Gut-Checking the Ceiling — Are Your Goals Realistic?
Test your revenue plan against technician capacity, bay utilization, and billed hours per RO before locking in targets.
You’ve got goals for labor and parts. Great. But here’s the truth: not every goal is achievable with your current team, bays, and car count. Before you floor it, you’ve got to gut-check the ceiling.
In the last article, you set clear goals for labor (ELR, efficiency, paid hours) and parts (ARPO, RO count). That’s the right first step. But before those targets become the basis of your revenue plan, you need to make sure they’re achievable with your current team, bays, and car count.
We’ll test your goals from three angles: billed hours per year, bay utilization, and billed hours per repair order (H/RO).
1. Billed Hours per Year (Tech Capacity)
🛠️ Why it matters: In the goal-setting exercise, you picked a shop-wide efficiency target. Now you need to check if the total billed hours that flow from it are realistic for each tech.
📊 How to calculate:
A full-time tech works ~1,472 paid hours/year.
At 85% efficiency = ~1,251 billed hours.
At 90% efficiency = ~1,325 billed hours.
👉 Example: If the labor revenue goal you built requires 1,500 billed hours/tech, it won’t hold. Keep goals inside the 1,250–1,325 billed hour range per tech.
📈 Benchmarks: Solid shops = 80–85% efficiency. Top performers = 90%+ (AutoVitals).
2. Effective Bay Utilization
🛠️ Why it matters: You also set a paid-hours goal. The next step is to test whether your bays can physically support that much work.
📊 How to calculate:
Bay Hours = Bay Count × Shift Hours × Days Open
This gives you the maximum number of hours available in a given period.
👉 Example: 6 bays × 8 hours/day × 22 days = 1,056 bay hours/month.
If your plan requires 1,200 billed hours but your bays only allow for 1,056, your target isn’t achievable without changes.
📈 Benchmarks: Industry average utilization = ~70%. Best operators = 85–90% (FinModelsLab).
3. Billed Hours per Repair Order (H/RO)
🛠️ Why it matters: This metric shows both your job mix and how effective advisors are at capturing work. It’s the link between inspections, estimates, and what actually gets billed.
📊 How to calculate:
Billed Hours per RO = Total Billed Hours ÷ Number of Repair Orders
📈 Benchmarks:
Industry average: 2.2–2.5 H/RO (NADA; AutoSuccess)
High-performing independents: 2.7–3.0
Specialty/high-line shops: 3.0–4.0 (Center for Performance Improvement)
👉 Example: If you’re currently at 2.7 and set a goal of 3.5, you’ll need system changes—better inspections, bundled services, and stronger advisor training—before that goal is realistic.
Pulling It Together
Ceilings to remember:
Tech capacity: 1,250–1,325 billed hours/year per tech.
Bay ceiling: 70% is normal, 85–90% is top.
Job mix: 2.5–3.0 H/RO is strong, higher requires real changes.
If your goals sit inside these, you’re tuned to perform. If not, it’s like asking a stock turbo to make racecar boost—it won’t hold.
Next Steps
Compare your revenue goals to these ceilings.
Adjust as needed: raise ELR, tighten inspections, or expand bays.
Review quarterly to keep your ceiling moving upward.
Want help running this gut-check on your own numbers? Ask me—I’ll show you where your shop’s true ceiling sits so you can set goals with confidence.
Sources
AutoVitals – Technician Capacity: Provides guidelines on technician efficiency, noting that ~85% efficiency is a solid target and 90%+ is exceptionalautovitals.comautovitals.com. Used to validate realistic billed hours per tech per year.
FinModelsLab – Bay Utilization: Notes that optimal technician/shop utilization ranges 70–85% in the industryfinmodelslab.com, supporting the idea that ~70% is average and 85% is a high benchmark for bay usage.
Ratchet+Wrench – Hours per RO: Reports an industry average of ~2.5 hours/RO for auto repair shops, with top benchmarks around 3.5+ hours/ROratchetandwrench.com. This frames typical vs. ambitious H/RO goals.
Center for Performance Improvement: Highlights that 3.0–4.0 hours/RO is a benchmark range for top performers, whereas many are stuck at 1.0–2.0centerforperformanceimprovement.com, illustrating the spectrum of H/RO in different shop environments.