, I will PAY YOU x amount for the TIME you spent"

If their estimate is miscalculated by any reasonable margin - then the price should fluctuate in either direction since it's the TIME being sold. That's WHY it's called an ESTIMATE.

And to answer whoever was saying "why should I be punished for finishing early" or " why shouldn't 'I' make more for being faster " good point - That's a conversation that SHOUKD take place between you and your boss about your hourly wages and how much THEY pay you.

- That "reward" shouldnt be paid for by overbillling the customers "CLAIMING" that it took more time to do the work then is STATED ON HIS BILL.

They're not selling time though. That's the whole point. They just use an average published time multiplied by the shop rate to arrive at the JOB PRICE. You aren't paying by the hour, despite the fact that there are hours on the quote. They are just showing you how they arrive at their price.

The ONLY time you pay by the hour in my experience is in custom work where book time is irrelevant.

When you agree to the quote before work begins, you agree to the total job price on the quote, not the time.

If for some reason you have an arrangement with a shop for true time and materials, you would receive a bill at the end of the job with actual hours worked and a price, but that's exceedingly rare in the repair business.

 

[bmwpowere36m3]

In the end, whats the difference... don't like the estimate, regardless of how it was created, get a couple more and compare TOTAL cost of job. No different than quotes from other trades. Have you argued with a contractor in how they determined their estimate? No, you get a few other quotes and decide if he's in the ballpark with others or not.

 

[Elsinore13]

Has anyone in this thread advocated at all for a repair shop to pass on their sub-retail discount, or is this just another straw man being propped up?

OEM MSRP for X part is $125.00. My discount from the dealer is 35%. My cost is $81.25. That's 54% markup. I've seen a whole bunch of ******* and moaning in this thread over a 40% markup. It would be funny if it weren't so sad.

 

[kythri]

I believe that you did think the discount should be passed on in your opening post.

Nope. Not at all. My opening post questioned what folks thought a reasonable markup was. When I first posted, I wasn't even complaining about a markup in general, just what would be a reasonable markup.

To re-iterate, the most expensive walk-in retail charge for the part locally was the O'Reilly next door to them, for $68.99, yet they charged $97.15 for the part.

I know for a fact they paid under $40 for the part, due to their discount. Not once did I suggest that I think I should have gotten the part for their cost, I only noted that, for what they charged me, I could have bought 4 of them, almost 5 of them, from Amazon or RockAuto.

And, that's assuming they didn't lie to me, and actually bought a Moog part, rather than a knock-off using the same part number - the invoice doesn't say Moog, that was something that we talked about on the phone when they told me that they weren't going to be able to repair as scheduled, and we had to wait a day.

I'm trusting that they installed Moog, and not something cheaper.

I'd be curious where the bottom line is on this repair. Did they give you a break on time and make it up on parts but the bottom line is equivalent to what another shop would charge. Was the part in town or did they have to make a run to Albany to fetch the part? Did you question why the markup was so much allowing them to maybe correct a mistake?

The part was not in their stock, which they claim they normally stock (not Moog, specifically, but a comparable quality brand, that I don't remember).

The part was not in stock locally, either in Lebanon, or Albany/Corvallis, or at any of their branches in those neighboring towns.

They purchased the part at the O'Reilly next door/across the street, who did not have it in stock, and had to put it on their freight order for arrival the next morning.

I didn't comparison shop at this point, because the car was just in for an alignment. I normally use a shop in Albany for alignments, but since Schwab's can do it local, and I was already in their for a flat repair and they pointed out some premature wear due to alignment (and ultimately, the bad tie-rod issue), I just decided to have it done there.

Ultimately, I'm not really annoyed at the total cost of the repair, nor was I complaining about that:

$193.14, broken down on invoice as:

$95.99 - INNER TIEROD SOCKET ON RACK & PINION - INSTALLATION
$97.15 - EV455 INNER TIE ROD

That was, if not the exact price quoted before I dropped the car off, damned close, and probably about the same as most anywhere else, I'd imagine.

And, honestly, if I didn't have an itemized invoice, I can't say that I'd really care, either.

