Flat Rate Is Dead
Could Auto Repair Flat Rate Be Dead?
Hey fellow shop owners My name is Gerry Frank and I want to ask you a question: Could flat rate be dead? Let’s talk about it.
TECHNICIAN shortage today is real. Last study that I saw said, for every eight shops that’s looking for a technician, there’s only one tech available so I know many of you watching this are experiencing that same thing. And I’ll also say one thing that I found: most technicians, when I mention flat rate, their cheeks kind of pucker up. They hate it. Why? There’s risk. They’ve been burned before. So often in the technicians starved market, what’s a shop owner left to do but put technicians on hourly or even maybe salary? And what that leads to is, really what I’m going to call an “uninspired performance.” Why? They get comfortable, they’re able to pay their bills without exerting a ton of effort.
How To Improve Auto Repair Flat Rate Sales
So what’s a shop owner to do? The answer I’ve uncovered recently in my shop is to have a Win Number. For every single employee. See one of the truths I discovered in my 30 plus years of being a shop owner is that often we don’t get the most out of our employees because we never really sat down and told them what we expect. I know that’s been one of my mistakes.
So one of the things that I’ve done recently is I’ve given each employee a weekly Win Number, and that’s why it’s so important. For example, I recently sat down with each of my technicians and shared with them their Win Number. What do I mean by win number? What I expect out of them in parts and labor production for each employee. The numbers are based on my desired technician cost as a percentage of sales. It’s worked so well with my technicians that I now sent it out and established that win number with both my CSR and my service advisor.
I’ve got to tell you the results have been incredible. Not only are my sales and profits up through the roof lately, it’s led to believe it or not, happier employees. Why? They drive home at the end of the day or at the end of the week knowing that they hit their goals. Knowing that they’ve contributed to a successful week for the shop and that certainly led to a happier shop owner!
So, let me leave you with a question. Does each and every one of your employees on your team clearly know what you expect of them?
If your answer is not a resounding YES, it’s time to put a pencil to paper and figure out each team employee or each team members weekly and daily Win.
I like this idea but could lead to overselling right? Or maybe it doesn’t, maybe it just motivates the technician to actually perform the inspections that they should have been doing in the first place. Which leads me to my personal thoughts about technician pay.
I have worked flat rate, hourly, and salary. I’ve always been anti flat rate because I dislike very much having my ability to earn hindered by a poor performing front shop or management as a whole. I’ve worked many places over the years and have had the hourly pay conversation many times with employers, most of whom really get scared at the idea of paying a tech hourly. When questioned why, the typical response is something like, “hourly pay could create a lazy employee…”. OK, I can see how that’s true. Um, how about firing them?
I get the sense that management these days is so scared to confront and let those go that are slugs within their company. Why is this? It’s simple, show me you’re willing to pay what that employee is worth to the point they aren’t thinking about how many hours they flagged daily, weekly, every pay period. Going home and running through their up and down budgeting all the time, and in return you expect a certain level of performance and quality. If either party can’t meet such simple criteria, employee can move on ( and apparently with all the articles about it said employee should be able to find easy work ), or the boss can let them go.
Maybe it’s too simple.
I have been paying A techs flat rate for years with a bonus over average gross, it has ups and downs depending on the work.
I’m thinking the fair way is to pay a minimum hourly wage with a flat rate for billable hours, maybe a bonus too?