Pricing repair shop services: how to calculate
Pricing a job by looking only at what the shop down the street charges is one of the fastest ways to work hard and earn little. Every shop has its own costs, customers and service standards. Pricing your repair shop services needs to start from those numbers so every job covers what it costs and still leaves a profit. Here is how to do it.
How to price repair shop services
Do market research
Market research shows the price range charged by shops in your area and helps you understand the context your business operates in. It is a reference, not a rule: your price needs to come from your costs and the value you deliver.
Identify your customers
Knowing who your customers are and their income profile helps you define the type of service and level of care that make sense. A shop serving fleets and rideshare drivers, for example, has different priorities from one serving luxury cars.
Gather all your costs
Forgotten costs turn into lost profitability. Items that need to go into the calculation include:
- materials or replaced parts
- shipping
- labor
- indirect fixed costs, such as water and electricity
- marketing investments and other operating expenses.
Set your target profit
Finally, decide how much you want to earn on each job. Think about what the business needs to grow and protect itself: reserves for downturns, renovations, raises and possible labor costs. That percentage should truly pay the shop, and the final price should be explained to the customer through the value of the work delivered.
The calculation
With the numbers gathered, the price of the job is the sum of your costs plus your target profit:
(materials + shipping + labor + fixed costs) + X%
To dig into the hourly rate calculation, see how to set your labor price. For another take on the topic, check out our content on service pricing.
Prices stored in the system
Onmotor is a system built for repair shops and, since 2009, has helped service center owners organize their management. With the car service center software, you store prices for services and products, which speeds up issuing the work order and the estimate. Talk to our team or start a free trial.