Really, it's not the end cost, it's what I consider the shady parts markup practice - and, as evidenced by BOTH sides in this thread - those that don't like the practice, and those that are going ******* defending the practice, it seems like a much easier time to be had by all if the parts markup didn't exceed retail pricing, and other "OMG WE HAVE TO CHARGE TO STAY IN BUSINESS!!!" costs were wrapped into the labor.

As I said in my original post:

I certainly understand some parts markup, so, as a forewarning, I'm not griping about parts being marked up in general. That's the price you pay, literally, for having a shop do the work instead of doing it yourself.

Ultimately, it's all on me, and I realize that.

I was busy, I needed/wanted the car by the start of the weekend, and I wasn't able to wait until the weekend to do the job myself (for a total expense of $21.79 plus a couple hours of my time) because of that need.

For all of the folks in this thread, defending the markup, and for all of their complaints of us "cheap" customers who ***** about parts markup, and can't afford a repair shop anyways (seriously, WTF?), I fail to see how it wouldn't just be easier all around to either not itemize and tell the customer what they paid for the part, or to shift that markup into labor costs, but, hey, if I knew more, I'd open a repair shop that puts an above-retail markup on parts that I manufactured myself in the back room, out of machines I built myself to manufacture those parts, so I could make tons of money and take my own steaks to the restaurant and have them cook them (or some other version of an argument created by a preschooler).

 

[signcrafter]

Yes - (and didnt get a chance to read everything you wrote - cause I have ice cream to eat and Netflix to watch) but yes - they aren't selling "the job" - they are selling the time for the job - where THEY estimate the time. Both parties are coming to agreement "in food faith" that "yes - if this will TAKE YOU 4 hours, I will PAY YOU x amount for the TIME you spent"

If their estimate is miscalculated by any reasonable margin - then the price should fluctuate in either direction since it's the TIME being sold. That's WHY it's called an ESTIMATE. Who in their right mind would AGREE to pay 4 hours of the labor rate if they said upfront "this will probably only take an hour or two"?
Customers just walk in and say "please - allow me to pay you for TWICE the time it took you. Please guys, just shut up and take my money "

And to answer whoever was saying "why should I be punished for finishing early" or " why shouldn't 'I' make more for being faster " good point - That's a conversation that SHOUKD take place between you and your boss about your hourly wages and how much THEY pay you.

- That "reward" shouldnt be paid for by overbillling the customers "CLAIMING" that it took more time to do the work then is STATED ON HIS BILL.

Guys, guys - I got the sale of the century going on. For an unlimited time we are prepared to sell you ONE hour of labor - for ONLY THREE TIMES THE HOURLY RATE!! Act fast, dont let this deal get away!!!!!

They are NOT selling you on an amount of hours. They are selling you a total price. When you go to a shop they say labor will be this PRICE and this price for parts and your total will be this AMOUNT of DOLLARS. You agree to that price and sign the paper and they fix your car. It truly is that simple.

The hours on the sheet is a way the shop uses to determine the cost of labor. Like I said before I dont know who decided putting the hours on the paper was a good idea. Take the hours off the quote and just give a dollar amount for labor so it doesnt confuse people and get them all riled up like you are. Simple solution. Just like I'm sure your company doesnt list an amount of hours they will bill for on a job quote. They give a bid for a total price of a job to be completed. Usually there is a margin of error built in too for things like rain delays and what not. Now if you finish a week early your company doesnt knock money off the bill. Or if you go over your company doesnt add onto the bill. Unless you run into unforeseen issues that deserve extra money.

It's the exact same thing. Just for some reason auto repair puts their estimated hours on paper so everyone can see it where all other industries hide their numbers.

I was a union carpenter Forman at one point. When I got to a big job with a handful of guys I was told the number of man hours that job was bid for(just like how auto repair shops do it). If I brought that job in under hours bid I got a nice little bonus. Why? Because the company pocketed that money for those hours we didnt use. But using your logic that company should have gave that money back. Even though we all worked hard to come in under hours. That's not how any of this works.

 

[Shane6377]

I apologize in advance for the long post-
If a job takes the skill of a tech with 30 years experience why is it based off of the time it takes and average tech to do the job? Likewise, if a shop gets a job that only requires the skill of a 1 year tech why would they have a 30 year tech do that job?

