“Flat rate” means two different things in a shop: how you bill customers for labor, and how you pay technicians. They’re related but separate decisions. This guide is mostly about billing, with a short note on pay at the end.
How each works
Flat rate: each job has a set number of labor hours, usually the “book time” from a labor guide. A front brake job might be 1.5 hours. You bill 1.5 hours at your rate whether the job takes one hour or two.
Hourly (actual time): you bill the time the job really took. A brake job that takes 1.2 hours is billed at 1.2; one that fights you for 2.3 hours is billed at 2.3.
Who each one favors
Flat rate favors a quick, experienced technician, and a customer who wants a firm price up front. The customer knows the labor cost before you start. A tech who beats book time earns the shop more per hour on the clock. The risk sits with the shop: a seized bolt or a snapped stud is your time, not the customer’s.
Hourly favors the shop on unpredictable work. Diagnosis, electrical faults, rust-belt cars, older vehicles: anything where book time is a guess. The risk sits with the customer, who can’t know the final labor cost until the job’s done, and that makes hourly estimates harder to approve.
Where labor guides fit
Flat-rate billing needs a source for book time. Most shops subscribe to a commercial labor guide, often bundled with repair information such as MOTOR, Mitchell 1 or ALLDATA. Book times assume a trained technician with the right tools, so they’re a fair starting point, not a guarantee.
If you don’t have a labor guide, you can build your own: track how long your common jobs actually take and set your own flat times. That’s slower, but the times reflect your shop.
Which suits a small shop
Many small shops use both:
- Flat rate for routine repairs with reliable book times: brakes, suspension, belts, most bolt-on parts. Customers approve firm prices more easily, and a good tech is rewarded.
- Hourly for diagnosis and unpredictable work, usually with a set minimum (say, one hour of diagnosis) and a cap the customer approves before you go past it.
For a mobile mechanic, flat rate is often easier to sell: the customer sees one number before you open the toolbox, and travel time can be a separate flat call-out fee.
Whichever you choose, put the hours and the rate on the estimate and the invoice. “Labor: 1.5 h × $95” is easier to accept than a lump sum. See how to write a repair estimate.
A note on paying technicians
Flat-rate pay means a technician is paid per billed hour, not per hour at work. It rewards speed and can push quality the wrong way. Hourly pay is steadier for the tech, and the shop carries the productivity risk. Pay rules (minimum wage, overtime) apply either way, so check your state’s labor laws before changing how you pay.
In CROW
A CROW invoice shows labor as hours × your rate, so either approach works: enter book time for flat rate, or the actual time for hourly. Your default rate is saved in settings. See invoicing in CROW.