The Ultimate Labor Guide For Auto Repair Shops
To keep your auto shop customers satisfied and returning to you in the future, delivering accurate estimates is crucial. If repairs take longer or cost more than expected, it could annoy them or – even worse – damage your reputation.
Are you unsure how to calculate estimates or would you like a refresher on this subject? Either way, keep reading for a comprehensive labor guide that work with shop management software in auto repair shops.
Auto Repair Estimate vs. Auto Repair Quote
Essentially, these estimates act as contracts between your auto repair shop and your customers. They include approximate labor schedules and pricing for your services, along with disclaimers to clarify this information is not final.
Auto repair quotes, on the other hand, fall into a separate category. Like estimates, quotes predict how much a customer’s repairs will cost. With that said, quotes offer an “expert opinion” on auto repair expenses, which both clients and insurance companies use. Quotes–not estimates–settle disputes related to service or billing.
Calculating auto repair quote with a labor guide
Delivering a quote for auto repair may seem simple. Just take your hourly rate, multiply it by how long you expect the job to take and add the cost of parts. However, there’s more to the quote calculation process than that implies. You’ll need to:
- Predict the materials needed – While you’re pricing an auto repair job, add a markup for any materials you’re likely to use. That doesn’t just include auto parts. You should also take things like paint, screws, and sandpaper into account. Using Shop-Ware’s canned jobs and past services means you don’t have to start from scratch every time.
First, start with your discounted costs for parts and materials. Next, increase that cost until it reaches the price that customers would pay independently. To avoid legal issues, be sure to check your state’s applicable pricing laws at the start.
- Determine how long it will take – Labor expenses make up a large portion of auto repair costs, so you must know how long it will take. You may want to use information from a reliable labor guide catalog, such as the Chilton Labor Guide.
Set a labor rate
To start calculating a basic labor rate, add up your expenses and divide them by how many hours you work. To demonstrate of how this works, assume your monthly overhead is $12,000 and you work 40 hours each week:
$12,000/4 weeks = $3,000/week
$3,000/40 hours = $75/hour
That rate will help you take care of your expenses without losing money on jobs. However, you’ll need to introduce a markup to earn a profit. For many shops, a 50 to 60% markup works well. Here’s what that looks like when applied to the example above:
$75 x $0.50 = $37.50
$37.50 + $75 = $112.50
Calculating an auto repair estimate
Since auto repair estimates differ from auto repair quotes, it stands to reason that the process of calculating them varies. Fortunately, this labor guide can help you provide detailed, transparent estimates for your customers. When it’s time to deliver an estimate, you should:
– Assess the vehicle
Of course, you can’t create a reliable estimate without knowing the condition of a client’s vehicle. That means the first step in this process is doing a vehicle inspection. Above all, focus on the sections of the car where you plan to install parts. Next, for larger-scale jobs, perform a diagnostic scan for additional information.
– Calculate cost of damage
Auto repair labor catalogs can help figure out how long it will take to fix a vehicle and the cost. Certainly, you must use caution since these guidelines may assume you install OEM parts in a car in mint condition.
To steer clear of any unexpected pitfalls, thoroughly inspect damages to the vehicle during your initial assessment. Then, take the number of hours you expect to spend fixing it and multiply that value by your hourly labor rate.
– Determine tools and parts needed
Before you’re ready to put your estimate together, you’ll need to take one more step–ordering parts and materials. To ensure you’re getting compatible materials, use the vehicle’s VIN while placing your order.
Once you know what auto parts and materials you need, you can add their cost (and your markup) to the labor rate you’ve already calculated. With that, you’ll have the total cost of repairs for the job.
– Create the estimate
Preparing a professional auto repair estimate involves more than just writing down a number on a piece of paper. Your estimates also need to include:
- Contact details for the customer
- Information on your business
- Parts and labor warranties
An estimated expiration date (since prices can change before customers authorize repairs)
You’ll be ready to send out a reliable estimate once you have this information!
Improving your margins
Offering reliable auto repair estimates and quotes is a great way to keep your customers happy. With the information in this labor guide, you can deliver estimates your clients can trust. That makes them more likely to come back the next time they need auto repairs.
But there’s more to making money than boosting customer satisfaction. While that is a major piece of the puzzle, you should also improve your margins by increasing technician efficiency. Today, that means reducing downtime with the use of cutting-edge technology.
AutoVitals is the auto repair industry’s most trusted provider of digital solutions for shop success. With its services and products, you can benefit from automated workflow management, digital vehicle inspections, professional web design, and more.
Increasing your car count and revenue means using automation and AutoVitals’ easily integrated software is ready when you are.
How to Start to Streamline Operations
If you haven’t already invested in at least one designated tablet for service technician use, the time to start is now. With this technology, your techs will be more efficient and your service dvisor will provide better customer service thus increasing car count.
A key component is ensuring you have the right software. AutoVitals provides digital solutions for auto shops, ranging from digital vehicle inspections and workflow automation to web design and digital marketing. Experts in running successful auto repair shops, AutoVitals can increase your shop’s revenue, sales, and car count.
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