I'm in IT and I deal with this regularly when bidding projects. Some projects take the skill of a 1st year programmer and others that the skill of a programmer with 20yrs experience. I don't have flat hourly labor rates. I bid jobs based on the time it will take AND the cost of labor for the programmer who will be working on the project. My 20 year programmer isn't working on projects that a 1 year programmer could be doing.

For example: My 1st year programmer is P1 and I bill his time at $100/hr. My programmer with 20 years is P20 and I bill his time at $200/hr. Two projects may both require 10hrs of work but I don't bill them the same:

P1: 10hrs @ $100 = $1,000
P20: 10hrs @ $200 = $2,000

I don't bill the $2,000 project like: 20hrs @ $100= $2,000. Yes the total bill is the same but it's deceptive because it makes it look like I'm having someone spend 20hrs on a project that should take 10.

Furthermore, if I know it would take P1 30hrs to do that project should I bill $3,000 for that project when I know I'm having P20 do the job? Of course not. But this is what happens all too often in the auto industry... I believe the industry term is "gravy work".

All customers want is transparent billing so that we can make an informed decision about a shops services.


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[richfinn]

Yes - (and didnt get a chance to read everything you wrote - cause I have ice cream to eat and Netflix to watch) but yes - they aren't selling "the job" - they are selling the time for the job - where THEY estimate the time. Both parties are coming to agreement "in food faith" that "yes - if this will TAKE YOU 4 hours, I will PAY YOU x amount for the TIME you spent"

If their estimate is miscalculated by any reasonable margin - then the price should fluctuate in either direction since it's the TIME being sold. That's WHY it's called an ESTIMATE. Who in their right mind would AGREE to pay 4 hours of the labor rate if they said upfront "this will probably only take an hour or two"?
Customers just walk in and say "please - allow me to pay you for TWICE the time it took you. Please guys, just shut up and take my money "

And to answer whoever was saying "why should I be punished for finishing early" or " why shouldn't 'I' make more for being faster " good point - That's a conversation that SHOUKD take place between you and your boss about your hourly wages and how much THEY pay you.

- That "reward" shouldnt be paid for by overbillling the customers "CLAIMING" that it took more time to do the work then is STATED ON HIS BILL.

Guys, guys - I got the sale of the century going on. For an unlimited time we are prepared to sell you ONE hour of labor - for ONLY THREE TIMES THE HOURLY RATE!! Act fast, dont let this deal get away!!!!!

What overbilling??

The book time is the time it takes to do the job (more or less for an average journeyman technician)

Lets say the Mastertech does the job on your car in 2/3rds of the time because of his knowledge and experience and a special tool he owns

Are you saying you only want to pay 2/3rds of the Labour?

Thats fine, we will bill you the higher Hourly rate for the Mastertech which is an extra 1/3rd of the normal rate!!

Tell us your vehicle repair story, what actually happened when you got ripped off, so we might understand??

 

[dr_clyde]

I apologize in advance for the long post-
If a job takes the skill of a tech with 30 years experience why is it based off of the time it takes and average tech to do the job? Likewise, if a shop gets a job that only requires the skill of a 1 year tech why would they have a 30 year tech do that job?

I'm in IT and I deal with this regularly when bidding projects. Some projects take the skill of a 1st year programmer and others that the skill of a programmer with 20yrs experience. I don't have flat hourly labor rates. I bid jobs based on the time it will take AND the cost of labor for the programmer who will be working on the project. My 20 year programmer isn't working on projects that a 1 year programmer could be doing.

For example: My 1st year programmer is P1 and I bill his time at $100/hr. My programmer with 20 years is P20 and I bill his time at $200/hr. Two projects may both require 10hrs of work but I don't bill them the same:

P1: 10hrs @ $100 = $1,000
P20: 10hrs @ $200 = $2,000

I don't bill the $2,000 project like: 20hrs @ $100= $2,000. Yes the total bill is the same but it's deceptive because it makes it look like I'm having someone spend 20hrs on a project that should take 10.

