February 22, 2017 at 12:13 pm #23713
Site Administrator / Forum ModeratorKeymaster
This series includes 24 Key Numbers. If you work on getting all of them in the ranges mentioned, your shop should be solidly profitable.
Key Numbers 101 Series – Key # 9 Gross Profit per Sold Hour
For this key number, we want to know how many gross profit dollars are being generated during an average sold hour over a certain period of time. It can also be used to calculate the gross profit per sold hour on individual operations and estimates.
Last month at Acme Auto the techs produced 275 total sold hours. The gross profit last month was $30,250. To calculate this number, see Key # 9 – Total Gross Profit
$30,250 ÷ 275 hours = $110
So, our Key Number is $110
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between $100 and $110. See note below regarding this number.
There is a fill in the blank form where you can automatically calculate this number for your shop in our Business Calculators area available to Premium Members.
This is a great learning and working tool for anyone in your shop who should know what the key numbers need to be.
Definitions and notes:
Gross profit: The total profit on the sale of something before any expenses or other costs of any kind are deducted.
Note: Most of the numbers in this series are percentages which generally remain the same regardless of area or when they are calculated. For Total Gross Profit per Sold Hour the Key Number is a dollar amount. This should be considered relative to location and time. In our example the amount was for 2016 in the US Midwest.
Copyright © 2016 Automotive Management Network
You must be logged in to reply to this topic.