We've entered the New Year, and many body shops use this time to consider changes to their labor rates.
Coming from a very challenging 2020, where repair volume was significantly down, if it was not already clear just how important labor rates are to a shop's business, it probably is now. Because there were many fewer vehicles coming through the door, it was critical to make the most out of every repair.
That meant getting paid for all your work (billable hours) and at the right price (labor rate). Now, perhaps more important than ever, labor rate pricing is crucial for body shops to sustain long-term profitability, growth and prosperity.
At NABR, we’ve been actively surveying, studying and analyzing labor rates for quite some time now, using our innovative Variable Rate System (VRS) software, which powers the new LaborRateHero.com site. After communicating with thousands of body shops and hearing firsthand how they make decisions about pricing their labor, we have some basic steps to share for anyone who wants to take action on their labor rates in the upcoming year.
First, let me provide some context. More than 6,000 individual body shops nationwide have submitted labor rate surveys to us. From that survey data, posted rates for Body labor range from $59 (national average) to $92 (+2 standard deviations). New surveys submitted within the last 12 months range from $63 to $99 (avg to +2 std dev.)
Doing a comprehensive labor rate analysis for your shop can be complex and quite involved, so instead, we offer here four simple steps to help get you started on the road to finding the right price for your individual shop.
Consider Your Market’s Overall Cost of Living
This step can serve as a simple sanity check to help ensure your labor pricing is within a reasonable range for the area you operate in.
While there is no official U.S. government cost of living index that compares the cost to live in different cities, there are some online resources that do. One site we like is AreaVibes, which will give you a good idea of your area's cost of living.
For this index, the national average is listed as 100. The index number for your market represents...