Shop owners, hourly rates and how do you bill for them??

I was figuring some time on a '52 Chevy pickup we're doing right now last night and after figuring hours on the job and the cost of paying 2 men @ $15hr. working on it I realized I'm not making much after the overhead! My shop rate is $50 per hour, my question is when more than 1 man is on a job do you guys bill per man on the job, as 2 men @$50, or X amount for second man or should I just raise the hourly rate? Up til the last 6-8 months I was a one man band and never thought about it, but now with hired help I wonder? I want to be fair to my customers but a mans gotta eat! Thanks, BobbyD

 

we bill shop rate per person working on the car, it adds up quick.

 

Greg, thanks for the reply....What is your rate?

 

ya you got to bill for each guy. we do 65 an hour for small jobs 45 for full builds plus a 3% fee on the parts side for small shop stuff like towels cleaners ect.

 

Ya gotta bill total shop hours (both guys) for the job. And it kinda makes me flinch to see what it adds up to sometime. But if you don't do it, it's like taking money out of your pocket and giving to the customer. I know folks think aomwtimes think shop owners are thieves, but it's hard enough to pay the bills let alone have enough left over to go to the grocery store once in a while.
I try to work on 50.00/hour, but get less on big jobs.
Larry T

 

First off, are they both working or is one guy holding the other ones hand?(helping hold stuff and such may be a reduction in rate. Not two for the price of one though.

If you had the guys in on two seperate projects would you still charge the same?

Does your overhead change when they are both working on one project?

 

Good answers all, and Larry I know what you mean about flinching! Thats what prompted me to start this thread as I figured it both ways last night and while I will no doubt make more with the 2X billing, as I said I want to be fair to both the customer and myself.

And BCR brings up a VERY good point of view, if both are on seperate projects then its a no-brainer. And I understand the "holding the hand" point of view and am taking that into consideration as well.

Thanks for all the great replys!

 

good question, I'll have to ask my dad how he does it...they almost always have 2 guys working on every job

I do know they will add in cost for materials they use like towels, grease..etc and I believe they charge $60 an hour

my buddys shop charges $80 an hour..which seems pretty high to me

 

I'm not running a shop like yours, but when I bill our customers, I bill for hours on every individual that worked the job. If ten persons worked a job that week, there would be 400 hours (or more) of labor against that job.

We have a goal of getting at least 1920 billable hours per year for each person working for me. That is basically a full time job in a years time, including paid holidays.

I think a hot rod shop runs into many of the same issues that my engineering company has. And the accounting is often the same for both.

 

Back when I worked in a hot rod / corvette oriented body shop each car had it's own set of time cards. Whoever was working on the car punched in and out on that particular car - even if they were on it 20-30 minutes.

And Gregg's right, it do add up.

 

I dont feel its right to x2 the shop rate.You are already paying for the overhead such as shop payment/rent utilities bookkeeper etc.You dont have to pay for these costs again just because you hired another guy. I think you should just add the additional hourly cost of the extra employee.You are getting more work done in less time and in theory should make more money per hour but dont expect to make twice as much either because usually they are help, not a direct replacement for what you can do.

 

i thinks its pretty simple.....2 guys, charge the rate 2x.

you do have to make sure they are both neccesary of course. if a guys is just helping for a minute or two, we dont add anything for that, but if it takes 2, or 2 guys are working on differnt sections of the car, then a 2 time charge is warranted




skull

 

Hey,

In 1985 I went completely flat assed broke runnin' a shop by tryin' to be a " nice guy" by cuttin' up to a third off some invoices for big ticket builds to soften the blow to the client on jobs that ran well into teens, and that was in 80s dollars! PLEASE!!!!don't make the same mistake I made!!

If you have two metalmen/mechanics working the same job they had better be able to carry their own water so to speak. For other than the occational "hey, hold this whyle I tack this", you can't cover shop help being semi-productive ,on an invoice for long.

" Humpty Dumpty was pushed!"

