How it is computed
Take labor sales for the period. Divide by the hours billed in the same period. Run it for customer-pay work on its own first, because that is the rate the store controls; then run it blended, so you can see how far warranty and internal work pull the whole shop from its door rate.
Why it matters
ELR prices every hour the building can produce. Two shops with the same technicians, the same stalls, and the same hours will post different gross if one collects twenty dollars less per hour, and nothing on the floor will look different.
It is the first place fixed-ops gross leaks. A discount given at the write-up desk never shows on the repair order as a discount; it shows up months later as an ELR that drifted below the door rate.
How operators read it
- Compare ELR to the posted door rate, as a percent collected. The gap is the sum of every decision made at the desk.
- Read it by writer. ELR is a shop number, but it is made one repair order at a time, and the spread between your best and worst writer is usually wider than the spread between you and the store across town.
- Pair it with hours. A rising ELR on falling hours can mean the shop is pricing itself out of work; a falling ELR on rising hours can mean the desk is buying volume with discounts.
Questions people ask
Is effective labor rate the same as the door rate?
No. The door rate is what is posted on the wall. ELR is what the store collected per billed hour once the month is over. The difference between them is where the coaching lives.
Should ELR include warranty and internal work?
Run both. Customer-pay ELR is the rate your people control. Blended ELR tells you how much of the shop's capacity is being sold at rates the manufacturer or the used-car department set.
How A.D.A.M. reads it
A.D.A.M. computes ELR as labor sales over billed hours from the repair-order detail, by writer and for the shop, and reads it beside the posted door rate. He reads it beside the numbers it trades against, names what the gap is worth, and leaves the decision where it belongs. What an AI advisor should do, and refuse to do.