Most independent garages set their labour rate by looking at the garage down the road and knocking a few pounds off. That is a way to stay busy, but it is not a way to stay in business. This guide covers what UK garages are actually charging, according to the surveys that exist, and then shows how to work out a rate from your own costs, with a worked example you can copy with your own numbers.

What garages charge now

There is no official national labour rate, and the surveys that do exist differ in how they count, so treat these as a range rather than a target.

SourceWhoFigure
What Car?, April 2023279 independent garages, all IGA membersAverage £76 an hour, ranging from £47 in Huddersfield to £141 in south-west London
IGA survey, 2020Independent garagesAverage £47 an hour
epyx 1link Index, June 2025Fleet work booked through the 1link networkFranchised workshops £90.64 an hour, non-franchised £51.69

The What Car? survey, reported by Tyrepress, is the most recent broad look at independents and shows two things: the average rose a long way between 2020 and 2023, and the gap between the cheapest and dearest areas is almost £100 an hour. The 1link figures, published by AM Online, are negotiated fleet rates rather than what a retail customer pays, so they sit lower, but they are the clearest like-for-like comparison of franchised against independent. Neither source states whether its figures include VAT, which is one more reason not to copy them blindly.

What they tell you is that a franchised dealer is typically charging a good deal more than the independent round the corner, and that an independent charging £47 an hour in 2026 is pricing at 2020 levels while paying 2026 costs.

Why "what everyone else charges" is the wrong starting point

Your labour rate has one job: to cover everything it costs to keep the doors open, pay you and your staff properly, and leave a profit, spread across the hours you can actually bill. The garage down the road has different rent, different staff, different equipment on finance and a different owner's wage. Their rate tells you what the local market will tolerate. It tells you nothing about whether you are making money.

Work out your rate from the costs up

Four steps. The numbers below are made up to show the method; put your own in.

1. Add up a year of costs

Everything the business pays out, whether or not a car is on the ramp. Take a two-person garage: the owner, who works on cars, plus one employed technician.

Total: £110,000 a year. If you leave your own wage out, you are not calculating a labour rate, you are calculating how cheaply you can work for free.

2. Count productive hours, not paid hours

Two people working 40 hours a week for 46 weeks (allowing for holidays, bank holidays and a bit of sickness) is 3,680 paid hours. You will not bill all of them. Quoting, phoning customers, collecting parts, moving cars, cleaning, waiting for a decision, redoing a job that went wrong: none of that goes on an invoice. Most small garages that measure it honestly land somewhere around 60 to 75 per cent of paid time being billable. Use 60 per cent until you have measured your own.

3,680 x 0.6 = 2,208 billable hours.

3. Divide one by the other

£110,000 / 2,208 = £49.82 an hour. That is your break-even rate. Charge less than that and the garage loses money on labour, however busy it looks.

4. Add a profit margin

Break-even is not the price. You need a margin for the quiet month, the ramp that fails, the tyre machine you will need in two years, and some reward for carrying the risk. A 25 per cent margin on the break-even rate gives £49.82 x 1.25 = £62.28, call it £62 an hour plus VAT. The exact margin is a conversation with your accountant, but it should not be zero.

Two checks on that number. First, at 2,208 billable hours and £62 an hour, labour alone brings in about £137,000, before parts. That is well over the £90,000 VAT registration threshold on GOV.UK, so a garage this size is almost certainly VAT registered and the rate you quote needs to be clear about whether VAT is on top. Second, parts margin is real money too, and if you make very little on parts the labour rate has to carry more. Our guide to VAT on parts and labour covers the invoicing side.

Where this fits in GarageDash: every job sheet records the hours booked and the hours actually spent, so after a month you know your real billable percentage rather than guessing at 60. Labour rate, parts margin and VAT are set once and applied to every quote and invoice. See garagedash.co.uk.

When to raise it

The honest answer is: whenever the calculation above says so, which is at least once a year. In practice these are the triggers:

Do it in one clean step with a date, tell regular customers before it happens, and do not apologise for it. A £5 rise on a two-hour job is £10; nobody who trusts you will move garage over that, and the ones who do were never paying for your time, only for the discount.

How to show it on invoices and quotes

A labour rate only works if the customer can see it. The complaints garages get about bills are almost never about the rate itself; they are about surprises. So:

The short version

Add up every cost for a year including your own wage. Count the hours you can honestly bill, not the hours you are there. Divide one by the other, add a margin, round to a number you can say out loud, and put it on every quote. Then rerun it every time something changes. The surveys tell you where the market is; the sums tell you whether you are in business.