You Know Your Auto Repair Shop Numbers. Now Find Out If They're Actually Good.

Find out what shops in your state are charging, and how to set a labor rate that keeps your shop profitable

In the automotive repair industry, your labor rate is more than just a number on an invoice — it is one of the key metrics that drives your business's profitability and overall growth. For shop owners, staying competitive while maintaining healthy margins requires a clear understanding of how labor costs fluctuate across the country. But knowing the national average is only half the picture. The more important question is: how does your shop compare?

Whether you are running a small independent shop or a high-volume operation, knowing where you stand relative to the average labor rate in your state — and against top-performing shops in your market — is essential.

This guide covers the current landscape of automotive repair labor rates across all 50 states, the factors that drive those numbers, and a step-by-step roadmap for setting a rate that supports your shop's long-term success.

Methodology and Key Terms

Tekmetric built this auto repair shop index as a community resource, backed by data from more than 10,000 shops across North America. Shops can use this tool to benchmark themselves and see how they compare state by state.

Key Terms to Know

Labor rate: The retail price per hour charged to the customer for repair services.

Flat-rate: A pricing model where a job is billed based on a predetermined number of hours from a labor guide, regardless of how long the actual repair takes.

Effective labor rate (ELR): The actual amount of labor revenue earned per billed hour after accounting for discounts, menu pricing, and unbilled time.

Understanding these terms will help you interpret the data below and apply it to your specific situation.

Mechanic Labor Rates by State

The average labor rate across the United States is $132 per hour, with the lowest state at $85 per hour and the highest at $197 per hour. Labor rates vary significantly by state, primarily driven by local cost of living and competition.

📊 See How Your Shop Compares — Free

The data below tells you what shops in your state are charging. But the labor rate is only one piece of the picture. The Tekmetric Shop Index lets you benchmark your shop across the four metrics that actually drive profitability — ARO, car count, parts margin, and effective labor rate — against thousands of real shops nationwide.

It's free, takes less than two minutes, and requires no Tekmetric account.

➡ Benchmark Your Shop Now →

Labor Rates by State

• Alabama: $123 per hour
• Alaska: $151 per hour
• Arizona: $147 per hour
• Arkansas: $144 per hour
• California: $163 per hour
• Colorado: $150 per hour
• Connecticut: $174 per hour
• Delaware: $142 per hour
• Florida: $154 per hour
• Georgia: $135 per hour
• Hawaii: $139 per hour
• Idaho: $133 per hour
• Illinois: $132 per hour
• Indiana: $121 per hour
• Iowa: $123 per hour
• Kansas: $117 per hour
• Kentucky: $121 per hour
• Louisiana: $136 per hour
• Maine: $113 per hour
• Maryland: $138 per hour
• Massachusetts: $130 per hour
• Michigan: $125 per hour
• Minnesota: $133 per hour
• Mississippi: $113 per hour
• Missouri: $117 per hour
• Montana: $136 per hour
• Nebraska: $125 per hour
• Nevada: $144 per hour
• New Hampshire: $125 per hour
• New Jersey: $141 per hour
• New Mexico: $140 per hour
• New York: $121 per hour
• North Carolina: $118 per hour
• North Dakota: $129 per hour
• Ohio: $125 per hour
• Oklahoma: $129 per hour
• Oregon: $147 per hour
• Pennsylvania: $114 per hour
• Rhode Island: $133 per hour
• South Carolina: $126 per hour
• South Dakota: $118 per hour
• Tennessee: $125 per hour
• Texas: $197 per hour — most expensive state
• Utah: $137 per hour
• Vermont: $102 per hour
• Virginia: $133 per hour
• Washington: $148 per hour
• West Virginia: $85 per hour — lowest in the nation
• Wisconsin: $121 per hour
• Wyoming: $134 per hour

Factors That Impact Automotive Labor Rates

Why do auto repair labor rates vary so widely from state to state? A few key factors drive the differences.

