Shop owners, hourly rates and how do you bill for them??

That's not true, because if the two people were working on two different jobs, you'd certainly be charging the full shop rate for each job. You would not charge the first customer of the day full price, and every other a discount, right? Same thing - think about it.

A good ballpark for your shop rate is triple wages. So if you are paying your wrenches $15 an hour, a $50 rate sounds right.

Someone mentioned adding a percentage for shop chemicals and so on - this is an area often overlooked - 2 or 2 1/2% of the total bill is a god guideline here. If your margins are very high then you can omit this - some customers feel this is like nickel and diming them, so many shops just factor this percentage into their shop rate.

 

Every car gets a box, in that box goes every scotch brite, sanding disc, roloc, whatever. I like them to see the consumables that are used.

 

My post from this thread:

http://www.jalopyjournal.com/forum/showthread.php?t=401880&highlight=shop+rate

Just to sum it up, 16K a month is $92 and change an hour, flat rate to operate.

Break that up to the four people in the shop you would need to charge $23.00 per person, and every single minute of those hours needs to be billed to someone willing to pay. And that's just the basics.

Gawd if it were only that easy.

 

zman, you are a fuckin' liar. I never said that and you know it.

I said I can buy the paint, supplies and rent a booth for that. Three times in the past two years, by the way.......... Get over it.

 

Elpolacko,
You speak the truth. Having worked for myself as a consulting engineer, it is still a BUSINESS and takes a tremendous effort to stay in business for any length of time. And figuring out those hourly rates can be a daunting task.

From a customer's point of view, you have to realize you hired this shop owner and his staff for their skills to work on your ride for a defined scope of work. He quoted you an ESTIMATE of the charges. Unseen things crop up that take more effort on the shop owner's part and thus will cost you the customer more money. When you get the invoice, PAY YOUR BILL, provided the shop owner is honest like Elpolacko. Don't bitch and moan needlessly. And just do business with those you trust and who are honest.

 

zman, this is an excellant idea. I bet some are suprised as hell to see how many consumables are used up!!

 

Holy thread ! ! I hadn't read once about an Accountant. Your Accountant (if he or she is Good) can tell each individual business owner what his labor "rate" should be. This should take into consideration "all" factors involved in running your particular business. Then "manhours" are billed at that particular rate. Now go ahead and pay a good Accountant $ 150.00 per hour rate to
analyze your business and charge what the Accountant tells you top charge.

 

good thread lots of really useful info

 

OK, now let's look at this from the otherside. Some of these cars get damaged and need to be repaired. Insurance companies write at flat rate. How does this work in your shop when you're trying to bill by the hour?

Second, all bodymen, fabricators and painters work at different speeds. Which car gets assigned to the 'fast' guy and who gets the 'slow' guy? And what do you use to justify the billing?

I have worked with these types of shops, and in most cases I haven't had a problem. But in two cases there was a big issue over what I was being billed for. I wanted to see the 'raw' billing sheets, but I was told 'no' like it was a big secret. I didn't pay anymore on the claim and the owner had to dig out of his pocket for the rest. And no, I don't think it takes an hour to R&I a tail lamp.

 

Ha ha ha ha ha ha ha ha....Bwah ha ha ha ha ha ha haaaa.

Now that I got that outta my system, I'd like to know what your figures are for overhead. Any shop can break it down and look the numbers over. Shock and horror set in 1st then you deal with it. Wages will cost you 27% more than that worker's hourly wage. Beyond that is the percentage of Worker's Comp and Unenjoyment Ins. If they quit and get U/E benefits YOUR RATE goes up whether they were entitiled or not. Liability insurance, mortgage or rent, utilities which are way higher rates for commercial enterprise vs residential. Got a shop truck? Toilet paper? Coffee and such for your workers and customers? Is all of that free? If so I want my share of the free stuff.

Bottom line is per man. No debates or discussions. If it were straight shop rate hours, shop hrs vs man hrs, the rate has to be well into the hundreds per hr just to cover the expenses. Now THAT"S NOT FAIR. Now the customer pays for everyone regardless of individual hrs. The frequency of billing is also important. We bill every week.