Furthermore, if I know it would take P1 30hrs to do that project should I bill $3,000 for that project when I know I'm having P20 do the job? Of course not. But this is what happens all too often in the auto industry... I believe the industry term is "gravy work".

All customers want is transparent billing so that we can make an informed decision about a shops services.


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I don't think a variable shop rate is a good idea. That sounds like a hot mess. Time keeping is already a huge headache, and now you want to introduce apprentice, journeyman and master rates? Whoof.

Generally speaking, the kid doing oil changes isn't doing the engine work anyway, but I would hate to field the phone call as to why their car was fixed with the "apprentice rate", even if the kid is competent for the job at hand.

No one is saying billing shouldn't be transparent, but I think we're exaggerating things to make points. Book time is an AVERAGE. Most guys who are AVERAGE, will be within a few minutes of the quoted time.

As stated MANY times, the flat rate book time and shop rate are used to price entire jobs. Nobody is (typically) billing the customer by the hour. It is just a tool used to get all the shops on the same playing field and make estimating price easy and fair.

 

[richfinn]

I apologize in advance for the long post-
If a job takes the skill of a tech with 30 years experience why is it based off of the time it takes and average tech to do the job? Likewise, if a shop gets a job that only requires the skill of a 1 year tech why would they have a 30 year tech do that job?

I'm in IT and I deal with this regularly when bidding projects. Some projects take the skill of a 1st year programmer and others that the skill of a programmer with 20yrs experience. I don't have flat hourly labor rates. I bid jobs based on the time it will take AND the cost of labor for the programmer who will be working on the project. My 20 year programmer isn't working on projects that a 1 year programmer could be doing.

For example: My 1st year programmer is P1 and I bill his time at $100/hr. My programmer with 20 years is P20 and I bill his time at $200/hr. Two projects may both require 10hrs of work but I don't bill them the same:

P1: 10hrs @ $100 = $1,000
P20: 10hrs @ $200 = $2,000

I don't bill the $2,000 project like: 20hrs @ $100= $2,000. Yes the total bill is the same but it's deceptive because it makes it look like I'm having someone spend 20hrs on a project that should take 10.

Furthermore, if I know it would take P1 30hrs to do that project should I bill $3,000 for that project when I know I'm having P20 do the job? Of course not. But this is what happens all too often in the auto industry... I believe the industry term is "gravy work".

All customers want is transparent billing so that we can make an informed decision about a shops services.


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Well thats easy, if the two lube techs are busy and assigned to jobs, the journeyman tech is elbows
deep in an engine rebuild, that leaves the Mastertech with 30 years experience to do your oil change service

Is it Ok to charge Mastertech rate ??

 

[Shane6377]

Well thats easy, if the two lube techs are busy and assigned to jobs, the journeyman tech is elbows

deep in an engine rebuild, that leaves the Mastertech with 30 years experience to do your oil change service



Is it Ok to charge Mastertech rate ??

Why are there only 2 lube techs if the shop is getting enough oil changes to support 3? I'd hire another lube tech or refer the customer to another shop to do their oil change.

Why does a Mastertech have time to do oil changes? I'd reduce my workforce by 1 Mastertech or find some higher paying work to keep him busy.

And I don't take this sort of thing lightly. I deal with workforce and labor management all the time.




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[richfinn]

Why are there only 2 lube techs if the shop is getting enough oil changes to support 3? I'd hire another lube tech or refer the customer to another shop to do their oil change.

Why does a Mastertech have time to do oil changes? I'd reduce my workforce by 1 Mastertech or find some higher paying work to keep him busy.

And I don't take this sort of thing lightly. I deal with workforce and labor management all the time.




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This is the reality, the type of work coming in into automotive workshops is varied and unpredictable

Everybody mucks in (even the mastertech)

For example a junior tech might need the mastertech to pop over and explain a wiring diagram or a lube tech might need help to reset a service indicator, he generally supports the other techs and cascades knowledge

I think this is why shops charge a set hourly rate and not on the skill level of the tech involved

Its a good idea though

 

[Shane6377]

Well thats easy, if the two lube techs are busy and assigned to jobs, the journeyman tech is elbows

deep in an engine rebuild, that leaves the Mastertech with 30 years experience to do your oil change service



Is it Ok to charge Mastertech rate ??

