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Shop Rates

K

K-Mo

Member
I was reading a post about cost of dealership repairs. People think they are getting ripped off. I agree.
I worked for an IH dealership in the 1960s & 70s. Shop rate was $5.00/hr.
Putting $5.00 through the government inflation calculator equates to $36.55/hr in 2020 dollars.
Corn price in 1969 was about $1.00/bu. 1.00 inflates to $7.31 in 2020 dollars.
1 hour of shop work in 1969 would cost 5 bushels of corn.
1 hour of shop work today at $100/hr and corn at $3.50/bu would take about 28.6 bushels for 1 hour of shop work.
Just to stay even with 1969, corn should be $7.31/bu and shop rates at $36.55/hr.
Seems pretty obvious to me or am I missing something?
 
Well, i pretty much agree with you'r figures,but the ROI, return on Investment,desire, is much higher now, and SS tax, retirment,and insurance on the shop, threw everything out of whack. The John Deere dealership is owned by a farmer here in my home town,he can fix about anything of his own,but he likes to take some of his jobs to a independent shop,to save money too!!!
 
That's what it is here too a $110.00 unless they have to work on Motor Homes, then it is $140.00 but the two independent shops are $70,00 .
 
You have wages, insurance, advertising, comebacks shop supplies, social security and health, uniforms, secretaries. accountants, rent, heat, electric, vehicles, tools, and what ever I forgot, before you get a dime. I can't see how anyone can keep the doors open, honestly with good help, for less than $100.00 an hour.
 
You are also comparing apples and oranges. Consider the shop rate for repairing a model T back whenever to the rate of repairing the latest car today. The knowledge, the tools, the diagnostic equipment, the materials everything is made of from the vehicles, to the tools, to the shop, are light years apart. Also, people are not living with what they lived with back whenever you want to compare data from. What is consider essential in a household, personal life or business is vastly different between then and now. Another thing to consider is the efficiencies in farming have increased the volume of crop harvested and the time needed to plant, care, and harvest. Perhaps if we went back to the method of farming that was prevalent in the era you cite, maybe crop prices would rise and people would have less disposable income for other things.

Applies and oranges.
 
I'll be the devil's advocate here and point out that technicians have to under go training, more specialized tools need to be owned, and larger facilities are required today versus the late 1950's. In order to keep even semi-qualified mechanics in New York a dealership has to pay 15 dollars per hour plus benefits. Also, the simple fact of the matter is there is less competition in terms of other shops offering services so what is left can charge more. I had to take a loader cylinder in recently that was stubborn coming a apart and I did not want to wreck it. The rate was 100 dollars per hour and the shop bill was just a little over 90 dollars. Yes, I dislike having to pay for shop work but I did not want my lack of experience to factor in to buying a new cylinder for what would be well over a thousand dollars.
 
In my experience, $110 per hour will equate to paying in the mid 60s for salary and have the business profitable. The cost of owning a business now is much greater than it was in the 50s and 60s. I can attest to this, as I just sold my business after having it for 20 years, due to being tired of handling these costs.
 
Assume you pay the person $70K, that person must earn about 2.5 times that for the business to be profitable. That makes the earned revenue at $175K per year.

I was very happy when my people got 85% efficiency, so that makes it 40 hours * .85 = 34 billable hours per week. Assume that the person will get 4 weeks off per per with holidays, sick and vacation. That makes 48 billable weeks per year * 34 hours = 1632 actual billable hours per year or $180K of revenue per tech.

The math adds up.
 
Needed to separate a rear wheel rim from the center, took it to a guy I have known a long time. 6 bolts, probably took him 2 minutes with an impact wrench, 80 bucks. He charges 80 per hour, one hour minimum. I won't be going back- Local tire place charged me 15 for the same project on another tractor. Thought I'd give my friend the business, turned out he gave me the business.
 
I would point out that the Mennonite mom and pop shops were operating around that 40 dollar per hour range that you were talking about. But if you need something done ASAP that will not happen with them. They usually lack the tooling for the newer electronically controlled equipment as well. At the same time I am told that the dealer shops don't want to be bothered with older equipment and most of their mechanics have no experience with decades old tractors.
 
I don't see the problem if he was upfront about his rates. Most shops operate under a one hour minimum bill. The last tire I took in was billed for a half hour even thought the job only took not even 15 minutes.
 
