What Is Hours per RO (Repair Order)?
Hours per Repair Order, also called Hours per RO, HPRO, or H/RO, measures the average labor time tied to a single Repair Order (RO).
Service Advisors and Managers get beat up on this metric all the time, and for good reason. It can be confusing if the team is only looking at hours without connecting the number back to labor sales and profitability.
Hours per RO is one of the Key Performance Indicators (KPIs) of your Service department. It impacts every other metric in the shop, especially profitability.
How to Calculate Hours per RO
If you ask a Service Advisor or Manager for the formula they use to calculate Hours per RO, they will usually start with hours. But hours alone do not tell the full story.
Hours are part of the calculation, but the profitable view also depends on labor sales, RO count, and Effective Labor Rate.
The formula for Hours per RO is:
(Labor Sales Ă· RO Count) Ă· Effective Labor Rate = Hours per RO
That is labor sales divided by your RO count. Then you divide the result by your Effective Labor Rate.
For example, if you had $20,000 in labor sales, 200 repair orders, and an Effective Labor Rate of $100, the calculation would look like this:
$20,000 Ă· 200 = $100
$100 Ă· $100 = 1
Your Hours per RO would equal 1.
Learn how to calculate Effective Labor Rate here.
Why HPRO Should Include Effective Labor Rate
Most shops calculate Hours per RO by pulling billed hours from their management program and dividing that number by RO count.
That method leaves out the most important part of the measurement: profitability. Including Effective Labor Rate gives you a more accurate reflection of what the department is actually producing.
Where to Learn More
This calculation was originally featured on our Service Drive Revolution podcast, and you can watch the full episode here.
Every episode of Service Drive Revolution includes practical information like this, so make sure to subscribe on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts.
If you need Service Advisor training, Service Manager training, or professional coaching for your Service Drive, you can learn more about Chris Collins Inc. by browsing our products and services.
Our motto is: “Training isn’t something that we did, training is something that we do!”
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