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Key #1 Payroll Cost

Category: Costs

For this key number, we want to know what percent of total sales is spent on gross payroll for all employees of every type except the business owner.


Last month Acme Auto had total sales of $50,000.
Total gross payroll for everyone except the owner was $12,000.
$12,000 ÷ $50,000 = 0.24

So, our key number is 24%

When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 22% and 27%.


Gross payroll:
Total regular pay before anything is deducted. Does not include any benefits or non-regular compensation.
Example: Joe works 40 hours at $15 per hour which equals $600. He also received $250 in incentive pay, so his gross pay is $850.

Total sales:
Includes sales of all parts, shop supplies, labor, sublet, and tires.

Payroll Cost Percent of Total Sales Calculator