Automotive technician pay plans: Hourly vs. Flat Rate…

Is the best automotive technician pay plan flat rate or hourly?

Before we start talking about automotive technician pay plans, we need to talk about technicians. A lot of technicians don’t feel like they should be measured as much on production, and there probably are places where that is a legitimate concern. 

What I do know is, the best technicians I’ve ever hired are more concerned about a few things in the interview. They typically want to know how the work is being dispatched, where the keys are kept, and service advisor performance. Usually, flat rate shops are more likely to go hourly than hourly to flat rate. 

Hourly vs. Flat Rate…The Face Off

Typically shop managers and owners think that there is one automotive technician pay plan that works in one department and not in another. But in reality, there are pros and cons of both pay plans that apply to any shop. If you pay your techs an hourly rate, you are rewarding them for showing up and clocking in, not for producing. The good technicians love to produce, and they should be rewarded for doing so. A flat rate pay system can be a great fit for highly motivated and productive techs who work in busy shops. The automotive technician pay plan you choose depends heavily on what type of technicians you have in your shop.

The Two types of Automotive Technicians

  1. The auto technicians that want to be able to make more money if they produce more. A tech like this has a very proactive approach, and is a lot more committed to the outcome.
  1. The auto technicians that don’t want to be vested in the outcome aren’t connected to the responsibility of production. They’re not writing good enough stories if there’s warranty involved. They’re not emotionally connected to it enough.

“How good are you at recruiting and growing? The better we are at both, the more accurate the pay will be.”

A 90-Day Roadmap to Your Best Fixed Ops Month Ever automotive technician pay plans

Automotive Technician Pay Plans

Advantages of Hourly Rate Pay Plans

An advantage to hourly rate pay is that auto technician jobs can be unpredictable. Unexpected issues may pop up, and that can cause extra time. If a one hour task takes three hours, the tech will be paid for all three.

In some cases, hourly rate pay may increase the quality of work. Now that the techs don’t have to worry about rushing against the clock, they can take the time needed.

Disadvantages of Hourly Rate Pay Plans

Regardless of how productive you are, you’re still going to be paid the same amount of hours. It may create a culture for your techs to be not as driven and motivated, compared to flat rate pay. 

Advantages of Flat Rate Pay Plans

Flat rate techs can complete and take on more work during their performance. They can work just 40 hours but may be paid double of what their hourly rate pay would have been. Maybe even more. A flat rate system can increase motivation to upsell so more jobs come into the shop. Techs can complete jobs quickly and accurately, which will give greater potential to increasing income in a flat rate shop. 

Another advantage for the shop, the flat rate pay plan does not have to overpay slower technicians. The shop can use average flat rates for jobs to estimate its income.

Disadvantages of Flat Rate Pay Plans

Unpredictability. That’s a key disadvantage of flat rate pay if the shop is slow and jobs aren’t coming in. Not only would this cause smaller paychecks, but this can also stall work. Flat rate pay may result in techs rushing through their work. This can create sloppy jobs and unhappy customers. Newer mechanics may take longer on jobs and may be paid less overall than if they were in an hourly rate pay system. 

For technicians who are more experienced and qualified, the value of flat rate pay may also be lower than what they might earn in an hourly rate pay system. There may be less focus on mentoring young technicians or providing customer service because technicians are concentrating on completing their jobs and moving on to new work.

“I would rather have techs making $60 or $80 an hour in relation to what we’re billing, than pay them $80 an hour to be inefficient. Techs that are inefficient aren’t tied to the production and do not have vested interest in the company succeeding or not.”

A 90-Day Roadmap to Your Best Fixed Ops Month Ever automotive technician pay plans

Which Automotive technician pay plan is Right for You?

WHICH GROUP IS GOING TO WIN?!

One of the two groups is going to set the tone. Eliminating entitlement and complacency can be the recipe for growth. Techs that are being vested in having an element of a flat rate system is the way to go. Technicians are going to do a much better job if the company is healthy. We’ll be able to hire more people and spend more money on resources that benefit the customers. We should also pay techs more per hour, and reward production and quality. 

An efficient automotive technician pay plan like this will help to keep your techs happy, and enhance their overall performance.

Other Articles to Consider

Performance-Based Service Pay Plans

Podcast

What's the best automotive technician pay plan? We're used to technicians getting a flat rate but sometimes that's not enough. 

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