Hourly vs. Flat Rate for Auto Techs

Hourly vs. Flat Rate for Auto Techs

Automotive technicians are generally paid by the amount of work they produce (known as “flat rate” compensation), or by the hour. Some shops combine hourly pay with incentives for above-average productivity. Here’s what to consider when determining which is right for you:

Defining the Terms

In a shop that pays by the hour, employees are compensated for the amount of time they actually work. If a job that standard “books” estimate will take an hour turns into a three-hour ordeal, the employee is paid for all three hours.

Under the flat-rate pay system, the technician is paid by the job. Similar to the example above, if a job that is estimated at one hour takes three, the employee is still paid at the flat rate -- the equivalent of one hour. However, if he completes the work in just 30 minutes, he still receives the full flat rate.

Pros and Cons

“Hourly rates are predictable,” says Jon DiGuiseppi, manager of Green’s Farms Shell Service Center in Westport, Connecticut. “You know at the beginning of the week what you’ll make at the end.”

Mechanics working for a flat rate have the potential to triple their earnings, according to DiGuiseppi.

DiGuiseppi’s shop uses an hourly scale, because “we’re old school,” he says. “We’ve been here 40 years, and we like the predictability.” Technicians at dealerships, on the other hand, can “make a killing off flat rate, because they’re almost always busy.”

An assistant service manager at a Toyota dealership, who asked that his name not be used because he was not speaking for the manufacturer, says that from a manager’s point of view, hourly work is unproductive. There’s no reason to work quickly.

However, he says of technicians who work fast and efficiently under a flat rate: “If you know you can ‘make’ 15 or 20 hours a day, you’ll do it.” (This dealership makes sure that flat-rate workers don’t cut corners by closely monitoring their work. Anyone whose repairs result in repeat visits can be terminated.)

Warranty Repairs

Warranty work is different from other general repairs. Most shops use commercial reference guides to determine the amount of time needed to do general repair work. These guides allow reasonably competent technicians enough time to complete a repair profitably.

But repairs made under new vehicle warranties are governed by the manufacturers’ estimates of how much time it should take to do the job. These are often less generous, so technicians who work according to flat rates based on manufacturers’ estimates may end up with less compensation -- one-quarter to one-third less, the Toyota service manager estimates.

Flat-rate pay systems can also result in lower paychecks during slow periods. While there is no industry standard, DiGuiseppi says that most shops guarantee at least a small base salary.

“The best type (of pay system) is really a combination of salary and incentives,” says Dick Laimbeer, publisher of Motor service trade publications. Technicians working under flat-rate or incentive pay systems usually earn more than employees in shops with hourly rates -- provided they are confident and work reasonably quickly.

Most companies use one system. However, even in many flat-rate shops there are tasks for which pay is based on work done on the clock. These often involve diagnosis work so complex that it is impossible to estimate how much time will be involved in finding the problem and then making a repair. Tasks that place a premium on fine craftsmanship are also often done at an hourly rate.

The Bottom Line

Ultimately, of course, the right choice depends on the auto technician himself. If you prefer to work slowly and methodically, employment in a flat-rate environment may not be for you. If your specialty is taking time to solve the elusive, difficult problems that plague some vehicles, flat-rate work may also hold little appeal.

On the other hand, if you can do a good job quickly and can find a shop with ample work that requires your set of skills (and has the equipment you need), you should thrive financially in a flat-rate or incentive environment.

“It’s up to you,” DiGuiseppi says. “The more you think you can handle, the more you can command. If you’re not sure of yourself, do hourly.”

“If you’re a hustler, the opportunity is definitely there to do very, very well,” the Toyota representative adds.