Sorry I didn't answer your question about is it ok to charge Mastertech rates for an oil change?

I would say no. It's not the customer's fault a lube tech wasn't available it's the shop manager's.

Just like if my 20 year programmer gets stuck doing 1st year work. I don't charge my customer more because it's my fault as a manger for not having the available staff to meet their request. If I want the business I take the hit on labor. If not (and this is usually the case) I refer them to someone else. I don't want business that isn't profitable but I'm not going to screw a customer for my mismanagement.


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[Yarpo]

They're not selling time though. That's the whole point. They just use an average published time multiplied by the shop rate to arrive at the JOB PRICE. You aren't paying by the hour, despite the fact that there are hours on the quote. They are just showing you how they arrive at their price.

The ONLY time you pay by the hour in my experience is in custom work where book time is irrelevant.

When you agree to the quote before work begins, you agree to the total job price on the quote, not the time.

If for some reason you have an arrangement with a shop for true time and materials, you would receive a bill at the end of the job with actual hours worked and a price, but that's exceedingly rare in the repair business.

They are NOT selling you on an amount of hours. They are selling you a total price. When you go to a shop they say labor will be this PRICE and this price for parts and your total will be this AMOUNT of DOLLARS. You agree to that price and sign the paper and they fix your car. It truly is that simple.

The hours on the sheet is a way the shop uses to determine the cost of labor. Like I said before I dont know who decided putting the hours on the paper was a good idea. Take the hours off the quote and just give a dollar amount for labor so it doesnt confuse people and get them all riled up like you are. Simple solution. Just like I'm sure your company doesnt list an amount of hours they will bill for on a job quote. They give a bid for a total price of a job to be completed. Usually there is a margin of error built in too for things like rain delays and what not. Now if you finish a week early your company doesnt knock money off the bill. Or if you go over your company doesnt add onto the bill. Unless you run into unforeseen issues that deserve extra money.

It's the exact same thing. Just for some reason auto repair puts their estimated hours on paper so everyone can see it where all other industries hide their numbers.

I was a union carpenter Forman at one point. When I got to a big job with a handful of guys I was told the number of man hours that job was bid for(just like how auto repair shops do it). If I brought that job in under hours bid I got a nice little bonus. Why? Because the company pocketed that money for those hours we didnt use. But using your logic that company should have gave that money back. Even though we all worked hard to come in under hours. That's not how any of this works.

What overbilling??

The book time is the time it takes to do the job (more or less for an average journeyman technician)

Lets say the Mastertech does the job on your car in 2/3rds of the time because of his knowledge and experience and a special tool he owns

Are you saying you only want to pay 2/3rds of the Labour?

Thats fine, we will bill you the higher Hourly rate for the Mastertech which is an extra 1/3rd of the normal rate!!

Tell us your vehicle repair story, what actually happened when you got ripped off, so we might understand??

Good luck. I think it's been explained 20 times now rather politely. I'm not sure how to explain it any better, I tried, you guys tried, some people just cant be reasoned with.

Ps I just got off the phone with customer support for mercedes MBRACE, similar to onstar...40 minute phone call, 40 minute update of the control unit and it costs the customer .5 and pays me .5. Catch me out here...getting rich obviously. I'm sure when I tell them that the control unit update takes forever they'd be ok with the shop charging them double, right? ...right?

 

[richfinn]

Sorry I didn't answer your question about is it ok to charge Mastertech rates for an oil change?

I would say no. It's not the customer's fault a lube tech wasn't available it's the shop manager's.

Just like if my 20 year programmer gets stuck doing 1st year work. I don't charge my customer more because it's my fault as a manger for not having the available staff to meet their request. If I want the business I take the hit on labor. If not (and this is usually the case) I refer them to someone else. I don't want business that isn't profitable but I'm not going to screw a customer for my mismanagement.


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Exactly, treat the customers consistently and fairly by charging the same hourly rate

The difference is the Mastertech is more efficient at the job and can flag more hours for the business

 

[Yarpo]

Exactly, treat the customers consistently and fairly by charging the same hourly rate

The difference is the Mastertech is more efficient at the job and can flag more hours for the business

He should be sued, tbh.

