How Do Shops Come Up with an Estimate?

Dale Bertram
May 31, 2012

These days, automotive service and repair shops are getting more calls than ever asking for an estimate. We understand that this is mostly due to the economy. People are understandably searching for the best value, and they want to make sure they can afford to pay for the service.

Many consumers want to know exactly how we arrive at the estimated price, so I thought I would take a moment and explain.

An estimate consists of three parts:

  1. The labor rate 
  2. Parts and supplies 
  3. Overhead

Labor Rate
An automotive service and repair shop estimates the labor rate by determining how long any given service or repair should take. These guidelines are further established by the manufacturer of each vehicle estimating the time it takes a trained technician to perform the specific task.

Parts and Supplies
Since we can’t fix things without parts and supplies, they are also included in the estimate. There are two kinds of parts—OEM and “Aftermarket.” The parts manufactured by the original car manufacturer are known as original equipment manufacturer or OEM parts. Aftermarket car parts include parts for replacement, collision, performance, and appearance. These parts are usually cheaper than the new OEM parts.

Shops such as mine make sure we use quality parts since they last longer and, in our opinion, save our customers more money down the road. These parts also come with a warranty, so if the part fails or doesn’t perform as it should, we can replace it without the consumer having to pay for it all over again. My shop has a 24,000-mile/2-year warranty, for example. Supplies include such things as replacement fluids and disposal fees.

Items that might be included in overhead costs are the building lease/mortgage and utilities; the constant training service technicians must take to keep up with technology; diagnostic and scanning equipment; and staff benefits.

The goal of independent service and repair shops is to provide quality parts and labor with an excellent warranty.

I hope this helps clarify how we arrive at an estimate.

Happy Motoring!

Dale Bertram

About the Author

I am an ASE-certified technician and have owned my own auto repair business, Fairway Auto Repair, since 1991. I am also an AMI graduate with a AAM degree, and continue my education by taking various courses during the year. I am a hard core car guy. Basically if it isn't mechanical, I'm not interested in it. This passion for vehicles has driven me throughout my life. My hobbies are my cars. I have two 1968 Camaros and a 1971 Camaro that my son and I built. I also raced an IMCA modified dirt track car for 10 years. In the last few years, I have been involved with autocross and road course racing events.  I have been married to my wife, Lorie, for 28 years and we have two children, Kaila (16) and Landon (13). I also enjoy the outdoors and hiking. Please check out my shop's page at

2 User Comments

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By , January 25, 2013
jiffy lube wants to charge me $350 for labor and $375 for parts to replace my AC Compressor, seems a bit much? what do think?
By , February 15, 2013
One reason to do it yourself is if you have an old car that is not worth fixing professionally. Use the professional who uses the best parts to make the car safe and dependable, like timing belts, suspension parts, wiring harnesses, and then the after market DIY for oil, filters,etc. Cheaper synthetic oil is something you can DIY for the price of conventional oil and extend the life of that old car.