Final Wrap: Crystal Balls, Darts And Other Ways Not To Set Rates - Engine Builder Magazine

Final Wrap: Crystal Balls, Darts And Other Ways Not To Set Rates

I never jumped off a bridge when I was a kid. None of my friends did, either, come to think of it, but that never stopped my dear mother from cautioning me against it.

I’m sure your mother said basically the same thing. No matter what you wanted to do because someone else told you to – whether it was rollerskating down the biggest hill in town, drinking as much cola as possible just to see how big a burp you could make, or hitting the wasp nest with a broom stick – Mom would throw in that famous line: “If they all jumped off a bridge, would you do it too?”

Of course, she usually was right, and she knew that we would be better off heeding her advice. She was definitely thinking of our best interest.

Sadly, many engine builders seem to have forgotten their mothers’ words. At least, that’s the impression I got after reading some of the comments from respondents to our recent “Salary and Benefits” survey.

Believe me, I’m grateful to all the busy shop owners who took the time to respond to our questionnaires, whether on-line or by returning a fax. I appreciate how busy you are and recognize that this took time from your busy day.

But to see a number of people respond to the open-ended question “Please write in how you determine your hourly shop rate” with “I charge what the market will bear,” is, well, akin to jumping off a bridge because someone told you to.

For years, you’ve been reading in these pages about the need to “know your numbers,” to have the necessary detail of your actual costs to be able to set your costs to produce a satisfactory profit. Business leaders, association executives, technical professionals and others say that the resources are available to allow machine shop owners and engine builders to understand the details of their daily operations.

Yet, the answer to the question often continues to be, “What I thought was fair for my market.”

I got an email from Earl Comer, Comer and Culp Engines and Performance, in Sydney, OH, the other day. “Over the years, I have watched a lot of machine shops go out of business or bankrupt,” writes Earl. “(As an industry) we know that the prices we charge have not even kept pace with inflation. In 1974, I was charging $60 for a V8 valve job. If I do nothing but add the rate of inflation to that price, I get $260. That doesn’t take into account the fact that I used to grind seats with a $2,500 grinder and today it takes a $40,000 seat and guide machine.”

A few months back, we published a letter from a shop owner who suggested that shops need to have a flat-rate guide of some sort to better support their hourly rates. “Rather than going by pricing that was determined in the 1950s or 1960s, this industry needs to know how long it actually takes to do a job and price it accordingly.”

Earl Comer agrees. “Two years ago, I looked up what the labor rate was for grinding the valves on a 350 Chevy pickup. The rate was for 16 hours. I subtracted R&R heads for this job and came up with 6 hours to grind the valves. So my local dealer who charges $70 per hour is charging his customer $420 for a job that I charge him $150 for – and he complains that it’s too high. Who’s the fool here? Yes, we need a flat rate manual. It doesn’t mean you have to charge that but then again you have a way to justify what you do charge.”

Another interested reader, Doug Barbour, from Rockville, MD, suggests that a flat rate manual only solves part of the problem. “My difficulty in pricing jobs stems from the reality that different employees spend differing amounts of time to do the same job. I have priced jobs according to how long it takes ME to do the job but then realized that it actually takes my employees 30 percent longer to do the same job. If I am motivated to price the job according to how long it takes the slower employee to complete the job, it does nothing to encourage efficiency, and is unfair to the customer. Usually, I settle for somewhere in between.”

The discussion about flat rate manuals is a great one and I urge you to voice your opinion. But it doesn’t get to the basic point of my column this month – no matter how you choose to price your jobs, whether per job, per hour or by some other method, if you’re setting your rates based on some number you “think” makes sense, you’re doing little more than throwing darts in the dark.

Your business is unique and basing your prices on what you think someone else would charge is probably not the best solution. If they told you to work for free, would you?

Comments? Contact me at [email protected].

You May Also Like

The Road to AAPEX Season 2, Ep 4

Part 1 – A good project car brings people together. Driving the rare Lincoln Blackwood into Ohio Technical College (OTC) turned heads. And once Babcox Media’s Joe Keene, an ASE-certified technician, and the technicians-in-training at OTC got to pop the hood and slide under it on a creeper to get their hands in it, its

Part 1 – A good project car brings people together. Driving the rare Lincoln Blackwood into Ohio Technical College (OTC) turned heads. And once Babcox Media’s Joe Keene, an ASE-certified technician, and the technicians-in-training at OTC got to pop the hood and slide under it on a creeper to get their hands in it, its service needs raised eyebrows.

The Road to AAPEX Season 2, Ep 3

Just 3,356 Lincoln Blackwoods exist in the world. For comparison, the Ford F-150—the Blackwood’s inspiration—has spawned more than 40 million since its launch in 1948. Guess which one is harder to track down parts for? Babcox Media’s Joe Keene, an ASE-certified technician, has tracked down his fair share of elusive parts, but fixing up a

The Road to AAPEX Season 2, Ep 2

This year’s Road to AAPEX is a tale of two roads: One metaphorical, paved with questions that face the automotive aftermarket like the impact of EV adoption and sustainability efforts; and one quite literal, that was paved at the start of the 20th century and conceptualized the first transcontinental highway. The Lincoln Highway, which begins

The Road to AAPEX Season 2, Ep 1

Last year, the idea was simple: Find a junker, fix it up with the best from the automotive aftermarket, and drive it to Las Vegas for AAPEX 2022. This year, it’s anything but simple. Related Articles – Race Oils – Facts About Engine Bearings – Does Connecting Rod Length Matter? The automotive aftermarket is at

What’s a Ford Sidevalve Engine?

It looks like an ordinary inline 4-cylinder flathead engine. Essentially it is, but it has quite a cult following here in the UK.

Other Posts
LTR Engine Build

This Late Model Engines build is centered around Concept Performance’s new LTR block, which is the first aftermarket as-cast aluminum Gen V LT block. 

A Look at Lead Times

Lead times are no longer months upon months as they were in the middle of 2020 and throughout 2021, but the situation is still of some concern, and it’s forced engine builders to get creative at times.

LS Intake Manifolds

LS swaps are popular for many reasons, but there are a lot of variations and details to sort through – more of them than you may expect – and many of them are associated with the intake manifold.

Choosing the Correct Block for Your LS Engine Build

Whether you’re scouring junkyards, ordering cores, investigating factory options, looking at aftermarket cast iron or aluminum blocks, or spending big bucks on billet LS blocks, you’ve probably noticed it’s been harder to find exactly what you want for the foundation of your LS build than it historically has.