Pay Plans

Steve Tuschen
I have seen the lawsuits on flat rate hours for technicians. Anyone doing things differently. I ask this as I am piloting a program with some techs where I pay a percentage of the sales for the total service department. Like anything I backed into the percentage by looking at what they were making(or should be making) and dividing by the total sales for the last 3 - 4 years to figure a percentage. Thought is you know exactly how much you can spend and you will always control your sales to gross percentage as they are 100% commission. It has been well received by those on it and others are interested in it. The other thought is looking more at the independents some have great techs they aren't paid by flat rate, they are usually paid a base plus commission for upsells. What are the thoughts?
Denim Simkins
@steve I have had a similar pay plan several years ago where each technician was paid a percentage of their total sales. The percentage would range from 16% to 25% maybe 26%. There were a couple of draw backs. #1 anytime you raised the door rate, they received a pay raise. #2 techs would not recommend maintenance items due to the menu priced items at a lesser labor rate. Of course this was on an individual basis and I think you were looking at doing it as a group and that may fix that problem. I like the control it gives you to make sure your GP% is "protected" regardless of the discounts given on labor. It also eliminates the FRH issues. I also think times right now are different. Customers can go to AutoMD and get an estimated price for any job, giving them the FRH's and estimated labor charge per hour. Just like we are seeing in the New Car Sales I foresee margins in labor shrinking due to the customer wanting transparency. We both know how techs want "their" piece of any job and at times can add a extra FRH's here and there for repairs. That times our door rate makes the price quite a bit more. Good question @steve I will be interested to see the responses.....
mark rask
We still use flat rate....
Mark Miller
I have been around multiple dealerships that pay a salary plus performance bonus and it seemed to work. The salary was never enough to live well on, but we tiered the bonus structure and our top performers made more than they made on flat rate. I've also had the chance to work for a dealer that paid EVERYBODY a flat salary and NOBODY worked any harder than they had to. In the independent world, I have had to guarantee minimum hours at times, which is no fun, but mostly used the straight up FRH pay plan there.

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