 

If you and the hired help are doing the same amount of work and are capable of doing of the same quality then you should charge $50 per hour per person working, after all the job should get done twice as fast and if you don't charge accordingly you are cutting your self short. The car gets done twice as fast but the shop is not making twice the money. If the other guy is not as good, fast, experienced as to be able to work as fast as you I would charge accordingly.
Let's say you can do a job in 10 hours and charge $500 for it working by yourself, if your employee can do the same job in 10 hours you need to also charge $500 for the same job. If your employee however is only a helper and doesn't do jobs on his own and only helps you and makes the job go 25% faster you need to charge accordingly, the same job should still only cost $500, but you made the same $500 in 75% of the time, which means you made $500 in 7.5 hours instead of 10 hours. So then you pay your employee $15 per hour ($15 X 7.5h = 112.5) which means you made an extra $12.5 on this job, not a lot. It comes out to about $60 per week. That's why I don't have helpers at my shop, not worth the trouble. The only guy I would hire is somebody that can do everything or more than I can, but then that guy is not gonna work for $15, he's gonna want $30. Some shops will charge double time if two guys are working on a job no matter how good the workers are but that is not fair to the customer, a ten hour job can easily turn into a 12 hour job with two inexperienced guys working on it and then you're gonna charge 24h worth of labor because you had two guys working on it? That will turn a $500 job into a $1200 job, I don't think that is right or fair to the customer. Having an employee is not easy. Just my $.02 hope this helps.

You do have to remember one thing, the reason why you have a shop is to make a living. Not to give away money, be fair but always remember you are running a business.

 

It doesn't really work that way. If it did, all the shop expenses would come out of one workers time. One worker can't do enough work to even start to cover expenses in a large shop.
Plus, when you add an employee, you add more insurance, more workers comp, more................. and you expect some profit for you out of his work or what would be the point of hiring him?
But this is from a guy that operates a 1 man shop, I could be wrong. Anytime I ever thought about hiring someone to help me, it became pretty clear that hiring one man wouldn't really be worth the effort. I would have needed to hire several and quit doing the work and just supervise. Not really my deal.
Larry T

 

if you added workers you always need to review costs to figure out how much they are costing you. 5 workers will cost you less per man than 3 workers because static overhead costs are divided between them, things like rent, phone bill, advertising ect...

but more workers also means more costs in some areas, such as taxes, insurance, utilities, consumables, ect...so be sure to really take a hard look at ALL your overhead and how additional workers effect it so you can really know, you'll be surprised at how the number changes.

in my business a $15 an hour employee costs $51 per hour so we charge $65 an hour to make profit and cover the time that isn't billable (wish i could charge someone to clean the shop and service our gear....) You'd be shooting yourself in the foot by not charging per worker, like any business the key to workers is having their time be as productive as possible while on your dime.

 

Give it a try and let us know how THAT works. I figure about 2 pay periods and your attitude will change

 

It does add up pretty quick. I billed a customer recently for 6 guys in a thrash after hours for 10 hours work and each of the guys stayed more than 12 hrs. I fed them and bought beer and drinks later.All of us busted ass the whole time and got lots done. Worth it to the customer even at 3000.00 for a nights work.

 

2 guys, rate x2... or if one guy is a helper, with his hands in his pockets most of the time. Then just the 2nd guys hourly pay+$5. You have to use your best judgement...
WTF do i know..

 

You will get many different answers and opinions on how or what you should do. I'm sure your are probably in the same situation many of us have found ourselves in business. We have learned a profession , whether body man or or painter , lawyer doctor , plummer, or whatever you have chosen to do , got reasonably good at it then made the inspired decision to go into business. What they dont teach you in trade or law school is business mangement. Many have fallen into this circumstance. My suggestion is to take a couple of business mangement classes at your local community college or get your accountant involved with this question. If you have an accountant that cannot help you with issues like this you may need to look around for one than appreciates you as a client and will help you grow your business. Consider what suggestions that have been made , some are good and others not so good. The classes will help you determine what is best for your situation.

