Option 1 — Flat-rate
Tech is paid per billed hour, not clock hour. Productive A-techs flat-rate 50+ hours in a 40-hour week. Pro: aligns incentives with shop profit. Con: techs starve on slow weeks, leading to turnover.
Tech compensation is the single biggest expense and the single biggest retention lever. Get the structure wrong and either the tech leaves or the shop loses money.
Most shops default to flat-rate because "that's how it's done." But a B-tech in a busy shop earns more on hybrid pay, stays longer, and keeps the bay producing on slow days.
Tech is paid per billed hour, not clock hour. Productive A-techs flat-rate 50+ hours in a 40-hour week. Pro: aligns incentives with shop profit. Con: techs starve on slow weeks, leading to turnover.
Simple, stable, predictable. Common for diesel and fleet shops where job size is uneven. Pro: easy to retain. Con: no incentive for speed — productivity drops 20–30% vs flat-rate.
Hourly floor (e.g. $24/hr for 40 hours) + flat-rate bonus on hours billed over a threshold (e.g. 32). Tech never goes broke on a slow week, but is rewarded for speed. Best retention model in the industry.
Tech is paid 35–45% of labor billed. Common in independent and mobile. Pro: scales with revenue. Con: tech can pad time or push unnecessary work — needs MPI accountability.
Top retention shops offer: paid ASE certifications, tool allowance ($1,200–$2,400/yr), 4-day workweeks, profit-sharing on shop margin, and a clear A-tech career ladder.
35–45% of labor billed is standard for B-techs. A-techs / masters: 45–55%. Anything under 30% loses techs fast.
Yes, always — and charge the customer for it. Free diagnostics is the single biggest profit leak in independent shops.