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Key Numbers 101 Series – Key # 7 Tire Gross Profit
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 # 7 Tire 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 less 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 less $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%
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.
https://www.automotivemanagementnetwork.com/business-calculators/
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:
Total tire sales: Includes the tires only. Does not include labor to install the tires. Does not include other parts sold with the tires – even if they are “tire related” parts.
Gross profit: The total profit on the sale of something before any expenses or other costs of any kind are deducted.
#tiregrossprofit
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