Flat rate vs. hourly

[JoelS]

I keep reading in different places that paying your techs flat rate is "the old way" and it is better to pay them hourly. I have three flat rate techs and four hourly, and was planning on gradually moving the hourly guys to flat rate. Any advice?

[Old Irish]

How are your production numbers?

Frankly, if the production stats look good I wouldn't be in any big hurry to switch to flat rate.....

Cheers
DD

[robc]

The past is littered with people who predicted the demise of flat rate, just like people think one-price selling will someday rule the sales world. People like knowing they got a deal, and the best techs want to be able to influence their own check via their own production.

Hourly works in certain instances, but we as an industry aren't anywhere near where we need to be on a gross profit basis to pay 40 hours and end up with negative efficiency.

Flat rate still exists because it works - unless the labor times are being set by GM or Ford, then it is horribly broken.

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** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[topshop]

This is an area where often the choices posed are one or the other. How about splitting the difference? What is a reasonable hourly rate for Joe Tech? Pay him 50% of that per hour. What is a reasonable flat rate for Joe Tech? Pay him 50% of that. Now, he has more stabile pay for his family and you have a decent incentive system.

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Tom Ham
AutomotiveManagementNetwork.com
Hams Management Systems

[robc]

Just to give an example to make sure I got it straight. Let's sat average rate for a master tech in your area is $25/frh. But it takes a steady $55,000 per year to live - the tech should make that just by doing a little over 40 hours per week. Instead:

Weekly base pay - $525 (50% of $55k/year)
Flat rate hour - $12.50/frh (50% going rate)

Annual pay at 42 hours/week - $54,600


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** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[This message has been edited by robc (edited 03-19-2006).]