10305 Hull Street Rd.
Midlothian, VA 23112

Labor Hours vs. Labor Units

Have you ever gone to a service or repair shop and been given an estimate listing the amount of time required to perform an operation, tell the company to go ahead with the work, and have them tell you the work is completed earlier then the written estimate stated only to have them charge you the original amount? We all have and this week we will try to explain to you why that is the case. In order to explain this phenomenon, we need to break down exactly what it is you are looking at on a written estimate that have a “time” figure listed next to an operation.


The labor hour as known in the repair/service industry is a flat rate labor time used to promote standardization among shops and estimators. These times, provided in several different repair manuals and databases, were derived from time studies performed by the manufacturers. These studies took place in laboratory like environments on new vehicles that had never been involved in any previous repair scenarios. The labor time was derived from the average of time spent performing the same operation three times in a row by one technician with no previous experience performing the operation and with all tools and parts right there with him. This became the flat rate labor time or “book” time.


Now, let’s take a look at the labor unit. By definition, a labor unit is the benchmark used to determine the labor value of an installation or repair. This is the most common terminology used in estimating, especially among contractors because it is not an absolute value. If three people performed the same job and all things being equal, there would be three different completion times. Labor units also take into consideration other factors such as the fact that there are more people involved in a repair process then simply the technician. It also factors such things as administration time, the time of the office staff involved in preparing the repair order, and the general overhead of the facility.


Seeing the difference in the terminology between labor hour and labor unit, the service and repair industry should adopt the use of labor unit on the prepared estimate and the final bills presented to customers. Until then, please remember this the next time you take your vehicle to be worked on and the shop tells you the job is complete in less time then the estimate stated. The time listed under labor hours for your bill is not only the amount of time the job takes to perform, but, also the time it takes for the office staff to prepare the work order, collect and process the bill, and the cost the facility pays for doing business.


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    10305 Hull Street Rd.
    Midlothian, VA 23112

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