It is typically a bit depressing to go over your service statement (invoice) after you have picked up your car after service. While many people simply don't look for fear of not knowing what on earth a CV joint is, for those of us who do look, we often find two primary numbers, one for parts and one for labor.
These two guys work step in step like Laurel and Hardy to provide a one - two punch when taken together. And like the dynamic comedy duo, one is always seems to be larger than the other. This is what's known in the industry as the parts-to-labor ratio, which as a benchmark is .8 to 1 (when you calculate the NADA's average per facility parts sales to average labor sales, it comes out to .77 to 1). That means that when you go to have your vehicle serviced, on average you can expect to pay 80 cents on parts for every dollar on labor you spend.
Those Do-It-Yourselfers are looking pretty smart right now aren't they?
Well, maybe, but when you consider how complicated vehicles have gotten, not to mention the specialized tools, scraped knuckles, stains on the garage floor, and ultimate cost of towing your now-broken car to the garage to be properly fixed, it is little wonder you don't seen more Serpentine Belt Home Kits available.
There are some other things that go into those prices you are paying however, that are beneficial to understand. For starters, you have the mark-up in the actual price of the parts, which (trust me) you really don't want to know. Unless you are married to an auto tech, there is little more that you can do than shop around anyway.
In addition to the parts though, where exactly does that labor rate come from? Well, first you have to consider whether your service center is working on a commmission-based fee or on a flat rate fee. Typically, any organized chain, dealership, etc...will be working on the commission based system as the flat raters are typically the independent garages who see or specialize in certain repairs. You don't find this much anymore. According to the NADA, the average per hour labor rate is about $75, with the average per repair order totalling just under $200.
So, if the labor rate is straightforward and the parts prices are generally fixed (though well marked up), then why are there such descrepencies in pricing and a bad reputation among mechanics?
To understand the commission system, you must understand that not all jobs or mechanics are created equal. The industry looks to labor guides, which describe not only how to make repairs, but even more importantly, how long each repair should require the average technician. Note, that this is the price you will be charged, not necessarily how long the procedure will actually take the person working on your car or truck.
And here lies the crux of the matter. The more efficiently a technician can perform a repair, service, etc... the sooner they can get on to another job. There is a real incentive for both the service advisor and technicians to turnover as many repairs as possible by completing them in less time than the labor guides suggest. At the end of an 8 hour shift, a faster mechanic could be billing for 10, 12, 15 or more hours of labor (provided the advisor can give them the customers).
So what does this mean to you, a paying service customer. Well, there isn't actually a whole lot you can do to affect how the industry is run, however, knowing and understanding how it works can be used to ensure you are getting the best deal on service you can. While there may not be any standard across the board rule to get the best deal possible every time, like go to an independent garage on the second Tuesday (morning) of the month and select the oldest technician there, during a leap year, etc...just knowing that there may be a significant swing in prices between two or three local service providers helps.
If you are having "standard" procedures completed, be sure to call around, you will likely be able to tell who is marking up what. And we have all heard how important it is to have a good, honest mechanic (or dealer, etc...) for all of those unforseen items. This should help you understand why.
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