I went back and read some of the replies. I see some professional craftsmen and genuine shop owners. I also see posers who wanna be like those above. To think you can directly quote ANYTHING CUSTOM is living in a fantasy world. Here's a simple example for ya. The book says we get 9hrs to install a conv top on a 67 Cadillac. Well, in 67 or even in 77 that was a good rate. today at over 40yrs old we'll spend 2 1/2 hrs additional replacing all of the tacking strips because they're gone. Rotted into a mush that makes one wonder how it stayed in place. There's worn bushings, broken arms or joints, rusted header panels. Who eats it? No me. I really don't care if John Doe Caddy has a new top or not. But if John wants me to do it I want him to know E V E R Y T H I N G!!!!! At this point it's his choice, not mine.

If I had to directly quote the steps involved in a total restoration I'd spend 2-3 hrs a day writing instaed of building. If a customer wanted a bottomline single price quote on a complete body-off restoration of a 30s Packard I'd tell him $375,000. I'ma cover my ass all the way and figure the worst case, not the best, then I'ma bust my ass to beat that quote and make more!! Not fair? RIGHT ON! NOT FAIR! What if his car is western sheetmetal with little rot? On the other hand what if it's western sheetmetal that termites got to?

The bottom line here is to be fair to yourself 1st. You owe other car enthusiasts NOTHING!!! You owe YOU. Take some serious pride and self respect in everything you do. Don't short-change yourself or your clients. DO EVERYTHING RIGHT AND GO ALL THE WAY. The only time none of these thoughts apply are flat rate work like body shops and repair shops. A tech learns how to beat the "book hrs" without a comeback (those are on the tech if he fucks it up) and that's the only way he makes money. Custom shops are not the way to get rich in a hurry. In fact it can often be a way to get poor and be "owned" by your shop. To get by that simply tell it like it is with no fear. Do the best you can pssibly do as if your peers are peekin over your shoulder lookin to pick on ya at any given moment. Do it like it's yours and you want to show it to ANYONE with pride equal to a newborn child or your kid graduating with honors. It's a hard and difficult craft to put up with at times and the rewards defy words. They're unique and personal. They can't possibly be figured into the hourly rate. Chew on that for a min while you think you're being ripped off or ripping someone off. I like the comment above about radiused edges and perpendicular tapped holes...yeah it's like that from start to finish or you're just a poser.

 

What we are working in is mostly a hobby market
With owners basing their working expendature on what is left after living costs are taken from their wage base

The major problem i have had to deal with is a customer on a set wage finds it hard to understand a charge rate for work he required, compared to what they are paid.
Try asking someone on wages what their employer charges out per hour for whatever they do, and what they have to produce every week so their pay goes in the bank
99% have no idea

Another thing most customers dont understand is what it cost to store their cars when they are unable to pay their bill.

 

as of monday morning this will be my new practice!! thanks

 

you must bill for all the time on the vehicle ,but also you said you were doing it as a one man show and now theres 3 .unless your buisness has tripled its a big jump and very hard to do.also like others have said you cant be mr nice guy when it comes time to bill. we are specialist and not anybody can do what we do,even though they think its an old car and its so simple to work on.were as talented as any dr. do they give breaks on a bill . any way our shop rate is 75.00 per hr .like i always say about the bill " it is what it is" just my 2 cents hang in there!

 

The most efficient shop I was ever in worked like this:
he had a computer terminal, and every car in the shop had a work order. When a guy would work on that car, he'd go to the computer terminal and clock in and out for that car.
The customer was then billed for actual work hours.

All the shop supplies were in a central location, also with a computer terminal, and when the employee went to get a couple cut-off wheels, some sand paper and a ScotchBrite pad, it was logged into the computer and assigned to the car he was working on. The customer was then billed for the actual shop supplies as well, which were marked up. The mark-up for consumables like that covered the loss for consumables like Mig wire and gas, replacement wire wheels on the bench grinder, drill bits, etc. etc. Incidentally, the computer in the supply room was set up to automatically order from the local supply house, so when the cut-off wheels or whatever got low, they automatically showed up at the door.

The customers were sent bills with actual hours, supplies and materials, along with a CD of pictures showing what work had been done to the car that week or month.

The guy had a complete building to store cars on the waiting list for customers, and he charged $50 a month (might have been more) for storage. If someone needed to take break to get more money to continue the project, it went up into the building and he was again charged storage.

It was a well-oiled machine, and they turned out some of the nicest cars in the country.

