Effective labor rate

Definition

What a shop actually earns per billed hour after discounts and warranty work.

Why It Matters

It is the real price of the shop's core product, and the gap between the posted rate and this one is a measure of discounting and warranty drag nobody advertises. An improvement here falls almost entirely to profit, which makes it the first lever a new owner reaches for and the reason a seller may already have pulled it. Ask how the rate has moved over three years: a shop that raised it last quarter has borrowed from your upside.