 

[Volvotechdude]

I see a lot of using ESTIMATE and QUOTE being used interchangeably. That is not correct. Legally an ESTIMATE is an approximation of what things may cost and can be subject to change. The rule of thumb is usually 10-15% plus or minus. This is used more in contracting and such. In the Auto repair business, QUOTE is used as a set price for a service including parts and labor that once accepted cannot be changed and is legally binding. The customer is free to review and generally the QUOTE will have a "good for 30 days" put on it so if they want to come back it'll still be what's QUOTED. There is a breakdown of what each entails, labor, parts etc. Book times, from a dealer perspective, are given to us via the manufacture based on a time study done several times over to establish a base time of what a skilled person can accomplish a certain task. Obviously a new tech will struggle while a seasoned one generally won't.

If the OP had a problem with it, you were free to decline or ask. You still can go in and ask about the part markup and why. Coming onto here, backing people in this trade into a corner and berating them for being crooks is cowardly.

 

[richfinn]

Good luck. I think it's been explained 20 times now rather politely. I'm not sure how to explain it any better, I tried, you guys tried, some people just cant be reasoned with.

Ps I just got off the phone with customer support for mercedes MBRACE, similar to onstar...40 minute phone call, 40 minute update of the control unit and it costs the customer .5 and pays me .5. Catch me out here...getting rich obviously. I'm sure when I tell them that the control unit update takes forever they'd be ok with the shop charging them double, right? ...right?

I think we are getting there

 

[richfinn]

He should be sued, tbh.

Dont even get me started on Lawyers

 

[Shane6377]

This is the reality, the type of work coming in into automotive workshops is varied and unpredictable

Everybody mucks in (even the mastertech)

For example a junior tech might need the mastertech to pop over and explain a wiring diagram or a lube tech might need help to reset a service indicator, he generally supports the other techs and cascades knowledge

I think this is why shops charge a set hourly rate and not on the skill level of the tech involved

Its a good idea though

I do understand the variability and unpredictability of work. I deal with a lot of that in my field as well. We are constantly collaborating and pitching in on projects from the top down.

I know these examples have been oversimplified and it's much harder in reality but it really is possible to manage workloads and staffing even in unpredictable businesses.

Do you track the type of work that comes in over days, weeks, months and years to help with staffing decisions? Remember, I'm in IT... we may have just stumbled across a million dollar idea! Lol


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[Shane6377]

Exactly, treat the customers consistently and fairly by charging the same hourly rate



The difference is the Mastertech is more efficient at the job and can flag more hours for the business

If you think this is treating the customer fairly then this has all gone way over your head. Sadly, this all boils down to lazy management. Sounds like a lot of shop owners may be good mechanics but are really poor businessmen.


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[sberry]

If there is more hrs to "flag"

 

[richfinn]

If you think this is treating the customer fairly then this has all gone way over your head. Sadly, this all boils down to lazy management. Sounds like a lot of shop owners may be good mechanics but are really poor businessmen.


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I understand the "system" inside out after 35 years.

Thats how it works and its been around
a lot longer than me, it was devised by the vehicle manufacturers who have probably spent millions coming up with estimated times for retail/fleet/warranty work

I dont rip anyone off

I do this job because I like fixing vehicles

I do like your idea about charging different rates for different skill sets, it's interesting

I dont claim to be a businessman or a manager

I can only explain it to you from a Technicians perspective

I can see how its possible you dont think the times are accurate and need lowering to suit how much you want to spend on your car.

We dont set the times, we beat them!!!

 

[mautotech]

Wow. I, (and my techs), are really glad I pay salary so we don't have to worry about all these issues that apparently most of the other shop owner posters have to worry about.
If nothing else, this thread has given me a better appreciation for how I run my shop compared to some of the other shop owners in this thread. I've wondered how prevalent the behavior of the bad shop owners I know is in the rest of the country. Now, I think we all know.