Whether you have one person or ten on the payroll all are considered in the expenses of the business. You need to make sure all working in the business carry their share of the responsiblity of contributing to the success and profitablilty of your endeavor.


Remember profit is not a dirty word .

 

^^^^^x2

In an hourly shop, OH is divided and worked in to the hourly rate of each hourly employee.......

I'm not an auto shop owner, I have a small engineering firm and I bill my guys hourly...... you're right it does add up quickly. Theoretically, if you are billing manhours, 2 equal guys will take half the time of one, so it will be a wash. But it rarely works out that way.

What I end up having to do to make things fair is to adjust the rates of my guys to reflect an appropriate rate for the tasks performed. For example, if you have a master fabricator that you can charge $100/hr for fabrication work, you can't really justify billing a customer that same rate for time that he spends stripping and cleaning up a chassis or suspension parts because that is all that you have for him to do, or because you do not want to carry the overhead of a lower paid guy for that kind of work. For that you would still bill his time, but at a reduced rate to reflect the skill level of the person that would normally be required for that task.

I have all highly skilled guys, but I have to vary their rates when they are doing grunt work. Its cheaper for me to do that than to carry less skilled staff.

Maybe that helps a little.

BTW, $50/hr sounds about right for a $15/hr guy, but not for 2.

 

I don't run a automotive shop, I operate a business that builds industrial control panels but it's about the same level of work. I was told, while working for some one else, that a good gage to how much to charge per hour is 3 times the base hourly wage you're paying someone. If you're paying some $20/hr then you charge $60/hr for shop labor. If I have worker who is basically a goofer I pay him $10 and charge $30/hr. There's a lot of things that eat into the hourly shop fee that have already been mentioned. Another big bite is the money you put out having the $20/hr sweep the floor and taking out the garbage when there's nothing for him to do for a day or so, the dead times. You can't lay the guy off every time the shop slows a little, you have to try to keep the good guys on payroll so you don't lose them.

Another thing about spreading the overhead among more workers. You want to make a profit. Many of my customers try to make me feel guilty for charging too much. I want to make as much profit as they do. They're the ones taking vacations twice a year to some far off place, they're the ones driving around in the newest, fanciest cars and telling about their weekly social meetings and expensive restaurants they go to. They think it's fine for them to make money but some how I'm chiseling them.

Let's face it, anyone who can afford to have some one else do all the work on their cars has some money. If you're a one man shop I know you aren't rolling in the dough, I'll bet you're making a lot less than the majority of the customers you have who are having you do complete restoration jobs. Don't feel guilty about making a profit. Don't gouge people, just do an honest job at an honest price. It's the only way you're going to make money.

 

If you are running a legitimate business, by that I mean one that has a proper facility, carries insurance, pays workman's comp etc, your actual cost of an employee is NOT the rate that you pay them. Depending on where you are located, it can be anywhere from 33 to 75% higher.
So anyone that adds the hourly rate of an employee to the regular shop rate when two guys work on a car is LOSING money!
Here in So Cal the going rate at automotive and motorcycle shops varies between $75.00 and $125.00 per hour and every successful shop I know charges that per man hour. Now having said that, I also know most have grunts or apprentices that are learning, lend a hand to hold something, do sweep up, that sort of thing, and those don't get billed to the customer at all - it is part of the overhead.

 

I bill by the manhour spent on it, be that one man, two man or three men, each gets paid so each get his time charged to it.

Since others started some of this, I'll add my 2 coppers to it also.

First question is do you know what your hourly shop overhead cost is? If not, you need to calculate that CAREFULLY, being sure to include all costs associated with being open.

Lease, utilities, insurance, YOUR SALARY PER HOUR (i.e. profit to you), office supplies, equipment depreciation all needed to be added up by year or by month and then calculated on an hourly basis. This is then added to the cost of each employee per hour including taxes, your share of fica and medicare, unemployment taxes, insurance. All these need to be added together to get an actual cost per hour. Now double that and that should be your shop rate.