Cost of Living

In states with a higher cost of living, shop owners face higher wages to attract technicians, more expensive rent, and elevated utility and supply costs. Those overhead realities push labor rates up — not because shops are padding their margins, but because the math demands it.

Shop Type and Specialization

Dealerships typically carry the highest labor rates because of their overhead, factory-trained technicians, and reliance on OEM parts. Independent shops often have more pricing flexibility, particularly for routine services like oil changes. Specialty shops — focused on European vehicles, diesel, or performance — tend to command higher rates as well.

➡ Benchmark Your Shop Now →

Technician Expertise and Certifications

A diagnostic job requires a different skill set than a brake job. Shops that employ ASE-certified technicians or master technicians can and should charge accordingly. The rate reflects the expertise required to do the work correctly.

How to Set Your Labor Rate (Step by Step)

Setting your rate shouldn't be based on what the shop down the street is charging. It should be a data-driven decision grounded in your actual costs and performance targets.

Step 1: Calculate Your "Loaded" Labor Cost

Start with what it actually costs you to have a technician on the floor. This includes:

• Wages and overtime
• Payroll taxes
• Benefits (health insurance, 401k)
• Workers' comp and liability insurance
• Training and certifications

Divide that total annual cost by the number of billable hours that technician produces in a year. That's your loaded cost — and it doesn't include any profit margin yet.

Step 2: Account for Overhead

Your labor revenue also needs to cover the cost of running the business:

• Rent
• Utilities and shop supplies
• Marketing and software
• Taxes

Step 3: Determine Your Target Profit Margin

Tekmetric shops average 65% labor profit margins. If your loaded cost for a technician is $45 per hour and you want a 65% margin, your base labor rate should be at least $128 per hour.

Step 4: Benchmark Against Your Market

Your internal numbers come first, but you can't ignore the local market. If your rate is $128 and every comparable independent in your area is at $100, you need to either clearly justify your value — through better inspections, faster turnaround, stronger communication — or find ways to reduce overhead. Benchmark against shops of similar size, service mix, and geography.

Step 5: Implement a Labor Matrix

Not every repair order is equal. Shops that implement a labor matrix can automatically adjust rates based on job complexity — billing more appropriately for diagnostic work or specialty repairs without manually recalculating every estimate.

➡ Benchmark Your Shop Now →

How Tekmetric Helps Your Shop Stay Profitable

Managing labor rates manually is a recipe for inconsistency and missed revenue. Here's how Tekmetric gives you the tools and data to stay ahead.

Know Where You Stand with the Tekmetric Shop Index

Before you can optimize your labor rate, you need to know how your performance compares to other shops. The Tekmetric Shop Index gives you free, instant benchmarking across four metrics: ARO, car count, parts margin, and effective labor rate. Enter your shop's numbers and see exactly where you rank against thousands of shops nationwide — no account required, no sales call, no commitment.

You can't improve what you don't measure. This is where that work starts.

➡ Benchmark Your Shop Now →

Real-Time Profitability Tracking

Tekmetric's reporting features give you live visibility into ARO, car count, revenue, and technician productivity — so you always know how your shop is performing, not just at the end of the month.

Custom Labor and Parts Matrices

Tekmetric lets you build a labor matrix that automatically adjusts rates by job type. A custom parts matrix works the same way on the parts side, protecting your margins consistently across every repair order.

Digital Inspections That Justify Your Rate

Tekmetric's digital vehicle inspections let your team send photos and videos of needed repairs directly to a customer's phone. When a customer can see the worn brake pad or the leaking gasket for themselves, they're far more likely to approve the work — and far more comfortable with the rate attached to it.

Accurate Labor Guide Integration

Tekmetric integrates with industry-standard labor guides so your estimates are based on real, accurate times — not guesswork or memory. That means technicians get credited fairly under a flat-rate system, and your service advisers spend less time on paperwork and more time with customers.