 

[richfinn]

Wow. I, (and my techs), are really glad I pay salary so we don't have to worry about all these issues that apparently most of the other shop owner posters have to worry about.
If nothing else, this thread has given me a better appreciation for how I run my shop compared to some of the other shop owners in this thread. I've wondered how prevalent the behavior of the bad shop owners I know is in the rest of the country. Now, I think we all know.

How much do the technicians at your shop earn??

 

[Citation]

I think we all agree the part has to be marked up. I think a problem is the actual cost to the shop isn't a straight markup of the cost of the part.

Consider this example. How much would someone have to pay you to pickup an oil filter from Walmart. Let's say Walmart charges $5 for the filter.

So let's assume you just walk so no vehicle wear and tear. However, let's assume you pay your employee $30/hr to fetch parts and it takes you 30 min to get the part.

So right now you have a $20 filter.

You also might add $1 as kind of an insurance just in case someone swapped the filter in the box and you have to return it for another one.

So now that $5 filter (my cost at Walmart, not including my time and effort to actually get the part) would cost me $21... and that only is based on paying your fee to get the part. You didn't put in extra cost for things like having to pay out of your pocket before I gave you money to pay for the filter.

I'm certain I haven't covered all the different costs but we have marked up a $5 filter almost 5x and you basically have made no money on the job.

Now let's assume we are getting a $50 part instead. Well the math might be a bit different. We still have $15 in time. The "risk" based costs go up since the cost of the part is higher. So lets say $10 to cover for a wrong/bad part.
So that makes a $50 part $75.

Anyway, the part in question wasn't very expensive so I would expect a bigger mark up due to the fixed costs of acquiring the costs being a bigger part of the total cost to get the part to the shop.

Quite simply, rather than ask why the shop charged X% we should ask, what are the total costs to the shop to have a mechanic put his hands on a part for your car. It's more than just the shop's cost for the part.

Nope. Not at all. My opening post questioned what folks thought a reasonable markup was. When I first posted, I wasn't even complaining about a markup in general, just what would be a reasonable markup.

To re-iterate, the most expensive walk-in retail charge for the part locally was the O'Reilly next door to them, for $68.99, yet they charged $97.15 for the part.

I know for a fact they paid under $40 for the part, due to their discount. Not once did I suggest that I think I should have gotten the part for their cost, I only noted that, for what they charged me, I could have bought 4 of them, almost 5 of them, from Amazon or RockAuto.

And, that's assuming they didn't lie to me, and actually bought a Moog part, rather than a knock-off using the same part number - the invoice doesn't say Moog, that was something that we talked about on the phone when they told me that they weren't going to be able to repair as scheduled, and we had to wait a day.

I'm trusting that they installed Moog, and not something cheaper.



The part was not in their stock, which they claim they normally stock (not Moog, specifically, but a comparable quality brand, that I don't remember).

The part was not in stock locally, either in Lebanon, or Albany/Corvallis, or at any of their branches in those neighboring towns.

They purchased the part at the O'Reilly next door/across the street, who did not have it in stock, and had to put it on their freight order for arrival the next morning.

I didn't comparison shop at this point, because the car was just in for an alignment. I normally use a shop in Albany for alignments, but since Schwab's can do it local, and I was already in their for a flat repair and they pointed out some premature wear due to alignment (and ultimately, the bad tie-rod issue), I just decided to have it done there.

Ultimately, I'm not really annoyed at the total cost of the repair, nor was I complaining about that:

$193.14, broken down on invoice as:



That was, if not the exact price quoted before I dropped the car off, damned close, and probably about the same as most anywhere else, I'd imagine.

And, honestly, if I didn't have an itemized invoice, I can't say that I'd really care, either.

Really, it's not the end cost, it's what I consider the shady parts markup practice - and, as evidenced by BOTH sides in this thread - those that don't like the practice, and those that are going ******* defending the practice, it seems like a much easier time to be had by all if the parts markup didn't exceed retail pricing, and other "OMG WE HAVE TO CHARGE TO STAY IN BUSINESS!!!" costs were wrapped into the labor.

As I said in my original post:



Ultimately, it's all on me, and I realize that.

