Pistonlog - Workshop Management Software

Ask ten workshop owners what they charge per hour and you'll get ten different answers – and at least half of them will be guessing.

Labour rate is one of the most important numbers in your business. Get it wrong and you're either leaving money on the table or pricing yourself out of work. But most garages set their rate years ago and never revisited it.

Here's how to work out what you should actually be charging.

Start With Your Costs

Before you can price your time, you need to know what it costs to keep the doors open.

Add up your monthly expenses:

Rent or mortgage
Business rates
Insurance
Utilities (electric, gas, water)
Equipment finance
Tool replacement
Software and subscriptions
Waste disposal
Accountant fees
Any other fixed costs

This is your baseline. You need to cover this before you make a penny of profit.

Work Out Your Available Hours

You might work 50 hours a week, but you can't bill for all of them. There's admin, phone calls, parts runs, cleaning, and all the other non-billable work that eats into your day.

A realistic billable target for a solo mechanic is about 30-35 hours per week. For a larger workshop with dedicated admin, it might be higher.

Take your monthly fixed costs and divide by your monthly billable hours. This is your minimum hourly rate just to break even.

Example:

Monthly costs: £4,000
Billable hours: 140 (35 hours × 4 weeks)
Break-even rate: £28.57/hour

That's before you've paid yourself, put anything aside for tax, or made any profit.

Add Your Wage

You're working. You should get paid.

Decide what you want to earn – be realistic but don't undersell yourself. If you'd expect £35,000-£45,000 as a mechanic working for someone else, that's a reasonable baseline.

Add this to your costs and recalculate.

Example:

Monthly costs: £4,000
Your wage: £3,500/month (£42k/year)
Total: £7,500
Billable hours: 140
New rate: £53.57/hour

Still not accounting for profit, tax reserves, or reinvestment.

Add a Margin

Profit isn't a dirty word. It's what lets you replace equipment, survive quiet months, and eventually grow.

A 20-30% margin on top of your costs is reasonable. Some workshops go higher, especially for specialist work.

Example:

Base rate: £53.57
Plus 25% margin: £66.96/hour

Round that up to £70/hour and you've got a sensible labour rate that covers costs, pays you properly, and builds the business.

What About the Competition?

Knowing what other garages charge is useful context, but it shouldn't set your rate.

If the garage down the road charges £40/hour, they're either:

Running on much lower costs (unlikely if they're in the same area)
Not paying themselves properly
Losing money and don't know it
Doing something dodgy

You don't have to be the cheapest. You have to be clear about what you charge and confident that you're worth it.

How to Talk About Your Rate

Customers rarely ask "what's your labour rate?" What they ask is "how much will it cost?"

When you quote, you're not selling hours – you're selling a fixed job. If you quote £250 for a clutch, they don't care if that's 4 hours at £62.50 or 3 hours at £83.33.

What matters is:

Is the total price fair?
Do they trust you to do good work?
Will the problem be fixed?

If you're confident in your rate, you won't feel the need to justify every line item. Quote the job, explain what's included, and let them decide.

Review It Every Year

Costs go up. Your experience increases. Your equipment gets better. Your rate should reflect that.

Set a reminder to review your labour rate every January. Even a £5/hour increase across 1,500 billable hours is an extra £7,500 a year in your pocket.

Summary

Know your costs – fixed monthly expenses
Know your hours – realistic billable time
Pay yourself – you're not a volunteer
Add a margin – profit lets you grow
Review annually – costs change, so should your rate

If your current rate doesn't cover all of this, you're working for less than you're worth.