Benchmark Your Insights Now

Knowing the average labor rate in your state gives you a useful reference point. But the shops that stay profitable long-term don't stop at state averages — they benchmark continuously, track the right metrics, and make adjustments based on data instead of instinct.

Your labor rate should reflect your actual overhead, your team's capabilities, and the quality of service your customers experience. Use the state data above as a starting point, then go deeper with the Tekmetric Shop Index to see how your shop compares across every metric that drives profitability.

Ready to see where you stand? Benchmark your shop free with the Tekmetric Shop Index →

Compare your shop's performance against real data from thousands of auto repair shops by state.

Benchmarking data is only useful when it changes what you do next.

If you've run your shop's numbers through the Tekmetric Shop Index and seen where you rank on ARO, car count, parts margin, and effective labor rate — good. You have a diagnosis. Now you need a plan.

This post walks through what each gap in your TSI results is actually signaling, which operational levers move the needle on each one, and how to build a focused 90-day improvement target that gives your team something concrete to work toward.

Start With the Biggest Gap

Your TSI results will show you four rankings. Resist the temptation to try to improve all four at once. The shops that make the most progress pick the metric with the largest gap and stay focused on it for a full quarter before adding another priority.

Trying to improve ARO, car count, parts margin, and effective labor rate simultaneously often means improving none of them because the operational changes required for each are different and can compete for your team's attention.

So step one is simple: look at your four rankings, find the biggest gap from the industry benchmark, and start there.

Gap: ARO Below Benchmark

If your average repair order is lagging, the most common root cause is inspection performance. Either digital vehicle inspections (DVIs) aren't being completed consistently, or they're being completed but not converted into approved work.

A few questions to answer before you act:

• What percentage of repair orders have a completed DVI attached?
• Of the DVIs sent to customers, what percentage include photos or video?
• What's your close ratio on recommended work?

If DVI completion is below 90%, that's almost always the first lever. Tekmetric's Inspection Report shows completion rates by technician, making it straightforward to identify who needs coaching and who's already performing well.

"Now I can look at everybody at a glance. I can be in a different state, different city and know exactly what's going on in each location all the time."  — Leroy Ingram, Ooroo Auto Care, Tekmetric Customer

If DVI completion is strong but close ratio is low, the issue is likely in how inspections are being communicated to customers — photo and video quality, the language in findings, how quickly the estimate follows the inspection.

Shops on Tekmetric also have access to the Parts and Labor Matrix, which protects against underpricing. It can be a quiet ARO killer that doesn't show up until you look at margin data.

➡ See how your ARO compares →

Gap: Car Count Below Benchmark

A car count gap can mean two different things depending on how it breaks down: you're not bringing in enough new customers, or your existing customers aren't returning at the rate they should. Both problems need attention, but they need different solutions.

For new customers, the questions are acquisition-focused. Tekmetric's online booking gives customers a way to find you and schedule an appointment 24/7 — filling bays without your team picking up the phone. The more friction you remove from the booking process, the more new customers follow through.

For returning customers, the questions shift to communication. Are declined jobs being followed up? Are customers receiving service reminders? Tekmetric Marketing automates follow-ups on declined work and scheduled maintenance intervals — so your team stays in contact with your car count without adding manual effort.

"Seven hundred and two dollars in ad spend has generated 11 net-new customers and $12,802 in new customer revenue — an 18.3x return on ad spend before factoring in the lifetime value of those customers returning for future visits."  — Tanner Markham, Phase 2 Automotive, Tekmetric Customer

➡ See how your car count compares →

Gap: Parts Margin Below Benchmark

A parts margin gap is almost always a pricing problem — either your markup isn't keeping up with cost increases, you're applying flat markup where a tiered matrix would protect margin better, or your team is manually overriding prices inconsistently.

The fix starts with reviewing your Parts Matrix in Tekmetric. A well-structured matrix automatically applies the right markup based on part cost ranges, removing the inconsistency that comes from individual pricing decisions at the job level.

