Why charging more than the dealer might be the best leadership move you’ll ever make!
Walk into any restaurant, coffee shop or trade event where a group of shop owners are sitting together, and the conversation will eventually turn to labor rates. Someone will lean in and say,:
“Well, the dealer down the road is at $145 an hour, I can’t go higher than that.”
Heads will nod in agreement, and just like that, a whole group of independent shops have set their ceiling based on what someone else is doing.
But here’s the reality:
The dealer’s labor rate shouldn’t be your benchmark. It’s your floor.
For too long, independents have played the comparison game with dealerships, assuming higher dealer rates must mean better technicians, better service and better quality.
The truth is far less glamorous.
Dealerships charge more because of their overhead structure—not because their service is inherently better. Yet many independents undercut themselves and their technicians by trying to stay below the dealer’s number.
As leaders, we’ve got to change that thinking.
WHAT THE DEALER’S LABOR RATE REALLY REFLECTS
When you see a dealer charging $165, $185 or even $200 per hour, what does that number really represent?
Overhead: Massive facilities, big showrooms, fancy customer lounges and manufacturer-mandated image programs.
Corporate requirements: OEM-driven equipment purchases, training formats and facility upgrades.
Perception: Customers expect dealerships to be more expensive—and dealers lean into that.
Notice what’s missing?
Technician quality.
I’m not saying dealership technicians aren’t talented; many are excellent. But their pay is tied more to the flat-rate system and the brand’s business model than to some magical skill set you can’t find outside the dealer’s walls. In fact, many of those technicians eventually leave for independent shops, where they find more freedom, a broader range of vehicles to work on and, often, a better quality of life.
THE INDEPENDENT’S ADVANTAGE
So if the dealer’s rate is built on overhead, what is yours built on?
Leadership.
As an independent shop owner, you lead from a different place. You’re not just managing a franchise, you’re building a team, shaping a culture and carrying the weight of every decision. That’s leadership in its purest form.
And leadership means:
- Investing in your people. The best shops don’t compete to pay the least; they pay more to get and keep the best.
- Creating efficiency. A well-led shop doesn’t waste time. Clear processes, strong advisors and skilled technicians mean cars are diagnosed correctly and fixed right the first time.
- Delivering value beyond the repair. Customers don’t come to you for a cappuccino in the waiting area; they come because they trust you. You’ve built a relationship that outlasts a warranty period.
WHY CHARGING MORE IS A LEADERSHIP DECISION
Raising your labor rate even above the dealer’s isn’t just a financial choice. It’s a leadership move. Here’s why:
- You set the standard—not the dealer
- If you’re constantly chasing the dealer’s rate, you’re letting them lead your business for you. Leaders set the pace. Followers chase it.
- Your team is watching
- Your technicians and service advisors notice when you undervalue your labor. If you want them to buy into your vision, you have to model confidence in your pricing.
- The market will respect it.
- Customers equate higher pricing with higher quality, as long as you deliver the value to back it up. Charging more signals confidence, professionalism and leadership in your market.
PAYING TECHNICIANS WHAT THEY DESERVE
Let’s get real. One of the biggest challenges facing our industry right now is the shortage of technicians. Everyone is fighting for talent, and too many shops are losing that battle
because they aren’t willing to pay what it takes to keep great people.
If you want the best technicians, you’ve got to be willing to do what dealerships often won’t: pay them better
That doesn’t mean throwing money around without accountability. It means creating a pay plan that:
- Rewards productivity and quality, not shortcuts
- Provides stability and a career path, not just a paycheck.
- Reflects the skill, training and professionalism it takes to master today’s complex vehicles.
When you pay your people better, they don’t just stay – they thrive.
They become ambassadors for your shop, recruiting others and raising the bar for performance. That’s what leadership looks like in action.
EFFICIENCY BEATS RATE EVERY TIME
Here’s a point that shop owners often miss: a higher labor rate doesn’t always mean a higher repair bill.
Think about it:
- A dealership tech at $145/hr. who takes 3 hours to diagnose a drivability issue costs the customer $435.
- Your technician, at $160/hr. who finds it in 2 hours, cost the customer just $320.
WHO’S REALLY MORE EXPENSIVE?
The point isn’t just to charge more, it’s to deliver greater value per dollar billed. That comes from better processes, better training and better leadership in the shop.
LEADING WITH CONFIDENCE
One of the core responsibilities of leadership is to set vision and direction. If you hesitate on your labor rate because you’re afraid of how customers might react, you’re letting fear lead. Great leaders don’t set prices based on fear; they set them based on value.
Communicate that value clearly:
To your customers: “We charge more because we’ve invested in the best technicians, the best equipment and the processes to keep your car safe and reliable.”
- To your team: “We’re charging what we’re worth so we can pay you what you’re worth.”
When both audiences hear the same confident message, you build alignment and loyalty.
THE LEADERSHIP CHALLENGE
I often tell shop owners: you’re not running a charity; you’re
running a business. And a business must be profitable to serve its people and its customers well
The leadership challenge is this: stop looking at the dealer as your ceiling.
Start leading by setting your own standard. If you know you’re delivering top-quality work with a highly trained, well-compensated team, then your rate should reflect that, even if it’s higher than the dealer’s.
THE BOTTOM LINE
The dealerships aren’t the enemy. They’re just operating under a different model. But their labor rate should never be the yardstick you measure yourself against.
As an independent, your goal isn’t to be the cheapest: it’s to be the best. And the best doesn’t undercut – the best charges what it’s worth and invests in its people.
So, here’s the challenge: set your labor rate with confidence, even if it’s higher than the dealer’s. Pay your technicians better than the dealer does.
Because when you lead with value, efficiency and trust, you’re not just running a shop, you’re building a business that will last.
If you would like a worksheet to complement this article, email Vic for a free action plan to help you get started with Setting Your Labor Rate. Ready to get rolling with a coach? Vic Tarasik is the founder of Shop Owner Coach, a coaching and training organization that is com-mitted to helping independent repair shop owners achieve their dreams through the intentional application of best business practices. Contact him to discuss how working with a coach can benefit you and your shop. He has been an independent auto repair professional for more than three decades of shop ownership in The Woodlands, TX. Book a compli-mentary coaching session by simply emailing him to set it up! Vic can be reached at Vic@ShopOwnerCoach or ShopOwnerCoach.com