22 Questions
True or false: The cost of labor decreases as the skill level of the technician rises.
False
True or false: Technicians in the service department are not a direct expense.
False
True or false: The flat-rate system was developed in response to a depleted technical workforce during World War I.
False
True or false: The tiered, skill-level, labor system is not suitable for establishing a tiered labor rate.
False
True or false: The flat-rate system guarantees consistency in technician pay.
True
True or false: Technician levels are not commonly used to categorize technicians.
False
True or false: The method of compensating technicians has no impact on the profitability of the shop.
False
True or false: Flat-rate manuals are used to establish material charges for performing common repairs.
False
True or false: The cost of labor decreases as the skill level of the technician rises.
False
True or false: It is not important for every shop to have a 'top gun' technician.
False
True or false: Effective staffing is not important for shop profitability.
False
True or false: The hourly rate method is the most commonly used method to establish charges for common or competitive repairs.
False
True or false: The tiered, skill-level, labor system is not suitable for establishing a tiered labor rate.
False
True or false: The profitability of the company would not be impacted if the time and skills of the top tech be spent doing all various types and technical levels of repairs.
False
True or false: In a variable rate pricing system, the hourly labor rate charged for a repair depends on the type of repair and the difficulty of that repair.
True
True or false: A shop using variable rate pricing will normally price basic maintenance and repair services at its highest hourly rate.
False
True or false: The method of compensating technicians does not affect the shop's profitability.
False
True or false: Labor rates are often based on the experience level of the technician.
True
True or false: It is not necessary for every shop to have a 'top gun' technician.
False
True or false: The cost of parts is not added to the labor cost.
False
True or false: The profitability of the company would not be affected if the top tech did all types of repairs.
False
True or false: Pricing for auto repairs is consistent across all shops.
False
Study Notes
- The flat-rate system charges customers a predetermined number of hours for a repair, ensuring all customers pay the same price for the same repair.
- The flat-rate system allows for accurate and consistent estimates before work is started.
- Flat rate guarantees consistency in technician pay and rewards highly skilled and motivated technicians.
- The flat-rate system was developed more than seventy years ago in response to a depleted technical workforce in the United States during World War II.
- Flat-rate manuals are used to establish labor charges based on a comprehensive listing of labor times for performing common repairs.
- There are two methods used to establish the times published in flat-rate manuals: live time study and national surveys.
- Very few shops use the hourly rate method to establish charges for common or competitive repairs.
- A pricing system that has gained increasing favor over recent years is the variable rate pricing system.
- In a shop using a variable rate system, the hourly labor rate charged for a repair depends on the type of repair and the difficulty of that repair.
- A shop using variable rate pricing will normally price basic maintenance and repair services at its lowest hourly rate, and very complex repairs that require specially trained technicians, special equipment, or proprietary technical information at a much higher hourly rate.1. Pricing for auto repairs depends on the complexity of the work.
- Diagnostic repairs are highly complex and difficult.
- The simplicity of the labor rate system used by the shop affects pricing.
- A shop may have 3-4 labor rates or up to 10-12 different rates.
- Pricing for non-diagnostic repairs falls between the two extremes.
- Labor rates are often based on the skill level of the technician.
- Shops may charge a flat fee or hourly rate for labor.
- The cost of parts is usually added to the labor cost.
- Some shops may offer discounts or promotions.
- Pricing for auto repairs can vary widely between shops.
Think you know all about pricing for auto repairs? Test your knowledge with our quiz! From the history of the flat-rate system to the various pricing methods used by shops today, this quiz will challenge you to think about how repairs are priced and why. Get ready to show off your knowledge of labor rates, diagnostic repairs, and more. Don't miss out on this chance to impress your friends and family with your expertise in auto repair pricing!
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