After updating the matrix, run your Parts Purchased Report to verify that retail pricing is reflecting the changes accurately. This is also a good time to cross-reference against recent vendor invoices — if costs have moved significantly in the last 6 months, your matrix thresholds may need updating.

➡ See how your parts margin compares →

Gap: Effective Labor Rate Below Benchmark

If your effective labor rate is trailing your posted rate, the most common culprits are inconsistent discounting, flat-rate job structures that cap labor recovery, or package pricing that doesn't account for actual labor time.

Start by pulling your Discount Detail Report to see where and how often discounts are being applied. If they're being applied inconsistently across your team, that's a coaching conversation — and Tekmetric's real-time reporting makes it easy to see which service writers are discounting most frequently.

The Labor Matrix is the structural fix. Similar to the parts matrix, a tiered labor matrix adjusts the billed hours or dollar amount based on configured ranges, protecting margin without changing what customers see on the invoice.

➡ See how your effective labor rate compares →

Building a 90-Day Improvement Target

Once you've identified your primary gap and the lever that addresses it, the last step is turning it into a measurable target for the next 90 days.

A good 90-day target is specific, tied to a leading indicator, and gives your team something to track week over week. For example:

• ARO gap: "Increase DVI completion rate from 72% to 90% over 90 days, tracked weekly via Inspection Report"
• Car count gap: "Launch declined-job follow-up automation within 30 days; track returning car count monthly for 90 days"
• Parts margin gap: "Update Parts Matrix for all parts under $150 within two weeks; track parts margin weekly via Parts Purchased Report"
• Labor rate gap: "Reduce average discount percentage by 15% over 90 days, tracked via Discount Detail Report"

These aren't arbitrary numbers — they're examples of the leading-indicator approach that lets you see progress before the outcome metric moves. Set yours based on where you're actually starting, not where you want to end.

Check Your Rankings Quarterly

Your TSI results are a snapshot. Set a reminder to re-run the benchmarking every quarter so you can see whether your numbers are moving relative to the industry — not just relative to your own history.

The shops that use benchmarking most effectively are the ones that treat it as a recurring discipline, not a one-time exercise.

"Thanks to Tekmetric, we've really enhanced our business and are looking to expand. We're the #1 shop, 6 years in a row in Upstate New York."  — Chris Chevalier, AAA Auto Repair, Tekmetric Customer

➡ Benchmark your shop now →

Takeaways

• Start with your biggest gap — don't try to move all four metrics at once.
• ARO gaps usually trace back to DVI completion rates or close ratios.
• Car count gaps split into acquisition and retention problems — each needs a different fix.
• Parts margin gaps are almost always a pricing matrix issue.
• Effective labor rate gaps often come down to discounting habits and job structure.
• A 90-day leading-indicator target turns benchmarking data into team direction.

➡ Benchmark your shop now →

The Tekmetric Shop Index allows auto repair shops to benchmark themselves against thousands of Tekmetric shops nationwide

Most shop owners have a feel for how their business is doing. They know the slow weeks, the strong months, and whether the bays stayed full. What they often don't have is a good way to compare those numbers against anyone else.

That gap is where opportunity hides — and it's exactly what the Tekmetric Shop Index is built to close.

The Tekmetric Shop Index is a free benchmarking tool that lets you enter your shop's key metrics and instantly see how you stack up against more than 10,000 auto repair shops nationwide. No Tekmetric account is required. No commitments either. It's just an honest look at where your shop stands on the four numbers that matter most.

Top-performing shops track these metrics religiously — and they know exactly where they stand relative to the industry. Here's what each one means, why it matters, and how your numbers compare.

➡ Try the Tekmetric Shop Index →

1. Average Repair Order (ARO)

ARO is the average dollar amount of each repair order — total revenue divided by the number of cars you serviced. It's one of the most direct measures of how well your shop is selling and completing work.