In my daily life/job, my employees earn $14-$18 an hour. They cost $45/hour. We bill them at $140 an hour. Our lowest rate is $100 an hour. This company has been in business 110 years.

 

As a non shop owner/operator I'd like to say, it's great to see a guy doing what he can to make sure he's being fair to his customers. With that said, you need to keep your priorities straight. It sounds cold but if you don't take care of #1 you won't be around long to be fair to anybody. I don't have much money to have work done but, when I have to have something done I'm real weary of guy's who seem hell bent to undercut the competition. I don't mind paying 10% more for a 100% better job. Now, not being a hot rod shop operator I probably shouldn't ring in with an opinion but, I know how I figure time in the business I am in. If I have to hire a guy to help my rate doubles. What the customer should be expected to pay for is number of man hours worked. What I pay my man is between him and me.

 

lol, you'd change your mind real quick about that if it was your business. That's a sure way to lose your ass.

x2

more good stuff... there have been a bunch of so called shops opening here lately, run out of someones garage, no accounting for overhead, taxes, anything. They low ball to get the business. Then a lot of times I end up seeing it to fix or redo it. I have real overhead, real employees, a business license, etc. $75 an hour for regular labor, $85 for fabrication. I think it's more than fair.

 

In my shop I charge $45 an hour per guy. When there are 2 guys on the car they are both WORKING not just jerking around. 2 guys usally mean the customer get a better deal too becasue it get done more that twice as fast compared to 1 guy. again my guys work and work hard. then i add 5% on the entire bill for overhead depending on price of the job sometimes i will charge 3%. my 2 cents.

charging for both guys is defiantly fair if they are both working otherwise no its not fair but almost always 2 guys is way more productive than 1.

 

Lots of great feedback, let me clarify my deal a little further.... It was me, then me and 1 good fabricator and I kept it at $50 for the both of us, made a little less but got more done......make sense?? Now with another guy (and maybe adding another) I knew I was going to have to raise my rates, how, still be fair AND make a profit was the question I posed here. One thing we all seem to agree on on the subject is alot of the customers (not all) try to "shame" you into charging less but their eating steaks and I'm in the drive-thru at Mickey D's!
And it is a real shop, 2 buildings with 4500+ heated square ft between them and another 1600 to store 2 cars and "tear-down" parts. Alot of my business is O/T cars for this board, lots of muscle cars, but hey its still work! I wish we did more traditional hot rods and since it has become more a "trend" we have gotten a few in thankfully. I only post occasionally (been a member for 5 yrs and only 357 posts) but this board has been a great source of information for me and 99.9% of the guys on here offer a wealth of knowledge on the subjects on here.
Thank you all for all the help and input.

 

It has been my experience in seeing friends billed for work is that they use a 'logbook' for labor. This is where the one guy in the shop who gets things done efficiently does 1.5 hours of work to get the job done, and the shop owner then bills for 15 hours. Those hours quickly add up and the project stays in the shop for 5 years until the owner can get it out of hock. Maybe this is how only the big shops work.

A one man operation after hours and on weekends can build a damn nice car in less than a year. Why does it take 3-5 years and $100K to $250K for a shop to get it done?

I really wonder how the billing and financing of projects works. I recently did a shop tour of a place I visited exactly one year ago. 90% of the cars that were there then, are still there in the same condition. Are they waiting for the owner to pay up? Is there a monthly billing? Are they waiting for another kidney to grow?

 

I have found on some jobs we can bill a flat rate, just like at the general auto repair facility, brake line insall, steering column install etc, but when I do a Hemi in a duece, its an estimate as best I can but trouble, redesign, customer influence etc. gets in the way and I usually tell my customers on the custom one off stuff that is an estimate I will hold as best I can but I will bill the actuall hrs. if one tech, then its the shop rate per hr. two guys.... one on the rear suspension and one on the a/c system, its x2, other wise, you'r looking to close your doors.