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Career Corner: Understanding Flat Rate

As you start to explore a career as a transportation technician, you may hear the term “Flat Rate” thrown around quite a bit, but what does it mean?

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As you start to explore a career as a transportation technician, you may hear the term “Flat Rate” thrown around quite a bit. Essentially, flat rate is how most automotive and collision shops bill for work, and, essentially, how the technician gets paid for the job. It is similar to a commission pay structure in a sales environment.

The way flat-rate works is that each job has a predetermined amount of hours associated with it, and that is how the job is billed, regardless of how long it actually takes. For example, a shop might bill two hours to replace a radiator. This means that the technician will get paid two hours to complete that job, regardless of how much time it takes to complete on the clock.

Advantages:

  • High pay ceiling since a technician can get paid for more than 8 hours in a day.
  • Gives technicians control over their pay.
  • Proper tools and environment can allow technicians to become even more efficient.
  • Training can have a direct impact on pay because you can learn more efficient methods to complete a job.
  • Repetitive tasks can help technicians build more efficiency into their work.

Disadvantages:

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  • A poor shop environment (disorganized, poorly equipped) can negatively affect one’s pay.
  • External factors can slow down one’s efficiency (waiting for parts, paperwork).
  • Hard to gain efficiency on some jobs (if a job pays half an hour, it may be hard to get it done in less time).
  • No pay during down times (if there’s no work, there’s no compensation).
  • Flat rate is less predictable than an hourly or salary wage.

Other Things to Know:

  • Flat rate is common in automotive and collision, but is less common in diesel, fleet and equipment repair because it is harder to estimate repair times.
  • When you are entering the field, it is probably best to start on an hourly or salary basis, since most entry- level techs will struggle with efficiency and, therefore, not do well on flat rate.
  • In a flat-rate environment, mistakes are closely monitored. The shop doesn’t benefit from a technician completing a job quickly if the vehicle is not fixed properly. A technician is often not compensated for a vehicle that comes back, and too many mistakes can affect job security.

Bottom Line:

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Whether or not flat rate is best for you is a personal choice. If you are confident in your skills and prefer a fast-paced environment, there is an opportunity to do well in a flat-rate environment. Some flat-rate environments can also have good teamwork, because pooling skills, tools and hours might be good for technicians. On the other side, if you prefer a methodical work environment, it may be better to be in an hourly or salary position. Work that requires a great deal of craftsmanship, such as vehicle restoration, is often paid hourly since quick work can negatively affect the outcome. Ultimately, a technician needs to consider his/her passion, working style and skills to determine what pay structure is best for them.

Article sponsored by TechForce Foundation.

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