Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Blended labor rate
$142.90
Gap below your customer-pay rate
$12.10
Labor gross margin
67.8%
Monthly labor gross profit
$57,170
Share of hours at customer-pay rate
64.4%
Monthly labor revenue
$84,310
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How to use this
- 1Enter customer-pay hours per month (hrs).
- 2Enter customer-pay rate ($/hr).
- 3Enter warranty hours per month (hrs).
- 4Enter approved warranty rate ($/hr).
- 5Enter fleet / wholesale hours per month (hrs).
- 6Enter fleet / wholesale rate ($/hr).
- 7Enter loaded technician cost per hour ($/hr).
- 8Read your blended labor rate on the right — it updates as you type.
- 9Hit Share to keep the scenario or send it to someone.
About this calculator
Almost no shop bills every hour at the posted rate. Customer-pay work goes out at the door rate, manufacturer or extended-warranty work goes out at whatever rate the administrator approves, fleet and wholesale accounts get a negotiated discount, and internal work on your own lot vehicles bills at cost. Each of those buckets has a different rate and a different share of your hours, and the weighted average of all of them is the number that actually drives your labor gross profit. This calculator takes the hours and rate for each bucket and produces the blended rate, the gross profit at your loaded technician cost, and the dollar impact of your mix. The insight most owners get from running it is that mix matters more than the door rate. Raising your posted rate by ten dollars does nothing to the sixty percent of your hours locked into warranty schedules and fleet contracts. Shifting even ten percent of hours from a discounted bucket into customer pay usually moves the blended rate more than a rate increase would, and it does not risk losing retail customers. Use it before you renew a fleet contract or accept a new warranty program.
Worked example
Using the values the calculator loads with:
Inputs
- Customer-pay hours per month: 380 hrs
- Customer-pay rate: 155 $/hr
- Warranty hours per month: 120 hrs
- Approved warranty rate: 118 $/hr
- Fleet / wholesale hours per month: 90 hrs
- Fleet / wholesale rate: 125 $/hr
- Loaded technician cost per hour: 46 $/hr
Results
- Blended labor rate: $142.90
- Gap below your customer-pay rate: $12.10
- Labor gross margin: 67.8%
- Monthly labor gross profit: $57,170
- Share of hours at customer-pay rate: 64.4%
- Monthly labor revenue: $84,310
What each field means
Inputs
- Customer-pay hours per month (hrs)
- The customer-pay hours per month used in the calculation, measured in hrs. Starts at 380 hrs so you have a working example on load.
- Customer-pay rate ($/hr)
- The customer-pay rate used in the calculation, measured in $/hr. Starts at 155 $/hr so you have a working example on load.
- Warranty hours per month (hrs)
- The warranty hours per month used in the calculation, measured in hrs. Starts at 120 hrs so you have a working example on load.
- Approved warranty rate ($/hr)
- The approved warranty rate used in the calculation, measured in $/hr. Starts at 118 $/hr so you have a working example on load.
- Fleet / wholesale hours per month (hrs)
- The fleet / wholesale hours per month used in the calculation, measured in hrs. Starts at 90 hrs so you have a working example on load.
- Fleet / wholesale rate ($/hr)
- The fleet / wholesale rate used in the calculation, measured in $/hr. Starts at 125 $/hr so you have a working example on load.
- Loaded technician cost per hour ($/hr)
- The loaded technician cost per hour used in the calculation, measured in $/hr. Starts at 46 $/hr so you have a working example on load.
Results
- Blended labor rate
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Gap below your customer-pay rate
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Labor gross margin
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly labor gross profit
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Share of hours at customer-pay rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly labor revenue
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
What is a healthy customer-pay share of hours?
For an independent shop, 65% or more of billed hours at the customer-pay rate is a strong position. Below about 50%, your profitability is largely controlled by rates other people set, and a single warranty schedule change or fleet renegotiation can swing your year.
Should I turn down fleet work with a low rate?
Not automatically. Fleet work fills slow days and stabilizes cash flow, which has real value. The test is whether it displaces customer-pay work. If your bays are full and fleet is pushing out retail jobs at a thirty-dollar-lower rate, it is costing you. If it fills otherwise idle hours, a lower rate still beats an empty bay.
What belongs in the loaded technician cost?
Base wage or flat-rate pay, payroll taxes, workers compensation, health benefits, paid time off, and training. That typically runs 25% to 40% above raw hourly wage. Using bare wage inflates your apparent gross margin and leads to underpricing.
Why does raising the door rate move this number so little?
Because a rate increase only applies to the customer-pay bucket. If customer pay is half your hours, a ten-dollar increase moves the blended rate five dollars. Changing the mix, or renegotiating a warranty and fleet rate at renewal, often produces a bigger result than a retail increase that risks customer pushback.
Should internal and comeback hours be in here?
Track them separately. Internal work on your own vehicles and warranty comebacks consume technician capacity at zero or negative rate, so folding them into this calculation as billed hours hides the problem. Measure them as a percentage of total available hours instead, and keep comebacks under 2%.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Effective Labor Rate Calculator
What you actually collect per billed labor hour, not your posted door rate.
Fleet Account Margin Calculator
See if a discounted fleet contract still clears your minimum margin at volume.
Shop Breakeven RO Count Calculator
How many repair orders per month you need just to cover fixed overhead.
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Blended Labor Rate by Customer Mix Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/blended-labor-rate-warranty-mix
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/blended-labor-rate-warranty-mix" target="_blank" rel="noopener">Blended Labor Rate by Customer Mix Calculator — RevenueLab</a> (2026).</p>
Source: [Blended Labor Rate by Customer Mix Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/blended-labor-rate-warranty-mix) (2026).