Key #8 Labor Gross Profit

For this key number, we want to know what percent of labor sales was profit. That is, the total sale price of labor sold minus the cost of that labor expressed as a percent of the total labor sales price. This is like parts gross profit except that instead of subtracting the cost of a part you are subtracting the cost of a technician to perform the repair.

Last month Acme Auto had total labor sales of $25,000. The cost of labor was $7,250. That was the amount of gross payroll for all technicians last month.
$25,000 less $7,250 = $17,750 profit.
$17,750 ÷ $25,000 = 0.71

So, our key number is 71%

When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 70% and 74%

Total labor sales:
Includes labor only. Does not include any parts or fees or other sales of any kind.
Gross profit:
The total profit on the sale of something before any expenses or other costs of any kind are deducted.