Category: Gross Profit
For this key number, we want to know what percent of tire sales was profit. That is, the total sale price of tires sold minus the cost of those tires expressed as a percent of the total tire sales price.
Last month Acme Auto had total tire sales of $2,000.
The cost of those tires was $1,500.
$2,000 minus $1,500 = $500 profit.
$500 ÷ $2,000 = 0.25
So, our key number is 25%
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 20% and 26%
Total tire sales:
Includes only the tires themselves. Does not include labor to install the tires. Does not include other parts sold with the tires – even if they are “tire related” parts.
The total profit on the sale of something before any expenses or other costs of any kind are deducted.