When you have questions about how to pay your auto technicians, does it ever come to mind to ask your accountant? Unless you work with a year-round service like monthly accounting, we’re guessing the answer is no.
Monthly accountants – especially ones who specialize in auto repair shops – can advise you on nearly everything that affects your finances. That includes employee compensation!
At CSI Accounting & Payroll, we’ve provided unlimited one-off advice (as part of our monthly accounting service) to auto repair shops for nearly 60 years. In fact, the automotive industry was our original specialty!
That means we’ve spoken to thousands of repair shop owners about compensation, addressing questions like:
- What are the pros and cons of hourly pay?
- What are the pros and cons of flat rate pay?
- What are the pros and cons of salary pay?
Hourly Pay Pros & Cons
Hourly pay is common in repair shops that have high variations in work volume, but it’s the second-most common choice for pay in this industry.
(While it appears to be the norm, this isn’t true. Hourly is often confused with flat rate, which we’ll get into in the next section.)
Pros
The average hourly pay for auto techs in the U.S. varies between about $25-$40. With hourly pay, things are kept simple and flexible.
Your techs are paid for all of the hours they work. This also means staffing can be adjusted for the work that comes in. The biggest pro, though, is that hourly wages are easy to calculate, especially if you also bill customers by the hour.
Cons
With any hourly role, you may risk your staff having low motivation to work efficiently since the longer they take, the more they get paid.
Then, you must carefully track your staff’s hours worked, especially if you don’t have a reliable time tracking tool.
Flat Rate Pay Pros & Cons
Flat rate is the most common compensation choice. A common misconception is that it’s a set pay for workers per job, but that’s not the case in this industry. It’s actually paying your techs for their billable hours, and it’s our most recommended method.
Check out this article about measuring your auto techs’ productivity that this method can be applied to!
Pros
If you have enough work coming in, your staff will be happy. It encourages them to complete jobs faster and even handle two bays at once when possible, boosting their earnings. This enables them to work a 40-hour week but bill for 60 hours of work, for example.
Cons
With any compensation that encourages speed, there’s a risk of work dropping in quality. Plus, if you don’t get much work coming in, technicians won’t be happy with flat rate since their reduced income is beyond their control.
It’s also difficult to estimate job costs, which means determining the compensation for them can also be difficult.
Salary Pay Pros & Cons
Salary is actually not very common for auto repair technicians. However, it’s sometimes used for senior technicians or management.
Pros
Salary means stability; consistent income can keep your workers around for longer. It’s also a predictable cost, simplifying your payroll.
Salaries range a lot since they can apply to different roles, but they often land between $50k-$150k.
Cons
When your workers are salaried, they can have fluctuating workloads but still get the same pay. That means they may feel overworked for their pay at times, or you can feel like they don’t have enough to do for their pay at times.
Salaries in any role can also mean workers have less incentive to work hard.
Partner With a Specialized Auto Repair Shop Accountant!
Now that you know about the pros and cons of hourly, flat rate, and salary pay (and that a monthly accountant can advise you in this area and beyond), are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with us by clicking the image below:
