Why it Pays to Properly Charge for Diagnostics
As Mike Anderson noted in a past FenderBender column, there is not a cut-and-dry answer for how much labor time should be recorded for scanning a vehicle. At the end of the day, Anderson wrote, technicians aren’t just hooking up a scanner—they must hook up battery support, run a health check, scan OEM repair information, perform functionality tests. In other words, he claims you shouldn’t sell your techs short when charging for diagnostics.
Interestingly enough, CCC Information Services’ 2018 Crash Course report provided data and insight into how OEM requirements for vehicle diagnostics might impact insurance claims. Overall, CCC found an average labor time of 0.2 hours to 6 hours to complete calibration procedures, at an average hourly rate of $45.
Based on information from the FenderBender Industry Survey, here’s a brief breakdown of how charging more for diagnostic scans improves profitability without hurting closing ratios.
How much does your shop charge for diagnostic scans?
Less than one full labor hour: 20%
One full labor hour: 50%
More than one full labor hour: 30%
One Full Labor Hour or Less
Annual Revenue Above $1 million: 64%
Estimate Closing Ratio Above 80%: 52%
Average Repair Order Above $3,000: 47%
Gross Profit Margin Above 40%: 59%
Gross Profit Margin on Labor Above 50%: 58%
Net Profit Margin Above 10%: 40%
More Than One Full Labor Hour
Annual Revenue Above $1 million: 76%
Estimate Closing Ratio Above 80%: 56%
Average Repair Order Above $3,000: 50%
Gross Profit Margin Above 40%: 72%
Gross Profit Margin on Labor Above 50%: 66%
Net Profit Margin Above 10%: 63%