How should a repair shop set its hourly rate?

Start from what the bench has to cover rather than from what competitors charge. Add your monthly overhead to the fully-loaded cost of the technician, divide by the hours that are genuinely billable in a month — not the hours the shop is open, which is typically 30-40% higher — and add the profit you intend to make. That figure is your floor. Competitor pricing tells you what the market will bear above that floor; it cannot tell you whether you can survive below it.