How shop owners calculate technician efficiency is one of the reasons ⅓ don’t take a paycheck.
Technician efficiency is calculated by dividing billable labor hours by paid hours, then multiplying by 100.
Technician Efficiency (%) = (Billable Hours ÷ Paid Hours) × 100
For most shops, the math is simple — but the way it’s applied is where things break down.
Here's a real-world example:
Your tech replaces a clutch on a W9 Kenworth. Book time says 10 hours. The job actually takes 15 hours. You bill the customer for 10 hours.
Result: 66% efficiency.
And this is where most shops make a critical mistake.
While low efficiency can be a tech issue, it can also be a front office quoting, billing problem and workflow problem.
All of these factors can play into why ⅓ of shop owners don't even take a paycheck!
Here's how you fix it:
#1 — Bill for EVERYTHING
Changing a clutch isn't just changing a clutch. You're removing the flywheel. You're replacing the input shaft on the transmission. That W9 is 20 years old — bolts are seized, access is worse, and everything takes longer.
Book time says 10 hours for a new truck. This one's going to take 12-13 hours minimum.
#2 — Stop chasing efficiency alone
I don't care about technician efficiency by itself. It's a vanity metric.
Here's why: Bob worked 10 hours last week and billed 10 hours. Congratulations — Bob is 100% efficient!
You can't pay your bills when a tech only bills 10 hours per week.
The number that actually matters? Billed hours. That's how you get paid.
Efficiency is only useful when it helps you understand why billed hours are low — bad quotes, workflow issues, scheduling problems, or scope creep.
So here's my question for you:
→ Do you trust your technician's efficiency numbers, or do they feel misleading?
→ How often does low efficiency turn out to be a quoting problem?
→ If you had to focus on one number — efficiency or billed hours — which would you choose?