June 22, 2017 at 9:54 am #26685
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 # 21 – Average RO
For key number 21 we want to know the average dollar amount per RO (repair order).
Last month Acme Auto had total sales of $50,000 and serviced 146 vehicles.
$50,000 ÷ 146 = $342.46
So, key number 21 is $342 – Average RO.
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between $400 and $525.
here 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.
Total sales: All sales of all kinds – parts, labor, tires, and anything else that is sold.
Note: Most of the numbers in this series are percentages which generally remain the same regardless of area or when they are calculated. For Average RO, the Key Number is a dollar amount. This should be considered relative to location and time. In our example, the amount was for 2017 in the US Midwest.
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616-340-2380June 25, 2017 at 5:38 pm #26746
Average Repair Order (ARO) will vary widely depending on how your business is structured and marketed. I’d bet a shop that specializes in high-end cars like say hmmm… Mercedes would have an ARO quite a bit higher than $400.
Our shop is a transmission specialty shop and we have 2 main Key Numbers. ARO and MARO. You’ve already accurately described what ARO is. For us, MARO is Major Average Repair Order. In the transmission industry, the differentiator between major and minor work is defined as if the transmission has to be removed from the vehicle or not.
If the transmission has to be removed, that’s major work. Everything else, including in-the-vehicle repairs and services, are considered minor.
At our transmission shop, our ARO was slightly over $1,700. (All word divided by the number of vehicles.) However, our MARO (Major job revenue divided by the number of major jobs) was almost $3,600.
While it’s not uncommon for a General Repair (GR) shop to write 25 or more tickets a day, it was a rare event for our transmission shop to write 25 tickets A WEEK! Basically, lower volume was offset by higher ticket totals due to the nature of the business.
Something to think about.
J. Larry Bloodworth, CMATJune 26, 2017 at 10:03 am #26758
Good points, Larry.
Another interesting thing about most indie shops with higher average R.O. is that it is often assumed that the shop sells a bit more on every car, however the reason is usually more that the shop tends to sell large jobs on a regular basis.
5355 Plainfield Ave. NE
Grand Rapids, MI 49525
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