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Key Numbers 101 Series – Key # 9 Total 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 # 9 Total Gross Profit
For this key number, we want to know what percent of total sales was profit. That is, the total of all sales of all types less the cost of those sales expressed as a percent of the total sales amount.
Last month Acme Auto had total sales of $50,000. The cost of those sales was $19,750. This includes cost of technician gross pay ($7,250), cost of parts ($11,000), cost of tires ($1,500) and cost of anything else that was sold.
$50,000 less $19,750 = $30,250 profit.
$30,250 ÷ $50,000 = 0.605
So, our key number is 60.5%
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 58% and 62%
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 sales: All sales of all kinds – parts, labor, tires, and anything else that is sold.
Gross profit: The total profit on the sale of something before any expenses or other costs of any kind are deducted.
#autoshopgrossprofit
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