Garage labour rates: how to set yours

Your labour rate has one job: to pay for the workshop, the people in it and you, from the hours you sell. The sum:

1. 1Add a year of overheads: rent, rates, utilities, equipment, insurance, software and marketing.
2. 2Add the full cost of your technicians, not just their wages.
3. 3Add the pay you want as owner.
4. 4Divide by the hours you'll actually sell to customers. That's your break-even rate.
5. 5Add your margin, then VAT if you're registered.

Parts margin helps your profit, but don't lean on it to prop up a labour rate that doesn't cover your costs. Some jobs carry few parts, and customers increasingly compare parts prices online.

A technician's salary is only the start. For 2026 to 2027:

• Employer's National Insurance: 15% on earnings above £5,000 a year. Eligible employers can claim Employment Allowance of up to £10,500.
• Pension: under automatic enrolment, at least 3% of qualifying earnings between £6,240 and £50,270.
• Holiday: at least 5.6 weeks of paid holiday a year, when they're paid but not in the workshop.
• Training, tools allowances and kit for newer vehicles, including EVs and ADAS calibration if you take that work on.

Apprentices and younger staff have their own minimum rates, starting at £8 an hour for apprentices from April 2026.

This is where most garage labour rates go wrong. A technician in for 40 hours doesn't sell 40 hours. Waiting for parts, road tests, cleaning down, comebacks and goodwill work all take time no customer pays for.

Look at your job cards or garage management system for the last few months. Divide the hours you invoiced by the hours your technicians were in the workshop. That share is your sold-hours rate, and it's the most important number in your labour rate.

Then compare your posted rate with your effective rate: total labour invoiced divided by hours worked. If you post £75 but discounts, warranty work and free rechecks bring the effective figure much lower, raising the posted rate won't fix it. Charging for diagnostic time and cutting comebacks will.

These figures are examples to show the sum. They aren't averages for garages and they aren't Ringzel customer data.

1. 1Hours in the workshop: 3 technicians × 46 weeks × 40 hours = 5,520 hours.
2. 2Sold hours: 75% of that, so 4,140 hours.
3. 3Break-even rate: £220,468.40 ÷ 4,140 = £53.25 an hour before VAT.
4. 4Add a 15% margin: about £61 an hour before VAT, or £73.49 including VAT.

If the garage can claim the full £10,500 Employment Allowance, the break-even rate falls to about £50.72, or £58.32 with the margin, before VAT. In this example the rate including VAT lands just under the What Car? average. Your own overheads and sold hours decide where yours falls.

Published figures show what customers are used to paying. They vary a lot by region:

Sources: What Car?'s servicing costs survey, Aftermarket Online's report of Garage Industry Trends data from more than 175 workshops, and Checkatrade's mechanic hourly rate guide. The What Car? survey is from 2023, so allow for increases since. We couldn't find a current published survey of main dealer labour rates, so we've left them out.

Most customers buy a price, not an hour. Build menu prices for your common jobs from standard times and your labour rate, plus parts:

Sources: Checkatrade's car service cost guide, BookMyGarage's diagnostic test cost guide and GOV.UK's MOT fees. The MOT fee is a legal maximum and you don't charge VAT on it, so the MOT itself won't carry your labour rate. Price the repairs it finds properly instead.

Charge for diagnostic time. A fault that takes an hour to find is an hour of your technician's time, whether or not the customer goes ahead with the repair.

If you're accredited to The Motor Ombudsman's Service and Repair Code, its rules shape how you quote. The code, updated on 1 June 2025, says:

• Charges for diagnostic or exploratory work are confirmed and agreed when the job is booked.
• An estimate is a written guide that could go up or down; a quotation is a firm agreed price.
• If extra time, labour or parts are needed, the garage contacts the customer for authorisation before starting that work.
• Invoices are itemised and show the labour rate and hours, and match the quotation unless the customer authorised extra costs.

The law points the same way for every garage. Under the Consumer Rights Act 2015, the work must be done with reasonable care and skill, what you tell a customer about the price can become part of the contract, and if no price is agreed, they only have to pay a reasonable price. Get authorisation for extra work in writing, even by text.

1. 1Rerun the sum every year with new rent, wages and the April National Living Wage rise.
2. 2Check your effective rate first. If discounts and unbilled time are the problem, fix those before raising the posted rate.
3. 3Update menu prices and your diagnostic charge at the same time.
4. 4Tell regular customers in advance, and explain what's changed.

Small, regular increases are easier for customers to accept than a big jump every few years.

Drivers ring a few garages to book a service or get a fault looked at, and book the first one that answers. When the front desk is busy and technicians are under cars, that call rings out. The cost of a missed call is the job's value multiplied by the chance they'd have booked.

Garage Industry Trends data put the average invoice at £300 in December 2024. A missed call that would have booked half the time costs about £150. Miss five of those a week and it's around £39,000 a year. Put your own numbers into our missed call calculator. For ways to fill the workshop, see our guide on how to get more customers to your garage.