The biggest thing I learned in business is let the customer win the little ones and they will let you win the big ones.
 
Benefits are usually somewhere between half to equal to a full time employee's hourly wages. A general rule of thumb is to charge three times the hourly pay for each employee.

In 1969 was $5 per hour the shop rate or the hourly wage for experienced mechanics? Minimum wage in 1969 was $1.30 per hour, $1.45 in 1970 and $1.60 in 1971. With a 7.25 inflation adjustment the $1.30 minimum wage in 1969 would be $9.42 today. How many experienced dealer mechanics were really working for just a little bit over minimum wage back then?
 
Keeping up with shop manuals (Mitchell on Demand) is worth a few thousand a year as well. I worked in a small auto repair shop and you have pretty much nailed it !
 
I don't like to pay the 100 per hour but by the time you pay the tech and his insurance which is a necessity imho and to cover the cost of a few bum customers who don't pay I understand.
 
I'm sure there are similarities between shop rate and construction. I started my commercial Industrial construction company in 1979. Then it would cost maybe $5,000 for architect / engineer drawings (maybe 5 sheets of drawings), permits would have been around $10,000 and take up to three weeks to obtain. The last building I did before selling the business cost $150,000 for engineering (20+ sheets of drawings), $260,000 for permits that took nearly 6 months to obtain. In around 1989 a requirement was added that you had to take classes to maintain your contractors license. Liability insurance rose greatly over inflation and just reporting requirements added substantially to our cost. Special inspections were added as a requirement in addition to governing jurisdiction inspections. Workers compensation costs also increased way faster than inflation. There's a lot more to it than just inflation!
 
Mennonite shop over at Dayton VA works on about anything including the fancy new Fendt tractors.I don't know their rate but my mechanic rents a stall to
work in sometimes charges me $40 hr.They don't drive around in $70,000 pick ups,have big boats,$25,000 side by sides play toys etc,etc either.Also get all tractor tire work done at a Mennonite on farm shop about 2 miles from the first shop,the fellow does a great job and charges less than 1/2 what any tire shop on
my side of the Blue Ridge Charges.
 
Bad debts have actually gone down to be near non-existent. 99 percent of the time a shop will not roll the dice on whether a customer can pay his bill or not. The shop manager will get an estimate before the job commences and will ask how the customer intends to pay his bill. If through the local bank somebody from the shop will call the bank to know if in fact the customer can pay his bill based on the bank. There of course is the option if it exists for that customer that a job can be charged to Farm Plan or VISA or some similar charge account. If there is a stumbling block once the equipment is made ready that equipment will not be released to the customer until the bill is made good in full.
 
(quoted from post at 11:28:01 12/26/20) I was reading a post about cost of dealership repairs. People think they are getting ripped off. I agree.
I worked for an IH dealership in the 1960s & 70s. Shop rate was $5.00/hr.
Putting $5.00 through the government inflation calculator equates to $36.55/hr in 2020 dollars.
.....
Click to expand...

At that price, heck double that, I couldn't afford to keep my little one man shop at home, open. Though at the end of the day I probably don't charge as many hours as some of the Big guys.
 
$100 per hour rates are excessive in my opinion. AND... the high rates are NOT shared equitably with the mechanics. At $100/hr., the mechanic should be getting in the range of $30 to $35 per flat rate hour. They are getting paid closer to $25. Pension plans in the shops are next to non-existent. Now, factor in a $15/hr. minimum wage as proposed by some, and the mechanics are grossly underpaid.

Also note that a union clerk in a retail store makes over $20/hr. plus benefits. Also note that the clerk does not have several tool salesmen bleeding them for $50 to $100 every week for tools that they need to do their jobs. The only tools supplied by the shop are proprietary special tools and large tools like presses, lifts, specialty tools like an A/C recovery machine and the like.

Boy, am I glad that I can do most of my own work! I am also really happy to be retired from that rat race. Believe me, the rats are winning! The rats I refer to are the owners of dealerships, and the crooked mechanics that steal from customers to keep themselves afloat.
 
