Most car workshops price by imitation: they ask what others charge for a job and land near it. That is enough to stay open, and not enough to know which jobs actually make money.
The reason is that a workshop's real cost is technician time — the one number most workshops never measure. So a job taking one hour and one taking four end up priced within a small margin of each other.
What an hour of labour actually costs you
Not the technician's wage alone. Add salaries and insurance, then workshop rent, electricity, equipment maintenance and consumables, and divide by the hours genuinely available in a month.
Note "genuinely available": a technician working eight hours does not produce eight billable hours. There is waiting for parts, movement, breaks and rework. Realistic utilisation in most workshops runs between 60% and 75%.
A workshop calculating its hourly cost on eight productive hours is pricing below its true cost without knowing it.
Three ways to price labour
Actual time
You record hours spent and bill them. Fair in theory; its problem is that the customer does not know the cost before work begins — and a slow technician costs the customer more.
Standard time
Each job has a pre-estimated time billed regardless of actual hours. This is what most organised workshops use, because it gives the customer a clear price upfront and rewards the technician for working well and quickly.
Building it requires data: record actual time for a period until you know the true average for each recurring job, then adopt it as the standard.
Fixed-price packages
Suitable for known recurring work such as scheduled servicing. Easy to market; the risk is that one uncounted part or extra task turns the package into a loss.
The number that changes your decisions
For each recurring job type calculate: average actual time, the price, and your cost per hour. Then compare.
| What you measure | What it reveals |
|---|---|
| Average job time | Whether the price covers the cost |
| Technician utilisation | Your real capacity, not theoretical |
| Rework rate | Where quality or training is costing you |
| Margin after time and parts | Which jobs are worth accepting |
The last row changes decisions. Many workshops discover a job they accept out of habit adds almost nothing once time is counted — and that refusing it or raising its price frees capacity for work that pays.
Rework: the hidden cost
A car returning for the same fault consumes time twice and is billed once. If it is not recorded as rework, that cost disappears entirely from your figures.
Record every rework and its cause: diagnostic error, execution error, or a faulty part. After three months the distribution will tell you what needs fixing — training, a supplier, or a pre-delivery inspection step.
Frequently asked questions
How do I calculate the workshop's hourly cost?
Add salaries, insurance, rent, electricity, equipment maintenance and consumables, then divide by genuinely available working hours — not rostered hours. Realistic utilisation is 60–75%, and ignoring it means pricing below cost.
What is the difference between actual and standard time?
Actual bills exactly what was spent; standard bills a pre-estimated time per job regardless of actual hours. Standard is more common in organised workshops because it gives the customer a clear price upfront.
How do I build a standard time schedule?
By recording actual time for a period until you know the true average for each recurring job, then adopting it as standard. Building on someone else's figures gives you standards that fit neither your technicians nor your equipment.
What is a good technician utilisation rate?
Between 60% and 75% in most workshops. A significantly higher figure usually indicates inaccurate time recording rather than exceptional efficiency.
How do I know which jobs are profitable?
By comparing price against average actual time multiplied by your hourly cost, after deducting parts. Without measuring time you know your revenue but not your margin.
Should rework be charged to the customer?
Not when the workshop caused it. But always record it as rework with its cause, because it is a real cost that vanishes from your figures if unrecorded.
Conclusion
Correct pricing is not about charging more. It is about knowing which of your jobs pay for themselves and which are subsidised by the rest.
Pick the three jobs that recur most, record their actual time for one month, then compare against your price and hourly cost. That exercise alone changes something in most workshops.
This article is part of our guide to garage management software and connects to spare parts management. To see how technician time is measured in practice, review the auto repair workshop management system.