Should I pay my techs flat rate or hourly?
Short answer
Flat rate rewards speed and can pay your best techs very well, but it needs steady work volume and honest time standards or it backfires fast. Hourly is simpler and safer for a smaller or newer shop.
Flat rate only works with volume and fair book times
Flat rate pays a tech a set number of hours for a job regardless of how long it actually takes, using published book times. It's great for your best, fastest techs and terrible for a shop that can't keep the bay full, because a flat rate tech with no cars to work on makes nothing.
Hourly is more predictable for both sides
Hourly pay guarantees the tech a paycheck regardless of how slow the week is, and it removes the incentive to rush a diagnostic job or skip steps to beat book time. It's the better starting point for shops under about six bays or with inconsistent car count.
A hybrid often fits mid-size shops best
Many shops land on a guaranteed hourly floor with a flat rate or production bonus on top once a tech clears a threshold of billed hours. This protects the tech in slow weeks and still rewards speed and skill in busy ones.
Flat rate vs hourly, same tech, slow week vs busy week
| Hourly pay, slow week (30 hrs worked)$24/hr guaranteed | $720 |
|---|---|
| Flat rate pay, slow week (18 billed hrs)$30/flat hr, but fewer jobs available | $540 |
| Hourly pay, busy week (45 hrs worked) | $1,080 |
| Flat rate pay, busy week (55 billed hrs)tech beat book time consistently | $1,650 |
The math: Flat rate pay = billed flat rate hours times the tech's flat rate. Hourly pay = hours actually worked times hourly wage, regardless of billed hours.
Where owners get this wrong
- Switching a shop to flat rate before car count can reliably keep bays full.
- Using outdated or inflated book times that let techs earn without matching real skill.
- Not guaranteeing any floor, which pushes good techs to leave for a shop that will.
Worth knowing: Check your state's rules on flat rate and minimum wage true-up requirements, several states require you to true up flat rate pay to at least minimum wage for all hours clocked.
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