It's their choice as to how they want to furnish their shop. It's not a matter of principle but a matter of how many jobs that they can expect in order to pay for the shop tools for the modern electronics that are found on some tractors. If a regular shop's bread and butter is pre-1990's tractors then they most likely are not going to buy much in the way of equipment for the newer mostly electronically controlled tractors. In the end if they have six jobs waiting when you come in the door and you need the job done now they are going to remain loyal to the first six jobs that came in ahead of you and perform them. As to fancy trucks and toys if the possibility was not there for handsome compensation how many would be farm equipment dealers? Nobody today is going to run a dealership for the "privilege" of driving a used pickup truck, tell mother it is another week of cheap meat at the market, and tell daughter that his coveralls need to be sewn again. People here complain about mega-dealerships but without the opportunity to make some money you would have to drive much further to price equipment, buy parts, or take things into the shop. Mom and pop dealerships in the hard scrabble areas where farms struggle to survive are the thing of the past.
 
I don't disagree that mechanics could be better paid but the dealerships for the most part have no problem getting people in the door for 15 dollars per hour at least around here so why pay more?

As to retail nothing is unionized to my knowledge and just the top layer of management makes 20 dollars per hour or more.

It is good that you can do your own work and I am glad that I can do most of mine. I agree that it is not getting better for the little guy out there.
 
Some interesting comments ...... funny how a lot of us might think current shop rates are outrageous but like me, have no clue as to the real costs involved in running a business these days. Employee benefit costs now might shock most of us as to what those are just by themselves. Property and liability insurance costs would be another. Meanwhile, the price system with all of its warts is used as a measuring stick ...... no way can we realistically compare what something cost or was charged for 60 years ago in comparison to last week. The inflation calculators don't really do that at all. The whole thing is pretty complex and beyond comprehension unless a guy is a trained economist. It's a great post though for discussion purposes.
 
I can tell you this for fact, 2019 three Kubota dealerships, profit % on new unit sales was right at 13% , profit from shop operations less that 4%. That was with shop rates of $90.00 actual time not flat rate. As David says getting the 40 hours billed is impossible , very good to get 85% billed the all the overhead associated with a shop is what kills it. One other factor call good will or the old lady brings here mower in you service it an charge her $90.00 then Tuesday morning she brings it back right front wheel fell off. Now you did not touch the wheel but by dang she expects you to fix it , so many of those kind of things that really eat at profit. I always took it that to stay in business one just had to eat it and go on. All the schools we attend will tell you as a dealership you want repeat business but there is actually about 3% of you customers that you would be better off to loose, those that always want something for nothing. LOL
 
I didn't mention, I was paid 60% labor. For me at that time was $3.00/hr.
That would mean your $100 technician today would receive $60/hr.
In 1969, I made good money at $3.00/hr. Paid all my bills. What's different, the cost of living.
To be truthful, today's technicians may have benefits like health insurance, but I still don't think it adds up to $60/hr.
Everyone thinks $15.00/hr will fix everything. Increased wage earner pay will create inflation and with in 3 years, the wage earner will be in the same place as today.
The pay goes up, the rent goes up.
The objective should be to reduce the cost of living to achieve a single income household.
How, I don't know. That's for the smart people to figure out.
Just something to think about on a cold winter's day.
 
I could not pay an employee 60% and be profitable, it needs to be more like 30%, the costs of running a business are much different today.
 
I knew a family member of a JD dealer from a few decades ago. The shop if it was lucky ran at a break even and they tried to make 10 percent on whole goods. What helped them as it most likely helped an IH dealer was selling parts on a very deep product line that existed for many decades. They tried to make 10 percent overall on sales that ran around 3 million dollars for all departments combined. I knew people who worked for the regional Case dealer here and they were instructed as to agricultural machinery sales that they needed to make at least 12 percent net profit on each sale or to walk away from a deal. This dealer had the benefit of a very healthy industrial sales network in order to pick and choose during the very bad for agriculture 1980's. This helped them to become predominant while their fellow Case dealers settled for deals that made next to nothing for them but got product out the door to get the territory manager off of their backs.
 
I think that the rates are likely driven from the intricacies and complexities of these new type machines. The rate was followed by the necessity of us to have all these nicer, more elaborate things. Remember that in 1970 the job was only going to require SAE tooling, now you need a full compliment of metric to go along with sae. This includes taps, wrenches, sockets, o-rings, allens, and more. Now, that cost is tremendously more than it was to do that same job from 40 years ago. The cost had to go up, the profit went down.

