How bout talking to Mgr Greasemonkey and 'yahoo' technician and seeing if they will keep the shop open a couple extra minutes for a couple Hamiltons and a post-install Pabst 12 pack/Old "E" 40 oz....or something?

 

Bob, how about a ride in the truck.

I have about 6-7G in my tools, and I don't work on cars/trucks (but my own), I work on trailers. I buy about 1G a year in tools

3 tool trucks stop by the shop a week. When Snap-On was here today I priced a flash helmet, it was over $500.00.

No, I don't get the $60.00 an hour we charge.


And any one that would pay over $300.00 for a set of sockets in out of his/her mind. Sears, Mac, and Macto you can ge that same set for $299.99.

 

I have to pipe in and agree here. Many people do not understand the overhead involved in running a business. A little business management 101:

1. Fringe benefits, social security, unemployment tax, etc Usually add up to about 33% of an employees income. Social Security alone is 15%

2. Legal and accounting costs for following the law and complying with IRS record keeping standards is substantial

3. Capital equipment and continuing education costs can be substantial if there is a rapid pace of innovation in the industry

4. The business has to carry insurances like excess liability insurance, usually several million dollars worth.

5. Most businesses take the form of a corporation in order to shield the personal assets of the owner(s) from litigation. This exposes the income stream to corporate income tax, both state and federal.

6. Don't forget your typical overhead costs, like leasing space, various bills for professional services, communications, utilities, etc.

7. You are getting good production from your workforce if they are 70% billable.

8. For the average business to be profitable, the per employee gross typically needs to be around 2.5-3 times the annual wages of the employee.


Given these factors, let's analyze what happens to our $100.00/hr when we are a cool boss who pays the employees well and provides excellent benfits.

Work year=2080*.70=1456 billable hours/year
1456*100=$145,600 per employee per year. w00p! Not so fast!

Employee wages=-$58,240 (multiplier of 2.5)
Employee benefits&taxes=-$19,219

10% for capital equipment and continuing education
5% for Legal/Accounting
5% for operating overhead
5% for insruances, advertising, permits, etc.

that's 25% in non empoloyee overhead

Non-employee overhead=-36,400

Ok, let's do the subtraction:

$145,600
-$58,240
-$19,219
-36,400
=$31,741

To keep the discussion simple, let's assume that we have a C-corp doing business in the state of Florida, with a gross of between $350,000 and $10,000,000. In reality most small businesses these days are S-corps or LLCs, but like I said, let's keep it simple.

Federal Corporate Tax rate=34%
Florida corpoate Tax rate=5.5%
Effective Corporate Tax Rate=39.5%

39.5%=-56,784

$31,741
-$56,784
=-$25,043! WTF! how can this be! sucks huh? In reality, The business would get to deduct most of their overhead expenses so the tax bill would not be quite so stiff, but still, this would not be a very successful business. Either benefits wold have to be cut, wages decreased, or production increased.

The point is, companies have to follow complex rules, carry lots of insurance, and pay taxes up the yin yang. State and federal Government takes a huge bite out of the cash flow of small and medium-sized businesses. when you are paying that outrageous hourly rate, remember all of these hidden costs.

-L

 

Got My FULL PSP Exhaust ( long tubes, mid-pipes, cats, and cat-back ) installed for $200...I was gonna do it, but to a busy business man it's a pain in the a$$!!!

---------------------------
Black '01
Born on 5-3-01
#3603 of 6381
K&N Box Filter
Sean Hyland 2# Upper Pulley
JL 3# Lower
JDM Boost Bypass
PSP Autologic Chip
MickeyThompson ET-Streets
PSP Electric fan&CobraR water pump
NGK / BR7 spark plugs .036 gap
PSP Longtubes w/Twin Magnaflow
PSP FactoryTech Valvebody
PSP DriveShaftLoop

 

LPD, advertising is also a huge cost associated with doing business.

 

Depending on the marketing plan, yes this is true. It costs a lot of money to have one of those half page ads in the yellow pages.

I omitted some other fun things too, like if you take credit cards, the credit card company gets a cut of each transaction. 2.5% is not uncommon.

 

It comes down to a simple choice: Do you want to pay $100 to pay for 30 minutes of work? This isn't brain surgery, computer programming, electrical diagnostics (99% of that is done with a scanner so that your grandmother could tell you what's wrong), hazardeous material reclaimation, etc. It's simply welding a pipe. This isn't welding nuclear cooling lines that have to be x-rayed after every weld to look for inconsistencys.

I believe you already know my choice. I don't agree with paying "the market price" because of the ignorance of the general public who sees some sparkley material come flying out from under their vehicle so it must be a hard job.

 

 

Nitro,

You didn't walk into any of the three MUFFLER shops that I did. You have no clue as to my automotive background or Electrical Engineering for that matter. You have no clue as to what vehicles I have rebuilt, repaired, modified, etc. [sarcasm]You know, some of them even had to little boxes with different colored wires.[/sarcasm] But for the life of me, I've yet to see a muffler with A/C lines, brake lines, wires hanging out of it, etc. What really pissed me was the fact that the first two shops didn't even look at the truck, one didn't even let me finish stating what I wanted, and the third looked at it, then LOOKED ME OVER (I was wearing Polo Chino's and a Nike golf shirt), guess what they saw? Here's a hint "$$$". Sad really that they had no clue as to the fact if I had a welder, I would have done it myself, just tried to make a quick buck.

BTW, the local guy did it for $60, used 2 feet of pipe and did a great job. The truck sounds AWESOMEand I'm pleased. For fact that he DIDN'T try to screw me over, he got a nice tip. I repay courteous actions.

BTW, C&C is an awesome show.

 

Just for the record. This is a topic that I complain about with my buddies over a beer. (And now, on this message board. ) I do not bring this up at the service desk. I pay dutifully. When I am looking for a place to do work, I don't ask,"Where's the cheapest place?". I ask, "Who does the best work?" and then "Are they reasonable?".

Also for the record. If I am expected to pay $60+ an hour and do it with a smile, I expect the job to be done right every time, not just when the tech feels like it. Nitro L is descibing the perfect tech, an ideal, not the people that usually end up working on my vehicles.

 

sorry guys, but you wanna know why your paying 60 dollars an hour for a half hour job......go back and read LPD's Post and let it sink in.

Nitro also is hitting it right on the head.

With the september 11th happenings, and recent drought, we (our buisness), has lost 40k in the past two months alone. The simple fact is that the goverment and society make it impossible for small buisnesses to survive. So if they are charging you an hour for a half hour job, you can look at it a few ways. Another shop may actually take an hour to do that job. I have techs at my shop that do a job that took them an hour, that i could do in twenty minutes because i've done it 206 thousand times. Or you can look at it that the buisness may be struggleing a bit, so maybe they are charging a bit more. That exta amount may be the difference between you going back there, or finding out they have folded and your looking for a new place all over again.

Corner , I can understand your point totally. If it took a half hour, you should be charged for 30 minutes labor. I agree from the paying standpoint. From the buisness standpoint, if I were to charge you a half hour for a job i could get an hour labor for, i'd be watching my competitors swallow me whole because i'd be cheaper and the customers will love it, till my doors are locked because i filed chapter 11.

Just simple buisness reallity. Sad but true!!!