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Set Your Labor Rate

Determine what your labor rate should be based on your costs and profit goals.

Recommended Door Rate

$219.61

Effective Rate at Efficiency

$186.67

How to Set Your Auto Repair Labor Rate

Your labor rate isn't just a number you pull from what the shop down the street charges. It should be a calculated decision based on your actual costs, target profit margin, and technician productivity.

The Formula

  • Start with loaded cost: Your true cost per tech hour (wages + benefits + overhead).
  • Apply target GP%: Door Rate = Loaded Cost / (1 - GP%). A 70% target with $56 loaded cost = $186.67.
  • Factor productivity: If techs produce 85% of available hours, your effective rate drops accordingly.

Market Context (2024–2026)

  • National average: Independent shop door rates range $135–$185/hr depending on region.
  • Don't compete on price: Shops that undercut competitors often sacrifice GP and can't afford A-tech pay.
  • Review semi-annually: Rising insurance, wage pressure, and parts costs mean your rate should increase regularly.

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