Auto Repair Labor Rate Calculator
The state average tells you what other shops charge. This tells you what your shop needs to charge — from your real wages, overhead, and billable hours.
How the math works
You pay technicians for every clocked hour, but you only collect for billed hours. So the true cost of one billable hour is your total monthly labor cost plus fixed overhead, divided by the hours you actually sell:
break-even = (tech pay + overhead) ÷ billed hours
rate = break-even ÷ (1 − target margin)
Two levers move the answer far more than owners expect: billable efficiency (a tech billing 34 hours instead of 30 drops your break-even by more than a 10% rate hike adds) and overhead per bay. Both are visibility problems before they're pricing problems.
Frequently asked questions
How do I calculate my shop's labor rate?
Add up what an hour of sold labor actually costs you — technician pay for all paid hours (billable or not) plus your fixed monthly overhead, divided by the hours you actually bill — then add your target profit margin. Rate = (monthly tech pay + monthly overhead) ÷ monthly billed hours ÷ (1 − margin).
What profit margin should an auto repair shop target on labor?
Healthy independent shops typically target a 20–35% net margin on labor. Below 15%, one slow month or one equipment failure puts the shop underwater; the calculator defaults to 25%.
Why does technician efficiency matter so much for my rate?
You pay techs for every hour they're clocked in, but you only collect for billed hours. A tech who bills 30 of 40 paid hours (75% efficiency) costs a third more per billable hour than their wage suggests. Small efficiency gains often beat rate increases — which is why tracking billed vs. clocked hours per tech is the first thing to fix.
Should I charge the same rate at all my locations?
Not necessarily. Rent, wages, and competition differ by neighborhood. Multi-location owners often run a base rate per market, then watch effective labor rate (labor revenue ÷ billed hours) per shop to catch discounting drift.
The calculator assumes you know your billable hours. Do you?
ShopCommand tracks clocked vs. billed hours per technician, per shop — so multi-location owners see real efficiency, not guesses. $100/mo per shop, unlimited users.