Labour Rates Explained

Though many people think auto repair shop rates are very high, most are close to industry averages. To help you better understand auto repair labor rates, and so that you feel more comfortable handing over your hard-earned money, here are some of the factors auto shops use to establish car repair labor rates.

  • Vehicle makes and models serviced (mainstream vs. luxury/exotic)
  • Repair shop type (dealership, independent, etc.)
  • Facility overhead (mortgage or rent, upkeep, utilities, etc.)
  • Business overhead (tools, auto repair technician training, equipment, advertising, taxes, etc.)
  • Skill levels and certifications of auto repair technicians

Most auto repair shops now charge upwards of $100 per hour. However, when it comes to counting the costs of driving, whether it’s to work, school, or whatever you’re doing this weekend, auto repair and regular maintenance are often the most forgotten. Even drivers who plan for maintenance may not plan for unexpected repairs, such as a check engine light or flat tire. While most drivers simply consider the cost of gas, insurance, and car payment as the core cost of ownership, auto repair is often left out of this list.

The average unexpected car repair bill is about $550, suggesting owners save $50 per month in a separate car repair fund. Keep in mind, this doesn’t include regular maintenance, some services which can run up to $700 or more. Even a quality oil change can run between $50 and $100, depending on the parts and supplies used.

Yes, you read this correctly, the average unexpected car repair is $550, which means some car repairs are cheaper, while others can be much more expensive. A loose gas cap might cost $15 to tighten or replace, not including the cost of a new gas cap. Drivers paid an average of $258 to replace a faulty oxygen sensor. At the other end of the spectrum, a failed catalytic converter averages $1,190 to replace.

Did we really say $15 to tighten a gas cap and over $1,000 to replace a catalytic converter? Why is car repair so expensive? Are “technicians” just out to get your money or is there something more complicated at work? Trust us, it’s the latter, but perhaps it needs an explanation. The typical auto repair quote has two columns, “parts” and “labor.” These refer to the cost of the parts and supplies used, as well as the time required for the technician to do the job. There is much more to the high cost of auto repair, however.

Different Labour Costs

This is usually straightforward for maintenance operations, but not so much for repair operations because the shop also must account for how much time and equipment it takes to diagnose the problem before it can be repaired. Some auto repair quotes might include “diagnostic time” which may even be charged at a higher rate than the typical “repair labor” rate. “You get what you pay for” applies well to labor costs, which are sometimes based on the training and experience of the laborers. This requires a significant amount of training and experience, which master technicians take many years to accrue. It takes time to learn how to make effective repairs, safely and efficiently, without creating further problems.

Flat Rate

Many auto repair shops quote labor charges using a “flat rate” manual or computer program that provides the average time it takes an experienced technician to perform a given car repair. That flat rate time is then multiplied by the shop’s hourly labor rate to reach the total labor charge for the service.

Some people think flat-rate pricing is a scheme to overcharge customers. Actually, it is a system that allows shops to give fair and consistent auto repair estimates while paying their technicians based on ability. For example, let’s say the flat-rate time to replace a starter is two hours. The shop quotes this rate to customers and pays its technicians two times their hourly wage for doing the work. If an experienced technician completes the job in less time, he or she effectively earns a higher hourly rate. If an apprentice takes longer, he or she effectively earns less. Either way, you pay the same amount.

Diagnosis Pricing

This requires significantly more training than a repair laborer, as well as different tools, both of which require training and exact a significant expense. Many auto repair shops quote a basic diagnostic charge that includes certain procedures and a maximum time limit. If the problem cannot be identified within that time, they will contact you, describe what has been done to that point, and ask for more time (and money) to do further diagnosis. This can be frustrating for both you and the shop, but there is no practical alternative, especially when it comes to complex or intermittent troubles.

For some problems, electrical issues, it is not unusual for the diagnosis cost to exceed that of the actual repair. For example, a shop may spend two hours tracking down an open circuit in a wire under the dash, and then fix the problem in five minutes with some solder and electrical tape. In these situations, you are mainly paying for the expertise required to locate the problem, not the repair itself.

Menu Pricing

Some auto repair shops advertise certain jobs using “package” or “menu” pricing. You have probably seen coupons for $24.95 oil changes that include the parts and labor required to do the job on most cars. Or maybe you have read ads that offer a “brake job” for $99.95 per axle – additional work extra. An amount for labor is included in the menu price you are quoted. Based on the time it takes to perform the service, package, or menu pricing labor can be as low as $10-$20 an hour. Menu pricing is a legitimate marketing tool but be sure to note any limitations and exclusions.

For example, if your car requires synthetic motor oil, more than five quarts of oil, or an uncommon filter, an oil change will cost more than $34.95. Similarly, most brake jobs will require more work than can be included in a $99.95 special. When you purchase menu-priced services, don’t be surprised if the auto repair shop calls you and requests approval to perform additional work. Before giving an okay, ask for a written estimate that details the parts and labor costs to help prevent any misunderstandings. If you have any questions, make sure they are answered to your satisfaction prior to approving the work.

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