Now, these DEALERSHIPS are requiring buying and paying for expensive equipment for these repair facilities to be complete. This includes all of these fancy expensive battery testers, fancy expensive thermal cameras for recording and documenting data of failing bearings or wiring, diagnostic platforms, digital torque instruments that are guaranteed to stay calibrated and store the date and time of the job for future reference if there is an issue.

I am afraid that the volume of work that needs to be put through a facility now to maintain these high overhead equipment and tooling requirements huge. Case put several dealerships out of business in my community by mandating that these dealerships maintain tool group and parts inventory for all sorts of case products, even specialty products like cotton equipment that doesn't even grow here, In a time when a new machine may come forward and the stores puller didn't work anymore because it needed updated to a metric platform or "our metric wrenches only go to 24mm and we now need an entire metric compliment now to do our job, of which someone has to pay for out of the profits of of the garage.

Overhead goes up, tool loss or repair costs escalate due to more inventory onhand, prices soar, and profit goes into the toilet.
 
If you think shops rates are way to high, why dont you build your own shop and then set the world on fire. The last time I had some shop quality mud poured it was 110 per yard. That was 6 sack with lime stone. It cost me half a lifetime of wages to build a (nice shop). Now fill it with welders, lathes, mills, machining tools. My snapon rolling cabinet and boxes were 18 plus grand new, alone! Now fill it with tools. You cant have this type of capabilities on 50 bucks per hour. Ok now its paid for, try to just maintain it. Heat isnt free, insurance, taxes, replace lights as they go dead, new tubes, ballasts. Band saw blades are 80 bucks! Everything I look at costs money. BIG difference between a fully stocked shop with supplies and hardware, and the old elm tree or sand floor barn. I did start out on sand. Wouldnt go back, but know to well what it costs to keep this lights on, and the doors open. Kind of funny how many guys complain about something being out of line while watching professional sports where their favorite player makes more in one game than I will earn in my best year. Its not that they will earn that much damaging their body, or that what they do is so dangerous. Most any man who has pulled on a wrench his whole life can tell you, I have had holes burned in my body, been on fire, been hit so hard with electricity that I got thrown across the shop. I have had things drop on me, slap me, tires blown up in my face, even had to have machines lifted off me a time or two. Lucky I am still here. All the while breathing in air that most would complain about. Most shops and mechanics EARN what they are paid. If you dont think so you are free to go get some flee market/garage sale tools and have at it. Al
 
Family run shop Mennonites used to have their own health care deal, and I'll take your bet that they don't pay taxes they do a lot of business in a years time.
The fellow that does my work always gives me a detailed bill on his charges even though I pay him with cash.
 
Need to read better they work on the latest Fendt tractors built which are the highest priced tractors I know of,a lot of the local Mennonites own them.These fellows don't own a truck might spring for a new buggy or bicycle every now and then,dress like all the rest do,and I'll guarantee they eat better than most anyone.Have plenty of fresh milk as one of the family runs the dairy farm on the place where the shop is located,plus they get off their butts and grow big gardens every year which most people are too lazy to do these days.They live good but don't waste money on trash and gadgets most people do these day.
 
I can read just fine. I know what Fendt tractors are but there are extremely few of them around at least in this area. I was just down to the area Mennonite shop in Penn Yan within the last week and most of the tractors waiting outside the shop door were pre-1990's John Deere tractors. The other Mennonite one man shop made the comment he sticks to the older JD tractors because he did not anticipate enough business on the newer 7000-8000 series tractors to justify owning the diagnostic tools for them. As to what most Mennonites run they tend to run older tractors but some have 7000-8000 series JD's and just go to the JD dealer if a tractor can't be serviced by a Mennonite shop. There are simply too many around to have a fancy operation in terms of newish iron so they cut corners to keep as many on the home farm as they can. They want 200-300 acres for each Mennonite couple that comes of age but that is impossible because all the old non-Mennonite farmers and the financial weaklings have all been sold out so that leaves the young and well financed farmers who have no need to sell. As to other people there are plenty of non-Mennonites and non-Amish who are willing to work hard. Also, the younger Mennonites push for better living through having appliances and so forth. The communities have had to change to keep their young from leaving when they become of age. I would also argue that a fair number are spendy on equipment even if they buy older units. I know of a Mennonite dairy that has three high horsepower tractors that maybe get 50 hours per year on them cumulatively because they hire things such as forage harvesting, combining, and manure spreading out.
 