A low ARO isn't always a bad sign on its own. But if your car count is healthy and your ARO is lagging, you could be leaving approved work on the table, underquoting, or missing opportunities to present needed repairs. A high ARO, on the other hand, means customers are approving more of the work their vehicles need.

ARO is also the metric most directly tied to your digital vehicle inspection process. Shops that complete digital vehicle inspections (DVIs) consistently — and share them with customers — tend to see higher approval rates and stronger AROs.

"I like the ease and the ability to be more transparent with my customers with detailed inspections and photos."  — Verified Tekmetric User, G2

➡ See how your ARO compares →

2. Car Count

Car count measures how many vehicles you service in a given period. It's the volume side of the revenue equation. ARO tells you how much you make per car; car count tells you how many cars you're making it on.

Both numbers matter. You can have a strong ARO and still struggle to grow revenue if car count is stagnant. And you can have a strong car count but a weak ARO if jobs aren't being sold thoroughly. Top shops keep an eye on both.

Car count breaks down further into new customers and returning customers — a distinction that matters when you're trying to understand whether your growth is coming from acquisition or retention.

"Customers can review inspection results, check estimates, and approve repairs with just a click. Everything is integrated, making our workflow way smoother than before."  — Verified Tekmetric User, G2

➡ See how your car count compares →

3. Parts Margin

Parts margin is the percentage of profit you're earning on the parts you sell. It's calculated as (retail price minus cost) divided by retail price.

This one is easy to overlook, especially if your shop has been using the same parts pricing for years. But small differences in parts margin have a compounding effect across hundreds of repair orders. If your parts pricing isn't keeping up with cost increases from your suppliers, your margin erodes quietly.

Top shops use tiered parts matrices that automatically adjust markup based on part cost ranges, protecting margin without requiring manual pricing decisions on every job.

"We were stuck at a certain level. … Once we made the switch, it just opened doors — payments, parts ordering, inventory — it all became more streamlined."  — Tim Lanier, Lanier Auto Group, Tekmetric Customer

➡ See how your parts margin compares →

4. Effective Labor Rate

Effective labor rate is the actual dollar amount your shop earns per labor hour — not your posted rate, but what you actually collect after discounts, flat-rate work, and packaged pricing.

A shop might post a $140/hour labor rate but collect significantly less per hour because of how jobs are built, discounted, or packaged. Tracking effective labor rate surfaces that gap and gives you something concrete to address.

This metric also helps you evaluate how well your labor matrix is working or whether you need one.

"I value its cloud-based agility and the way its real-time shop management board eliminates the bottleneck at the service desk … handling parts tracking and labor margins seamlessly."  — Verified Tekmetric User, G2

➡ See how your effective labor rate compares →

So Where Does Your Shop Stand?

These four metrics are the foundation of shop performance analysis. But knowing what they are is only half of it. The other half is knowing how your numbers compare — not to a theoretical ideal, but to real shops in the real industry.

That's what the Tekmetric Shop Index is built to show you. It's a free benchmarking tool that lets you enter your shop's numbers and instantly see how you compare to shops across the country on ARO, car count, parts margin, and effective labor rate. No Tekmetric account is required.

"With the implementation of Tekmetric we have seen a dramatic increase in business and positive feedback from customers."  — Verified Shop Owner using Tekmetric, G2

You can't improve what you don't measure. And you can't prioritize improvements without knowing where the gaps actually are.

Takeaways

• ARO measures revenue per vehicle. Strong shops track it and act on it.
• Car count captures volume. Both new and returning customers matter.
• Parts margin erodes quietly if you're not tracking it against your costs.
• Effective labor rate reveals the gap between your posted rate and what you actually collect.
• Benchmarking against real industry data turns these numbers into a roadmap.

See how your shop compares. The Tekmetric Shop Index is free, takes less than two minutes, and doesn't require a Tekmetric account.

,➡ Benchmark Your Shop Now →

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