Effective Labor Rate

[nreis]

How do you define "effective labor rate"?

[Old Irish]

Its the true amount you are collecting per flagged hour considering your *entire* work mix....repair work, accesories, competetive work, menu items, etc.

If the shop produced 2500 hours of labor and your *total billed labor* was $165000, then your effective labor rate would be $66.00/hour.

This will almost certainly be lower than your "posted" or "door" rate.

Cheers
DD

[bterbo1]

Your ELR will not always be lower, expecially if you use a labor pricing grid. If your repair mix is strong you can actually see an ELR that is higher than your "posted" or base rate.

[oldsfan]

What are the NADA guidelines on ELR vs. Door Rate as a percentage?

[Old Irish]

"Your ELR will not always be lower, expecially if you use a labor pricing grid. If your repair mix is strong you can actually see an ELR that is higher than your "posted" or base rate."


Quite true, but not "the norm" in my experience.

This would require matrixed labor, of course. I reckon just about everybody does that, though.

Cheers
DD

[robc]

Guide would be within 90% of door - average is probably closer to 80%

[Mike Vogel]

Your effective labor rate will be lower if your maintenance to repair mix is higher. There's not much you can do in an import store where 70/30 maintenancce to repair mix is the norm. I agree with Rob, 80-85% of the door rate is what is probably the true number at most import stores.