10-4 Al. I have some top of the line technicians working for me. They are not cheap either. I lost one that I didn’t pay enough. Now I pay the ones I want to keep so much no one can afford to take them from me.
 
Basically the economy is flush with some cash and about unlimited credit,apparently many don't care how much things cost as long as they can charge it.All being fueled by massive deficit spending by gov't on all levels and consumers.Businesses don't have to fight for the customers business just give them Zero down,Zero interest and tell them where to sign.When this scam and Ponzi Scheme is up there is going to be some sad times for many people.The Reset as many are calling it will be a big jolt of reality.
 
By the way there are no horse and buggy or bicycle Mennonites around me. A fair number tool around in full sized vans. Some of the better heeled ones have a vehicle for each member of their family who can drive. Nothing wrong with that but lets not oversell virtue where it does not exist.
 
Parity was the buzzword during the 1970's in agriculture. If corn was X per bushel then diesel fuel needed to be Y per gallon. The only problem with that is the rest of the world did not give a darn about the farmer's plight many of whom figured the farmer made his own mess.
 
Well it stands to reason there must be good money to be made at dealerships. The chain dealers snap up individual dealers as quick as they can get them.
Does not stand to reason they would be buying these money losers just to lose more money.
My local CaseIH dealership is up to 12 dealerships in a relatively short time.
Redline
 
Shops run at around breakeven unless their service is very exclusive in nature or controls the area market. The parts department historically is where the profit has been at but with the number of dealers down from decades ago the dealers with help of the manufacturer can make wholegood prices to their favor. No more selling a corn planter or forage harvester for a few hundred dollars above invoice unlike a few decades ago.
 
Well, my better half made over $20/hr standing at a cash register - in the Teamsters union. Now, she is retired with her full pension at age 58.

As a mechanic, I saw the lion's share of everything going to the management while those of us in the shop got the crumbs. so, now, if they raise the minimum wage to $15/hr, where does that put the mechanics in your area? Working for minimum wage?
 
I tried to charge my self an hourly rate when I worked on my own tractors. I couldn't get my self to pay me. I did the repairs anyway, for free. Stan
 
1) The world is full of folks that will pay a premium be it convenience are faith it will be fixed the first time. The top shops are gonna get those folks and wine and dine them to keep them happy.

2) There is a shortage of qualified people in the trade and its not getting any better...

There is always gonna be those hole in the wall shops that get the low end low ballers. Those shops will always be low end shops with customers the top shop don't want need are has fired. Its the food chain effect.

I don't know how a man opens a new shop today many fold in a few years. They cannot build a blank check customer base with there massive debt they stay on the hole all the time.

The trade is not an instant winner it takes years to build skills to where you can knock out work efficiently. With so many other ways to make good are better money he will have to be dictated to hang in there...

Working on older vehicles in most cases is a lost leader I know quite a few shops that will not work on anything 20 years old are older the money is just not there. Even if it were you can make better money staying away form old junk...

The trade has one thing going for it you will have work to do till you die... Most work till they die because the retirement benefit package chucks...

There is always gonna be that one in a million that hits the road running and makes a good go at it... You have to admire them even if you don't like what they charge...
 
Those of you that are still paying $100 or less should count you blessings. The 1 1/2 state area I run around in ranges from $135 to just shy of $200/hr.

McDs pays $14/hr to start, so dealers need to do a fair amount better than that to attract help. All of them struggle to find help.

Best paying dealer group advertises from $25 to $42/hr for techs. They are in the middle at about $150 shop rate. This is a very well managed outfit.

Some of the farmers in this area have figured out they can hire the best mechanics away from the dealer, pay them a bit better and have exclusive rights to their services. Doesn't take too many dealer repair bills to cover the annual salary.

Biggest challenge facing dealer shops today is that people that are smart enough to be good mechanics are smart enough to do something else with their life that pays better and is not as hard on the body.
 
Tongue in cheek - Does that mean there must be a lot of good money to be made in farming too? Every time someone retires there are a dozen more lined to rent the ground. Farmland still seems to sell high enough that farming alone can't pay off the mortgage.

