Here is a quick example of what I am talking about. I just calculated new internal costing rates for 3 manufacturing plants. Same company, so things like insurance and overhead (part of what is generally referred to as G&A) are the same. Plant rates, OTOH, are specific and very different. I can't give you real numbers for what I hope are obvious reasons, but if one plant had a cost of $30/hour, plant 2 is at $40/hour, and plant 3 is at $46.50/hour. The numbers are not real, but the ratios are. These differences are caused by different facilities costs, different taxes, different wage rates (different skill requirements), different utilization rates, different equipment requirements, and a whole host of other factors. So one plant costs 155% of what my cheapest plant does. It is worth it because I get very different things from them.
Relative to a dive shop tech, one mechanic at a dealership needs more floor space to work (more $$), more equipment / tools and more expensive equipment / tools, greater variety, level, and value of parts inventories required (and bigger parts, all of which needs more expensive floor space), more expensive staff, more overhead support, more extensive / expensive ongoing training requirements with each model year (which by the way means more new expensive test equipment and special tools, and more things to be added to parts inventory).
Plus, as a business grows, its overhead grows. A small LDS should always have a lower cost structure than a larger business. They just don't need multiple levels of management, and many support jobs are combined into a single position. The LDS owner will likely do their own purchasing whereas the dealership will require a dedicated procurement agent (or more) with the level of work involved. The LDS owner will often do their own books, but the dealership will likely require multiple financial staff. I am sure you can think of other examples.
If you think a car tech gets ~ 20/hour, my suggestion would be that given the difference in required training, a LDS tech should probably top out at ~15/hour (anyone who knows what is normal can feel free to chime in, this is just a SWAG on my part). Again as a SWAG, I would suggest that if the G&A rate worked out to 100% which is probably reasonable, that gets you to a rate of $30/hour to cover costs, leaving $5/hour as profit. That is 14%, which is quite reasonable. If a LDS is charging $50/hour, there is even more room for higher overhead and / or profit.
Please take these numbers with a grain of salt. I have never looked at the books of a LDS, so I don't KNOW. But I do feel safe in saying that they would not continue to charge $35 or $50 for a service if they were losing money on it. I also feel safe in saying that I don't think many are in the LDS business thinking it will make them rich
Without spending time to develop for you a bunch of boring spreadsheets, this will hopefully give you a flavour.
