4 Options for Determining a Fair Price for your Service Department Labor

Don Reed, CEO

Determining fair labor prices is a key part of maximizing your dealership’s profit potential. Do it right, and you’ll keep your labor costs low while still providing your customers with the best service possible. Here are four of the best options for determining a fair price for your service department labor. If you’re ready to implement a new pricing strategy then automotive dealer training is the next step.

What are the 4 options to determine a fair price in charging for labor

There are four key options for determining fair labor prices:

Customer Pay Door Rate

You can first start by defining the customer pay door rate—which are simply hourly rates charged for work performed in one hour. This approach can be helpful if you’re looking to control your costs while providing your customers with a fair price.

Flat Rate Hours

If you want to provide your customers with a price per job rather than per hour, you can use flat-rate hours. This approach allows you to charge a customer for the total amount of time required to complete a job, regardless of the number of hours worked.

Job Pricing

Another option is to charge customers based on the specific job that they’re requesting service on. This can help you avoid overbilling customers for work that’s not specifically related to their car.

Variable Labor Rates

Finally, you can also charge customers based on the amount of labor required to complete a job. This approach can be helpful if you have a lot of different types of jobs that require different amounts of labor.

Which of the four options is the most competitive?

According to Robert Atwood of the NADA Academy, variable labor rates are the key to becoming competitive. Variable rates based on the complexity of the job allow you to match technicians’ skills to particular jobs. You can use the labor pool more efficiently, and you’ll be able to better control your costs while keeping customers happy with fair pricing.

How can a DealerPRO trainer help you put new pricing strategies in place?

With the help of a DealerPRO trainer, you can learn how to implement new pricing strategies that will help you control your costs and provide your customers with the best possible service. Our dealership training can help you identify which pricing option is the most competitive and optimal for your dealership based on service offerings, and he or she can also teach you how to put new pricing strategies in place.

Contact us at DealerPRO Training today for automotive dealer training that will help you put new pricing strategies in place.

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Don Reed, CEO

DealerPRO Training

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Don Reed is the founder and prime mover of DealerPRO Training. As a former Car Dealer, Don knows it takes a well-trained team in Fixed Operations to be successful in the auto industry. His passion for excellence in service is highly contagious and is why Dealers across the nation consistently vote Don’s ideas to be among the best they’ve ever heard in Fixed Ops.