How to Set Your Labour Rate and Service Prices

Start With Your Costs

• Monthly rent or mortgage on your premises
• Equipment costs divided by 12 (amortise over useful life)
• Staff wages including your own salary
• Utilities: electricity, water, gas
• Insurance: public liability, employer liability, tools cover
• Consumables: oils, fluids, rags, cleaning supplies
• Software, subscriptions, and administration costs

Calculate Your Billable Hours

• Count your technicians (including yourself if you work on cars)
• Multiply by 8 hours per day and your working days per month
• Apply a 75% utilisation rate — not every hour is billable (admin, breaks, non-chargeable time)
• Example: 2 technicians x 8h x 22 days x 75% = 264 billable hours per month

Set Your Break-Even Rate

Divide your total monthly costs by your billable hours. This is the minimum rate you must charge to cover costs. Do not price below this number — every hour below break-even costs you money.

Add Your Profit Margin

• Add 20% for a sustainable small garage
• Add 30-40% if you want to invest in equipment, training, or expansion
• Review competitors in your area — if you are significantly above market, you may need to reduce costs, not prices

How to Price Service Jobs

• Labour: hours estimated x your hourly rate
• Parts: cost price + 30-50% markup (standard industry practice)
• Total job price = labour + parts
• Always provide a written estimate before starting work

Reviewing and Adjusting Prices

• Review your labour rate every 6 months — costs change
• Track profit per job type — some jobs may be less profitable than they appear
• Inflation affects your costs continuously; annual price reviews are a minimum
• Do not be afraid to raise prices — customers prefer a sustainable, reliable garage