Labor Matrix - How much is too much.

[spwilkins]

Maybe a better question is how much is appropriate?
What percentage above your posted labor rate is ok to go for your effective labor rate to be right?

[bsilcox]

spwilkins:

Shop your market! You must know what your market will bear to see what your mark-up needs to be. It can be anything as long as it's not on the very visable items. Find out what your customers are buying. Interview the parts houses in the area If you have a relationship with any of them and find out what they are selling into your market area, Then shop those items...The bottom line is charge what you want have a match or beat pricing program and just do a great job It's not about the price!!!!

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Bob Silcox

[Tyler Robbins]

Don't get sucked in by the supposed "standards" that some yahoo's have determined are the percentages above or below. Any of those "standards" are nothing more than averages they have comprised, making up who knows how many or which dealers. Averages are nothing more than the median of highs and lows and as Bob stated, individual Markets determine highs and lows.

Your Labor Matrix should be pinpointed, maybe lower FRH intervals have higher ELR while high FRH intervals are lower. When developing your Matrix, take your operations' most frequently used operations/intervals and "manage" those more than the typical escalated up forever traditional ones.

There is no guide that you should be following other than to be competitive in your market area!

[GENE WHITE]

The original labor pricing matrix was developed in the late 70s and early 80s. The original design was to have lower labor rates up to the then average FRH/customer pay RO of 2.5. After that point the labor rate went up high enough to sustain your needed effective labor rate. The effective labor rate is needed to be maintained at a level to justify your warranty labor rate and yet not price yourself out of the market place.

Matrix pricing is based entirely on flat rate hours needed to do the job even though we no longer have as many of the larger jobs we used to have such as AT overhauls and engine overhauls. There are as many versions of matrix pricing as there are consultants and Service Managers and there is no standard. Some start off high and go low.

I have always recommended and used Skill Level Pricing which is based on the technician skill, trainin costs, and specialized equipment needed to do the work. I always use market pricing for all maintenance work.