Billing for diagnostic time can be a contentious issue for many automotive service providers.

On the one hand, you’ve got more complex vehicles entering your service bays which require more advanced equipment and skills to properly analyze, pinpoint and fix a problem. At the same time, you need to ensure that A, your customers understand what’s required when it comes to diagnostics, and B, your technicians have both the capability and consistency to solve these kinds of problems on a repeat basis. 

According to Mark Lemay, a diagnostic specialist and automotive technical trainer who owns and operates Auto Aide Technical Services in Barrie, Ont., it’s important for service shop owners and managers to understand that because it requires more advanced skills to diagnose and repair vehicles and in many cases, part sales associated with this kind of work are minimal, you can’t charge the same labour rate as you would for a technician performing brake service.

Different rates

“You’ve got your most expensive equipment and you’ve got your highest-paid technicians doing the work, so it’s not fair to be charging the same rate as you would for other types of mechanical service or repairs.”

To make it work and be able to realize ROI, Lemay says shops need to consider a package structure. Such as having an initial, one-hour inspection and then a second and/or third package for the customer depending on the scope of the problem and the amount of time that’s likely required to solve the issue.

At Eldon Ingram NAPA AUTO PRO in Stratford, Ont., shop owner Rob Ingram says that a critical aspect of being able to bill effectively for diagnostic time concerns showing the value of it to your customers.

“You need to have systems and procedures in place to make sure you can consistently present your business as a professional operation,” states Ingram. Additionally, he says, the service advisor needs to be able to show the value of the diagnostic work to their customers.

And this starts by asking qualifying questions, such as how the vehicle behaves, such as does it stall while driving down the road, or does it only stall when the engine is cold? “If you don’t ask qualifying questions, you can end up having your technicians spending $150 per hour trying to pinpoint a problem that only happens on rainy days and it’s been warm and sunny for a week.” Needless to say, such situations end up very expensive and frustrating, both for the customer and the shop.

Qualifying questions

By asking qualifying questions, and notifying the customer of an initial diagnostic inspection and test drive that’s built into the price of the package offered to the customer, the shop is in a much better position to show the value of the services it provides.

Where shops often fall short, explains Ingram, is that they don’t actively promote these services and the staff within the business don’t promote each other, such as the service advisor promoting a technician’s expertise. Ultimately, Ingram says it comes down to mindset. “If the shop owner or manager knows they can show the value they provide through diagnostics services, they can actively promote that to both their staff and their customers, providing an opportunity for everyone to buy in.”

Chris Chesney, Vice President of Training & Operations at Repairify, notes that one way in which shops can show value is by not using the term “diagnostics” at all. Chesney explains that a better way of presenting it is by performing tests on the vehicle and providing an analysis of the data that results from those tests. In other words, performing a “triage” on the vehicle when it comes into the service bay. From there, the shop can structure the billing based on the data results—selling a series of tests and procedures, which includes validating those test results. “Half the time is spent testing, half the time validating—that’s how I would look at deploying it,” explains Chesney.

Managing Diagnostic ROI

Properly investing in diagnostics equipment and training is expensive, so for many service providers there needs to be careful consideration when doing so. Mark Lemay notes that in many cases, it simply isn’t economically feasible for a service centre to have a highly paid technician constantly performing diagnostic work. It also doesn’t make sense for the most senior technicians to be performing routine maintenance such as brake servicing when less qualified technicians can perform the same task for less money. 

For smaller shops, Lemay says that pooling resources with other facilities and sharing diagnostic technicians who they are able to invest in and train collectively can be a very effective way of maximizing returns. Another option; is for a shop to hire a mobile diagnostics service when they need it, though in this case, it can prove quite costly, plus there is no guarantee the mobile diagnostic technician will always be available when you need them. Plus, if you didn’t train a diagnostic technician it can be hard to determine the quality and consistency of the work they perform. Ultimately, for a service centre to effectively charge for diagnostic work, it needs to have confidence that its technicians are able to perform the work required, which in turn, allows the shop to bill for time accordingly.