I was busy, I needed/wanted the car by the start of the weekend, and I wasn't able to wait until the weekend to do the job myself (for a total expense of $21.79 plus a couple hours of my time) because of that need.

For all of the folks in this thread, defending the markup, and for all of their complaints of us "cheap" customers who ***** about parts markup, and can't afford a repair shop anyways (seriously, WTF?), I fail to see how it wouldn't just be easier all around to either not itemize and tell the customer what they paid for the part, or to shift that markup into labor costs, but, hey, if I knew more, I'd open a repair shop that puts an above-retail markup on parts that I manufactured myself in the back room, out of machines I built myself to manufacture those parts, so I could make tons of money and take my own steaks to the restaurant and have them cook them (or some other version of an argument created by a preschooler).

 

[bczygan]

If they had charged retail, I wouldn't have posted this thread.

Instead, they marked it up well past retail.

It's simple.

Vote with your wallet or your time.

If you don't have the time and desire to do something, and hire me to do it, I will charge what the market will bear.

In that case I have a stronger bargaining position. Where I assign the money really doesn't matter. In fact, I would prefer to quote you a lump sum amount. That way you wouldn't even know what parts cost.

Bill

 

[Shane6377]

I think we all agree the part has to be marked up. I think a problem is the actual cost to the shop isn't a straight markup of the cost of the part.



Consider this example. How much would someone have to pay you to pickup an oil filter from Walmart. Let's say Walmart charges $5 for the filter.



So let's assume you just walk so no vehicle wear and tear. However, let's assume you pay your employee $30/hr to fetch parts and it takes you 30 min to get the part.



So right now you have a $20 filter.



You also might add $1 as kind of an insurance just in case someone swapped the filter in the box and you have to return it for another one.



So now that $5 filter (my cost at Walmart, not including my time and effort to actually get the part) would cost me $21... and that only is based on paying your fee to get the part. You didn't put in extra cost for things like having to pay out of your pocket before I gave you money to pay for the filter.



I'm certain I haven't covered all the different costs but we have marked up a $5 filter almost 5x and you basically have made no money on the job.



Now let's assume we are getting a $50 part instead. Well the math might be a bit different. We still have $15 in time. The "risk" based costs go up since the cost of the part is higher. So lets say $10 to cover for a wrong/bad part.

So that makes a $50 part $75.



Anyway, the part in question wasn't very expensive so I would expect a bigger mark up due to the fixed costs of acquiring the costs being a bigger part of the total cost to get the part to the shop.



Quite simply, rather than ask why the shop charged X% we should ask, what are the total costs to the shop to have a mechanic put his hands on a part for your car. It's more than just the shop's cost for the part.

This has been covered several times over but...
I don't know any shop that is sending an employee to fetch parts, let alone a $30/hr employee. Most shops get parts delivered for free from local parts stores. Custom work or special spec parts might be an exception but no ones going out after oil filters.

Additionally, most shops get discounts on those parts. Shops should not be expected to pass along their discount to the customer. They earned that by having a relationship with the parts supplier and for the effort of picking up the phone or clicking the mouse to order.


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[2ndGearRubber]

Why are there only 2 lube techs if the shop is getting enough oil changes to support 3? I'd hire another lube tech or refer the customer to another shop to do their oil change.

Why does a Mastertech have time to do oil changes? I'd reduce my workforce by 1 Mastertech or find some higher paying work to keep him busy.

And I don't take this sort of thing lightly. I deal with workforce and labor management all the time.




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Everybody dumps oil, even the lead techs in the shop. I'm the lead tech where I work; ASE Master and L1, as though any of that matters. I do stupid **** all the time, daily, like dumping oil, mounting tires, etc. It comes down to work flow and how the shop is staffed. I can change oil faster than anyone else, and mount tires faster. If there's no "real" work, I do whatever is available, and clean-up after the other employees issues. Counterpoint, there's times where a half-dozen cars are written up, and I'm the only one who is going to be touching any of them so everyone else just stands around. The shop is really focused around me doing the heavy lifting and everyone else just taking up the stuff I don't have time for.



I will agree most shops are poorly run. The fact that shops accept LOF as a standalone service, and actively seek such business, is proof enough.