Tuesday, July 23, 2024 Detailed Auto Topics
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At one time, everybody basically understood or knew someone who understood how vehicles worked. Today vehicles are so complex that even experts in the field normally only work with certain systems. With so much complexity there is bound to be misunderstanding. Where there is misunderstanding and money, shysters will find a way to prevail.

There are no simple formulas for such a complex problem. There are good guidelines in selecting a shop that everyone should follow. There are also changes that I feel could be made. Such a change would be the flat-rate and incentive based systems that dominate the auto repair business. (please click images for a closer view)

The flat rate scale does not favor the clientMost people would assume when they are charged for an hour of service they are getting an hour of service. This is not so with flat rate pricing. Proponents of the system say a flat rate hour is simply a unit of measure. They seem to feel nothing is wrong with charging for more time than is spent as long as they mean a unit when they state an hour.

With flat rate a guide is used to price work.  For instance a flat rate guide may state three hours is the normal time for a service.  Even if the service is routinely performed in one hour, with flat rate pricing the client is still billed for three hours. The flat rate technician and service writer would also be paid for three hours. Some shops even have more than one guide and may bill from which ever guide charges the most on a given service.

Obviously the incentive is to rush through the job.  Skipping steps or not performing the work can be very profitable.  Since the shop gets a percentage of everything, there seems to be little desire to change.  Flat rate guides instruct that times given are simply a reference. This may be overlooked on lucrative jobs and applied only when the job takes longer than the guide states.

There is also overlap. This is a reduction of charges, when items are made easier because of other work in proximity. Not accounting for overlap can result in a significant overcharge to the client with this system.

As with many things, to find the root cause, follow the money. To foster compliance with the system, service writers and technicians are usually paid a percentage of what they can sell. This means the more flat rate hours sold, the more they make.

Treating people like rats after cheese may result in people who act like ratsTreating people like rats bribed with cheese, may result in people who act like rats after cheese.

An example of what might happen would be a client with an oil leak. The vehicle is checked and the oil drain plug is found to be loose. Tightening the plug may only pay one-tenth of an hour. It is also noticed that there is an insignificant amount of oil around the oil pan and valve covers. Technically this could be referred to as a leak, but is not a problem or even noticeable by the client. These repairs pay eight hours and can be performed in less than five.

An honest technician and service writer would tighten the plug. If the shop is slow, there is a huge incentive to exaggerate the problem. Flat rate does not pay people to be honest, it pays them to sell labor hours. 

I feel an additional problem is bonuses, called a "spiff," for pushing lucrative services. For instance, for every fuel injection flush sold the service advisor may get an extra twenty dollars, on top of the flat rate amount. The client could pay $189.00 for a twenty-minute service that is not needed.

The first tip off of a flat rate shop is a menu board. This will list common services with prices. For instance "tune up $189.99" or "brake job $89.99." These are considered a joke among good technicians. A come-on to get people in the door. Everyone in the shop knows this is NOT what will be charged.

Worse, ask for a tune up and still have the original problem. "You asked for a tune up not . . ." Menu pricing places responsibility for diagnosing the problem on the client. It uses deceptive information to bait clients in with no responsibility to fix anything.

 Ask if the service is guaranteed to resolve your problem?

 Ask if the price quote is guaranteed to resolve your problem?

Without first checking the vehicle no shop can answer these questions. This exposes menu pricing for what it is, a come on. Instead, seek an honest professional.

Professionals first diagnose the problem

Professionals guarantee their diagnosis

Professionals guarantee their prices

Fixed right the first time, at the price quoted and ready when promised. AGCO, it's the place to go.

To post your opinion on flat rate please check our Auto Repair Trade Practices Poll.

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