Pricing your labour rate is one of the most important decisions you'll make as a workshop owner. Charge too little and you're leaving money on the table. Charge too much and customers walk. Here's how to find your sweet spot.
This guide covers current NZ labour rate benchmarks, how to calculate your true costs, regional variations, and strategies to increase your rates without losing customers.
NZ Average
$95-120
per hour (excl GST)
Specialist/Euro
$130-180
per hour (excl GST)
Dealerships
$150-200+
per hour (excl GST)
↓ In this guide
🗺️ NZ Mechanic Labour Rates by Region (2025)
Labour rates vary significantly across New Zealand. Auckland commands the highest rates due to higher operating costs, while regional areas tend to be lower but often have less competition.
| Region | General Servicing | Repairs/Diagnostics | Specialist/European |
|---|---|---|---|
| Auckland | $100-130 | $120-150 | $150-200 |
| Wellington | $95-120 | $110-140 | $140-180 |
| Christchurch | $90-115 | $105-130 | $130-170 |
| Hamilton/Tauranga | $85-110 | $100-125 | $125-160 |
| Regional/Rural | $75-100 | $90-115 | $110-150 |
* All rates exclude GST. Rates based on industry surveys and workshop feedback, 2024-2025.
💡 Pro tip
Don't just match your competitors. If you provide better service, cleaner facilities, or faster turnaround, you can charge 10-20% more. Customers pay for quality and convenience.
🧮 How to Calculate Your Labour Rate
Your labour rate needs to cover all costs and leave profit. Here's the formula successful workshops use:
The Formula
Labour Rate = (Total Costs ÷ Billable Hours) + Profit Margin
Total Costs
Wages, rent, utilities, insurance, tools, software
Billable Hours
Realistic hours you can bill (not total hours worked)
Profit Margin
15-25% minimum for healthy business
Step-by-Step Calculation
Let's work through a real example for a small workshop:
Calculate annual costs
Wages ($85k) + Rent ($30k) + Insurance ($8k) + Utilities ($6k) + Tools/Equipment ($10k) + Software ($2k) + Other ($9k) = $150,000
Calculate billable hours
48 weeks × 40 hours × 75% efficiency = 1,440 billable hours/year
Calculate break-even rate
$150,000 ÷ 1,440 hours = $104/hour (just to cover costs)
Add profit margin (20%)
$104 × 1.20 = $125/hour (your target rate)
📊 Track your actual numbers
Workshop management software like Hoist tracks your actual billable hours, job profitability, and costs automatically. This data helps you set accurate rates based on real performance, not guesswork.
📈 How to Increase Your Rates (Without Losing Customers)
If you haven't raised your rates in the past year, you're probably undercharging. Here's how to increase rates strategically:
Raise rates for new customers first
New customers don't know your old rates. Start charging your new rate immediately for new bookings, then gradually increase for existing customers.
Annual increases (small and regular)
A 5% annual increase is barely noticed. Waiting 3 years then raising 20% causes sticker shock. Make it routine and communicate it clearly.
Add value before raising prices
Improve your waiting area, offer pickup/dropoff, send progress updates. When you improve the experience, price increases feel justified.
Communicate professionally
"Due to increased operating costs, our rates will increase by $10/hour from [date]." Simple, honest, professional. Most customers understand.
🗣️ Real talk about rate increases
You will lose some customers when you raise rates. That's okay. The customers who leave over a $10/hour increase are often your most price-sensitive, time-consuming clients.
The maths usually works out: losing 10% of customers but charging 15% more = more profit with less stress.
⚠️ 5 Pricing Mistakes That Kill Workshop Profits
Pricing based on competitors only
Your costs are different. Your service is different. Use competitor rates as a reference, not your pricing strategy.
Forgetting to include all costs
ACC levies, tool replacement, training, software subscriptions, vehicle costs – they all need to be factored into your rate.
Overestimating billable hours
You don't bill for every hour you're at work. Customer calls, quotes, cleaning, admin – be realistic. 70-80% efficiency is typical.
Not charging for diagnostics
Diagnostics is skilled work. Charge for it. "Free diagnostics" attracts tyre-kickers and devalues your expertise.
Discounting too easily
Every discount comes straight off your profit. A 10% discount on a job with 20% margin cuts your profit in half.
💰 Different Rate Structures Explained
There's more than one way to charge for your work:
| Method | How it works | Best for |
|---|---|---|
| Hourly rate | Charge for actual time spent | Complex repairs, diagnostics, unknown scope |
| Flat rate / Book time | Charge based on standard job times | Routine services, common repairs |
| Menu pricing | Fixed prices for specific services | Oil changes, WoF, brake pads |
| Tiered rates | Different rates for different work types | Workshops doing both general and specialist work |
✅ Recommended approach
Most successful NZ workshops use a combination: menu pricing for common services (customers like knowing the cost upfront) and hourly rates for repairs and diagnostics (protects you from unknown scope).
📊
Track your true profitability
Hoist automatically tracks job costs, billable hours, and profit margins so you can price with confidence.
Start Free Trial❓ Frequently Asked Questions
What is the average mechanic labour rate in New Zealand? ▼
The average mechanic labour rate in New Zealand ranges from $95-120 per hour (excluding GST) for general servicing and repairs. Rates vary by region, with Auckland typically charging $100-130/hour and regional areas charging $75-100/hour. Specialist and European vehicle workshops often charge $130-180/hour.
How often should I increase my labour rates? ▼
Most successful workshops review and adjust their rates annually. A small annual increase of 3-5% is easier for customers to accept than large increases every few years. Consider increasing rates when your costs increase, when you add new services or equipment, or when demand exceeds capacity.
Should I charge GST on top of my labour rate? ▼
If your business is GST registered (required if turnover exceeds $60,000), you must charge 15% GST on your labour. You can quote either GST-inclusive or GST-exclusive rates, but must clearly indicate which. Most B2B workshops quote excluding GST, while consumer-facing workshops often quote GST-inclusive for clarity.
How do I know if my labour rate is too low? ▼
Signs your rate is too low: you're always busy but not making money, you can't afford to replace equipment, you're paying yourself less than you'd earn as an employee, or your rate is significantly below the regional average. Use the formula in this guide to calculate your true break-even rate.
Should I charge differently for different types of work? ▼
Yes, tiered pricing is common and makes sense. Diagnostic work requires expensive equipment and specialist knowledge – charge more. Routine servicing is faster and more predictable – you can offer competitive fixed prices. European and luxury vehicles typically command 20-30% higher rates due to specialised training and tools required.
Disclaimer: The rates and figures in this guide are based on industry research and workshop feedback as of 2025. Your actual rates should be based on your specific costs and market. If you have updated information, please contact us at accounts@hoist.nz.