Understanding Labor: How Vehicle Repair Costs Are Determined

By: Jim Champion/The Auto Guy Email
By: Jim Champion/The Auto Guy Email

When you get your vehicle repaired there is almost always some sort of labor charge associated with the job. Obviously labor is the work side of the repair and the starting point is the labor rate of the shop.

In most cases, the labor rates are between $90 and $120 per hour, depending on the shop and the type of work being done. The labor rate is based not only on what the technician makes per hour, but additional costs that the shop has to pay such as subscriptions to information databases, shop management software, training for techs and equipment. This can easily add up to thousands of dollars per month for the shop.

The labor charges you pay also help cover administrative staff in the office, insurance on the building and employees and others costs of doing business for the shop. When an estimate is being put together, the shop uses a database of labor information that has just about every type of labor operation for every type of vehicle. This labor information is called the flat rate, which is how much time it should take an experienced mechanic to do that particular job.

For example, replacing a water pump on one vehicle might only be 1.2 flat rate hours and on a different vehicle it might be 2.7 flat rate hours. The shop uses the flat rate labor information for your particular vehicle along with the price of the part to come up with an estimated cost of the repair.

Overlapping labor is a term that’s used when two parts need to be replaced and they are located in the same area. Replacing them at the same time is cheaper than replacing them separately because the labor charge will be lower.

A good example is replacing a water pump and a timing belt on many front-wheel drive vehicles. The shop should not look up flat rate labor time to replace the water pump and then add it to the flat rate labor time to replace the timing belt because most of the labor is duplicated to replace both of them at the same time.

Diagnostic time is one of the most misunderstood labor costs because it can be hard to comprehend how long it takes for a mechanic to get to the bottom of an issue. Many people think that mechanics can hook up their computer scanner and see exactly what the problem is, but that’s far from the truth. The scanner gives the mechanic codes and data to interpret along with information related to which system on the vehicle is acting up. But it still can take a substantial amount of time to diagnose the problem and come up with a repair plan. This is why you will see “diagnostic time” on many repair bills these days.

Labor charges will always be a part of repairing vehicles, so don’t be afraid to ask the shop questions if you don’t quite understand what’s being done on your vehicle. Your mechanic should always be able to take the time to explain the repairs to you on every job.


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