He wasn't cheap, but his shop was worth it.

-Brad

 

Another thing to think about:
I have a friend who runs a business. Ask him, and he'll tell you "I'm a businessman."
He likes this analogy.
Say you're really good at building hot rods. You build them for yourself, you do some work every now and then for friends, and once in a while for a friend of a friend. You're REALLY good at building hot rods, and you love doing it. You decide that rather than do it in the nights and weekends, you're going to open up your own hot rod shop.

You are no longer a hot rod builder, you are a businessman.

If you run your new business like you were running your hobby, you will be unemployed, and will go broke by the time you get there.

Business is business, hobbies are hobbies, and though you may very much enjoy your work, it's a business and needs to be run as such.
-Brad

 

well lets look at this as a single operation............of r&I a taill lamp..........

first off you need to bring he car to your stall or work area....
second you have to get you tools out.....
third get the part.........
fourth do the job......
fifth..... put tools away.............
sixth .......... dispose of part properly....recycle as required
seventh......return car out of shop..........
and so on

I am sure I missed a few steps....but there is more to doing the job than just doing it..............

and from what I have read is BILL fairley.....and we are in it to make money and a liviing...........so customers that can not do their own werk have to pay..................

and shops that do fair good werk will be busy and others will just go away...by their own doing..

 

Riiiggghhhhtttttt .

 

I just came across this thread again... this should be required reading for anyone thinking about opening a shop. It's worth bringing back from 2010!
I've created a web form with a few fields where you can input your hourly rate. I hope it will become a good resource to see how your shop rate compares to others around the country, and hopefully to provide some validation to raise your rates
Here's the link:
https://docs.google.com/forms/d/1PiR0QWqATW9PjmfiY6XSG7EG8lw8BhBfZbt0AZMFVYU/viewform?usp=send_form

I'll post an update on the blog when I've got some good data.

Thanks for your time
dw

 

2 men working on a car for 1 hour gets 2 "man hours" worth of work done, so you charge for 2 hours. The most important thing I tell people is get the work done. Don't take on more than you can handle in fear of losing the job and then let the car sit in the corner indefinately without working on it. Once in a while I get a customer that doesn't want to wait, and I lose the job. BUT, if I took the job and let the car sit for weeks that guy's not gonna come back anyways. I'd rather lose a job here and there and retain good "word of mouth". I also email progress pics to some of my busier customers. They seem to love that

 

Facebook seems to be a great way for shops to keep customers (and potential customers) up to date on projects locally. Just create a new album for each vehicle, and you can update it from your phone in practically real time.

 

That is one of the ways I keep my customers informed. Most are local and stop buy a couple times a week. But for the rest, Facebook and my own website work well for the updates.

 

I managed a body shop at a dealership for several years and my take on it is this...

As a manager i should have some basic idea how much time it takes to do a certain job. Now if say flat rate shows 2 hrs to do a certain job and i put 2 men on it then it should not be a problem for those 2 men to accomplish that job in 1 hour or close to that. If it still takes 2 men 2 hrs to do that same job then there is a problem in my shop either with my managing abilities or the men themselves. To me its not fair to charge the customer for 2 men at 2 hrs each for a total of 4 hrs for a 2 hr job.

If i put 2 men on the job and plan on charging the customer for those men then i expect them to be doing the proper work to justify their time.

I had 4 men and a young guy i used as a floater to help who ever may need it and to clean etc otherwise. I still kept my profit margin around 35 to 40 %. I bought in bulk, on sale, paint i bought in bulk and mixed my own. There are ways to save and make money but you must be dilegent. And for those that dont know in a dealership the bodyshop paid rent, telephone, electric etc to the dealership itself just like any independent bussiness

 

Of course, as always this all depends greatly, in addition to all else, on the three most important things real estate: location, location, location. Not only the proximity to your customer base, but what the cost-of-operation, and the cost-of-living are where you are operating.

Comparing shop rates straight across is almost impossible if you don't take into account where the shops are located.

A childhood friend of mine is the service manager at a classic car shop in St. Louis MO.

Where he is, the cost-of-living is less than one-half of where I am, and the cost-of-operation is a little over one-third.

Needless to say, we do not have the same shop rates. Not even close.

There are numerous online calculators that show the differences from location to location.