Key #5 Marketing Expense

For this key number, we want to know what percent of total sales is spent on marketing – including discounts that are directly related to marketing (advertised specials, etc.)

Last month Acme Auto had total sales of $50,000.
Total marketing expense was $2,500.*
*Remember that this includes marketing discounts.
$2,500 ÷ $50,000 = 0.05

So, our key number is 5%

When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 4.0% and 5.5%.

Marketing expense:
Any cost with the primary purpose of promoting the shop in some manner to potential or existing customers.

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

Note:
The most notable exception to this key number would be the shop that is in an exceptionally good location for customer convenience and exposure because of the great deal of marketing which can be accomplished through the presentation of a facility. While the marketing expense in a shop like this may be as low as 1.0% or even less, the higher cost of the excellent location usually offsets it.