Flat-rate Vs the Hour
In payment made by the hour, employees are compensated for the time they actually work. If a job that standard estimate says would taken an hour but turns out to be more than that the employee is paid for the number of hours he has worked.
In flat-rate pay system, technician is paid by the job. There is no extra payment as above if if a job estimated at one hour takes more than that. The employee gets paid at the flat rate -- the equivalent of one hour. If he completes the work in just 30 minutes, he still receives the full flat rate.
Pros and Cons
Flat rate is an old-fashioned piecework plain and simple. Auto manufacturer establishes fixed times for all conceivable repairs. This includes everything from a bulb replacement to installing a new engine. Mechanics working for a flat rate have the potential to triple their earnings because they're almost always busy. However managers point of view hourly work is unproductive as there's no reason to work quickly.
However, technicians who work fast and efficiently under a flat rate can 'make' 15 or 20 hours a day but the quality of the work usually is monitored closely. (Anyone whose repairs result in repeat visits can be terminated.)
Warranty Repairs
Warranty work is different from other general repairs. Most shops use commercial reference guides to determine the amount of time needed to do general repair work. These guides allow reasonably competent technicians enough time to complete a repair profitably.
But repairs made under new vehicle warranties are governed by the manufacturers' estimates of how much time it should take to do the job. These are often less generous, so technicians who work according to flat rates based on manufacturers' estimates may end up with less compensation -- one-quarter to one-third less, the Toyota service manager estimates.
Flat-rate pay systems can also result in lower paychecks during slow periods. A point to remember is that there is a relationship between Flat Rate pay system and the incidence of Lemon Vehicles when quality suffers. Although Lemon Laws differ from state to state, a lemon vehicle is one you've owned for less than two years and is defective. If the dealer either cannot repair your vehicle after numerous attempts or if the same or similar problems persist, and still isn't fixed, you probably have a lemon.
Therefore the best ought to be a combination of both: salary and incentives. Technicians working under flat-rate or incentive pay systems usually earn more than employees in shops with hourly rates -- provided they are confident and work reasonably quickly.
Most companies use one system. However, even in many flat-rate shops there are tasks for which pay is based on work done on the clock. These often involve diagnosis work so complex that it is impossible to estimate how much time will be involved in finding the problem and then making a repair. Tasks that place a premium on fine craftsmanship are also often done at an hourly rate.
Technician Knows Best
Ultimately auto technician has to decide what is best. If you prefer to work slowly and methodically and if your specialty is taking time to solve the elusive, difficult problems that plague some vehicles, flat-rate work may not be for you. On the other hand, if you can do a job quickly and satisfactorily and can find a shop with ample work flat-rate or incentive environment is suited for you. More you can handle go for flat rate; not sure of yourself then go for hourly basis.
