Calculating Labour Rates

Our Estimator is agreeing lower labour rates with insurers. Some insurers still think we can repair vehicles for the rates we worked on 40 years ago. The estimator has been told several times by insurers that we are the only one wanting to charge this rate in our area. How can I make sure the estimator agrees reasonable rates?

Any advice would be much appreciated?

Change in the insurance side of the repair process has brought benefits; however, the number of people within the insurance industry with actual hands-on experience of repairing vehicles appears to have reduced.

The common sense approach once so widespread when field engineer’s visited your premises and discussed the repair face to face has long disappeared. Perhaps it is a consequence of distance communication, there is difficulty for the insurer to accurately appreciate your business situation. When distance communications are undertaken over a visual link, email or phone your ‘prestige premises’ in a prime city location and high level of customer benefit may appear to be exactly the same or even worse than ‘Fred’ in his rural relatively inexpensive ‘Shed’. 

However the blame for the reduction in your labour rate cannot reasonably be laid at the door of insurers. It’s your business and you are in control of what you charge and the ‘contracts’ you agree to abide by.

Your Estimator must be aware of the financial needs of the business and be able, willing and prepared to sell your business to insurers. If he isn’t able to do this at the moment then you need to take action because a vast proportion of your business income is via the Estimator. The Estimator can either make or equally break your business.

It is surprising in this day and age that there are still repairers who do not know what their break-even hourly rate is. (The  hourly rate which is required to pay all the overheads and employee costs). It is important that your Estimator understands the amount that your business must take each day/week to break even. If he understands this information he will be able to speak knowledgeably with insurers when agreeing to repairs.

The Northern Ireland Bodyshop Alliance (NIBA) http://www.niba.biz recently created a simple hourly rate calculator, all that required is for you to insert the information about your business and the hourly rate will be calculated.

NIBA has kindly agreed that this calculator can be shared with body repairers who may find it useful. Click spreadsheet here (12 KB) to download a copy.

If you haven't done so already it is recommended that you calculate your absolute minimum hourly rate and then discuss this with your Estimator so he can understand and negotiate knowledgabley.