You may have heard the term batted about -- "flat rate." But what does flat rate mean exactly? Many will tell you that it's a way for shops to rip off their customers. These people are usually not well informed. The flat rate system of repair estimating and billing isn't dishonest at all, but it does present some interesting problems at the shop.
Basic Flat Rate Billing
What is flat rate billing? There's a history behind the development of the flat rate system, but *yawn*, we don't need to go into that. Let's say you take your car or truck in for a water pump replacement. The mechanic looks up the repair in his book, and it tells him that replacing a water pump in your vehicle takes 3 hours. You're billed 3 hours labor for the repair -- a flat rate based on what the book says. Simple enough, right?
Billed vs. Actual Labor Time
So what's the big deal? It seems pretty cut and dry. The confusion comes when the work is actually being performed. Let's say the mechanic knows what he's doing and is able to install your water pump in just two and a half hours. Under the flat rate system you still pay for 3 hours labor. Ouch. It just doesn't seem right, does it? Before you pass judgment, you need to hear both sides of the story.
The Shop's Explanation
If you complain to the shop about paying for more labor hours than were actually used, you'll get a quick response. Besides the expected "that's how it's done," and "we don't set the standards, the book does" you'll get a more thought out response. The billable hours that are listed in the flat rate book are based on the time it would take the average mechanic to complete the job. If you have an above average mechanic with years of experience, it stands to reason that he'll be able to do the same job faster. He still bills for 3 hours because it's his extensive training and experience that make him faster, training and experience that cost him money along the way.
The Down Side of the System
Unfortunately, there's a dark side to flat rate billing, and it comes from the top. Many mechanics will be paid based only on how many billable hours -- what the flat rate book says -- he accumulates. On top of this, management puts lots of pressure on the technicians to bill as much as humanly possible. If they fall below a certain number of hours per day, the techs have problems. And it doesn't matter why the day went slower. Left in a position where one slowed repair can put him behind, lose him money, and get the bosses breathing down his neck, some mechanics will rush the job and take short cuts. That's when the flat rate system can fail.