It seems whenever commodity prices rise enough to make good profits, there are farmers who bid up the inputs back to near break-even profits again.
 
Let me guess you work as a so called mechanic at a place that charges high dollar an hour and you're pizzed there are Amish and Mennonite shops that charge a lot less.
 
My dad worked for a Case/ Minneapolis Moline dealer back in the sixties. The owner paid dad one hour less then the flat rate manual. Claiming dad worked too slow having only one arm. The customer was charged two hours more than the flat rate. At that time the shop rate was $15hr.

The owner put one hour of dad's wages and two hours of shop labor in his pocket on each job.
 
I have and I do And I can fix anything anybody else can with a 5000.00$ worth of tools and my equipment doesn’t know it wasn’t fixed using the exact same tool that a lot of times cost ten times as much just because it has a snap on stamp on it . Who’s making the money when the shop charges 150$ and pays the mechanic 20$ How many years does that mud take to pay for 50 or 60 70 because I’ve worked in a lot of shops that were that old But I guess those owners are still trying to pay for the shop 😀 and all those high quality tools that I myself have to provide
 
I probably sound petty here, The thing that gets me is when they charge for the miscellaneous stuff. You know they figured in the cost of rags floor dry and all that when the shop cost was figured up. Then I get this bill with all these additional charges that were already figured when they came up with their cost to operate the shop. So now I'm paying for that twice. Once with the shop rate then again in the additional charges for shop supplies or how ever they put it. All put it in there with different wording.
I don't hardly ever use an outside shop for things. I figure I made good money doing it myself. I even do the truck work on the semi's myself for most of it. Time is a big factor on some things. If we're planting or harvesting hiring it done in some cases is more cost efficient than doing it myself unless it is going to rain and I can get by till then.
I have had places not use the parts I wanted like wheel seals and you can't see them till you have to pull the wheel off to find out they used what they wanted. Yes there is a difference in wheel seals. For truck and trailer seals Stemco is the best longest lasting wheel seal made bar non and I've used or tried them all over the years.
 
I've seen on many repair bills where they charge for "shop supplies" and many times when you ask for a certain brand of parts like the seals you mentioned and they use an off brand but charge for the good one.
 
Not accusing anyone here, but in my experience, people who complain about prices don't seem to be at all bashful about charging all the market will bear in their own trade.
 
I see that and some of the people I know who work at certain dealers in the local Napa, etc, buying buying all kinds of parts and charging to the dealer account. Go figure lol
 
What I see wrong with your argument about corn prices is the cost of fertilizer and fuel comparatively. As far as wages, the cost to the employer, has to take in the cost of benefits. Unemployment insurance, employer retirement contributions, disability insurance, sometimes life insurance, and health insurance is especially expensive. All of these costs add up to double or more than the employee is earning. Then add in the cost of overhead-the shop building, liability insurance, electricity, special tools, etc., are higher comparatively, too. Mark.
 
I used to have a BTO neighbor who freely admitted
that he and his wife made far more money farming
the mailbox. He farmed, she was a clerk at the
local ASC who saw all the government mail about
grants and bailout programs as it came in.
 
My dad had shop, his 70s rate started out at $15 and ended up $20, I do think the $5 was maybe 50s.
 

6 to 8 was the norm for an independent around here in the 70's. I opened my shop in 1979 my labor rate was $12/15.

I thought when I could get a buck a min I was gonna be rich... I am still poor...
 
I am in charge of the maintenance on our fire dept. vehicles. I noticed a charge of $1.00 a gal. waste oil disposal on the invoices. Well I found out the waste oil was used to heat the shop. Another time I had a fire truck in for PM service. After returning to the station I checked to see if they had greased the spring shackles. They didn't and they also didn't change any of the filters, the mechanic just wiped the filters off with a rag. I took the truck back and the shop supervisor had 3 mechanics change every filter and all fluids. I think someone got fired. Just think how many customers get ripped off because they just don't know.
 
If I gotta live somewhere McDonald’s can pay 14$ an hour to flip a soy patty I’d rather live below the poverty line
 
I can see the need for 120 dollars service while w servicing expensuve equipment but this cannot apply to changing chisel plow shares....
 
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