If your labor rate doesn’t fund excellence, you’re not really coming from a true heart of service. You’re undercutting your own ability to serve.
Let’s just call it what it is. For most shop owners, raising the labor rate isn’t a calculator problem. It’s a heart problem. You can have the best spreadsheet in the world.
You can have formulas, charts, benchmarks, coaching programs. But if something tightens up in your chest when you think about raising your rate … you’ll sabotage it every time.
You’ll hesitate.
You’ll discount.
You’ll “just hold off for now.”
You’ll say, “We just need to be fair market value.”
And I say this with love … That’s usually fear wearing a business suit. Let’s talk about how to move from fear to freedom — from scarcity to abundance — and why raising your labor rate the right way will actually give you hope.
Fair Market Value — Or “Fear Market Value?”
I hear this all the time:
“Dave, we just need to be fair market value.”
Okay. Fair to who?
There will always be someone cheaper.
There will always be someone more expensive.
If you build your labor rate around the shop down the street, you just handed them the steering wheel to your business, and now you have two businesses racing to the bottom.
And unless they’re paying your mortgage, your payroll, your tech training, your scan tool subscriptions, and your equipment upgrades … they probably shouldn’t be driving your pricing strategy.
Let’s be honest. When most shop owners say “fair market value,” what they really mean is: “I’m afraid someone will say no.”
That’s not strategy.
That’s survival thinking.
And survival thinking keeps you small.
Profit Is Not Greed — It’s Integrity
Here’s a shift that changes everything: Being profitable is one of the most moral, ethical, and integrous things you can do.
Why? Because your customers don’t want:
- The cheapest technician.
- The oldest scan tool.
- The most outdated training.
- The thinnest warranty.
They want the best.
• The best diagnostics.
• The best technicians.
• The best equipment.
• The best experience.
• The best warranty.
And all of that requires profit.
Not ego.
Not arrogance.
Not price gouging.
Just responsible, sustainable, purposeful profit. If your labor rate doesn’t fund excellence, you’re not really coming from a true heart of service.
You’re undercutting your own ability to serve. Let that sink in. And that’s not abundance. That’s erosion.
Labor Is Not a Number on the Wall
Most shops treat the labor rate like it’s a sticker. Top-performing shops treat labor like it’s a system. They even label it differently: Professional Technical Service.
Some point-of-sale (POS) software allows you to change this. Most do not. Challenge your POS to make this element flexible for you to relabel it.
Labor has structure:
- Preventative Maintenance
- Diagnostics
- Repair
- Warranty considerations
- Efficiency targets
- Advisor presentation
- Technician workflow
- Profitability checkpoints
When labor is systemized, diagnostics, preventative maintenance & repair, you stop guessing, and more importantly, you stop having to put out self-created daily fires. And when you stop guessing, fear loses its grip.
Now you’re not raising your rate emotionally. You’re aligning your rate strategically. That’s leadership.
Here’s the Part That Creates Hope: Maximize your labor rate
Let’s talk efficiency for a second. Setting the dollar amount of your labor rate is only the first step in maximizing labor profits.
Say your labor rate is $205/hour. At 100% efficiency, you produce $205 in revenue per hour. At 150% efficiency? You’re producing $308 per hour.
Same seasoned tech.
Same hour.
Same rate.
Different system.
That’s abundance.
It’s been said, “Faith without works is dead,” and applied to efficiency … Efficiency without works is dead! You don’t always need to raise the rate to grow.
Sometimes you need to strengthen the structure. And when you combine the right rate with the right system? Now you’ve built a cash-flow engine.
The Two Numbers That Tell the Truth
If you want to replace fear with clarity, start measuring the right Key Performance Indicators (KPI).
- Sold-Hour Effective Labor Rate (Service Advisor KPI)
Labor Sales ÷ Sold Hours
Target: 100–105% of your door rate.
If your door rate is $205 and your effective rate is $179, your system is quietly discounting your value.
- Actual-Time Effective Labor Rate (Team Workflow KPI)
Labor Sales ÷ Actual Technician Hours
Target: 135% of your door rate.
These tell you what you’re actually taking to the bank. When you know these numbers, raising your rate stops feeling risky. It becomes informed.
Customers Don’t Buy Labor Hours
Here’s the big mindset shift. Your customers are not buying hours or parts and labor with dollars attached to them. They’re buying peace of mind. Let that sink in.
They want:
- Safety
- Reliability
- Confidence
- Clarity
- Trust
If your advisor leads with heart of service — not pressure — price resistance drops dramatically. Two shops can present the exact same estimate. One gets approved. One gets declined.
It’s rarely the number. It’s the context. When you lead with a heart of service, customers lean in. When you lead from fear, they feel it and back away. And no one wants to fund your anxiety.
Scarcity vs. Abundance Thinking
Scarcity says:
- “People won’t pay that.”
- “We can’t raise our rate.”
- “The market won’t allow it.”
- “This is just how it is.”
Abundance says:
- “What would need to shift for us to charge what we’re worth?”
- “Who is our ideal customer?”
- “How do we build systems that support excellence?”
- “How do we lead instead of follow?”
One mindset contracts. The other expands. You cannot build a world-class shop with a scarcity labor rate.
A Practical, Courageous Path Forward
If you want to raise your labor rate without raising your blood pressure:
- Run a real labor rate calculator that has 10 or more profitable metrics. Include wages, training, warranty, equipment, taxes, and profit.
- Strengthen your labor mix.
• 50% Preventative Maintenance at 150%+ Efficiency
• 25% Diagnostics at 200%+ Efficiency
• 25% Repair at 135%+ Efficiency
- Monitor effective labor rates. Replace guessing with knowing.
- Train Service Advisors to sell peace of mind. Stop leading with line items.
- Use profitability checkpoints. After estimating. After repair.
- Build a buffer for reality. Rust happens. Bolts break. Life is real.
- Lead with confidence, not comparison.
Light Humor, Heavy Truth
If a Maserati dealership can charge $5,000 for an oil change and sleep at night, then you can charge what it actually costs to run a healthy, professional auto repair center. And no, you’re not Maserati … yet. Time to release your inner Maserati!
But you are responsible for protecting families on the road every single day and the livelihood of you and your team. That matters.
Final Thought
Raising your labor rate isn’t about becoming expensive. It’s about becoming sustainable. Let that sink in.
It’s about creating stability for your team.
Opportunity for your technicians.
Growth for your advisors.
Peace of mind for your customers.
And freedom for yourself.
When you shift from fear to leadership … Labor stops feeling like a fight. And starts feeling like the engine of abundance it was always meant to be. Now that’s something worth stepping into.
Dave Schedin can be reached at 800-385-0724, dave@computreksystems.com, and www.computreksystems.com. A complimentary 30-minute discussion is available for the asking.
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