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Survey – Parts Gross Profit
What is your target percentage for parts gross profit (also called margin…NOT markup)?
_____ 30-35%
_____ 35-40%
_____ 40-45%
_____ 45-50%
_____ 50-55%
_____ 55-60%
_____ 60-65%
_____ 65-70%
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41 Replies
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60-65 % We get 55-60% AVG
update 11-15-11 50-55 new avg as of the last few months
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We have a tiered parts matrix and measure the margin weekly. A week with an engine or transmission will generally drag down the percentage a bit. Overall we average 53%. A low week is 48% and a high week is 56%
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Parts margin we shoot for is 40%
with supply charges added in, we average 35%. we will mark down parts
instead of labor because of the damned taxes.
Overall I trade at 65% MARGIN on parts and labor.
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I shoot for 50-55%. this year so far 51.5% down from previous years.more engine and trans jobs this year,and also buying more parts from the dealers because of quality, mostly engine sensors. What kind of profit margin on dealer parts is everyone getting.I am at 42%
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Bruce, the dealers around here openly quote “List Price” to consumers,
our markdown is 17%, meaning we make nothing on dealer parts. I use
more labor charge to make up for a minimum blended repair order of 40%
margin. If an RO is below that, I need to be involved.
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All parts excluding tires 53.5% to date this year. Target is 50-55
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We shoot for 45%. Average is around 42%. I believe industry standard is 45%. We do have a tough time with Dealer parts. Tires are between 25 to 35%. Batteries 30%.
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We average 50-53%
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55% parts
35% tires
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Our goal is 50+, but we usually manage 46-50.
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We also use a tiered parts matrix. Our average is around 40% but I would certainly like to hit somewhere around 45-50.
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Why does “list price” at a dealer make any difference to how you price your part? Why do you let some other company dictate what you need to charge to run your business? Ignore list price. Ignore it from dealers and ignore it from any aftermarket supplier. Use and trust your own price matrix. You will not get very many objections from customers. Don’t be scared.
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So, to be clear…are you saying that if you have a 60% parts gross profit (margin), that your parts cost is 40%?
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I’m with you on that Tom. Not all dealers sell parts by MSRP, some make up their own matrix and then discount to us indy’s. For example, a local GM dealer suggests a bottle of AutoTrac II smurf oil cost 9, list 12,an out of town dealer will sell at 6, list at 9. Some dealers discount 15% off list, some give 30. I have argued with insurance companys and won on charging more than MSRP on OE parts from dealerships. I noted that if the dealership did the job, they get paid and make 50% on parts plus their inflated labor rate; I only need 40% on parts with a lower labor rate. I have never had a customer say “I can get this at the dealership for less!” although we have heard that about the local parts store.
Parts is parts, and they all get marked up regardless of MSRP.
Tom Lund wrote:
> Why does “list price” at a dealer make any difference to how you price your part? Why do you let some other company dictate what you need to charge to run your business? Ignore list price. Ignore it from dealers and ignore it from any aftermarket supplier. Use and trust your own price matrix. You will not get very many objections from customers. Don’t be scared.
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If you buy a hose clamp for .33 and sell it for 1.25, you have .92 of gross profit. .92/1.25 = 74% parts margin. If you buy a water pump for 30.25 and sell it for 63.74 you get a 53% parts margin. The 30.25 cost of the dealer part or the aftermarket part gets calculated the same.
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Hey Hey, now here’s a voice of reason. I’ve been saying this to anyone who will listen!
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Tom Piippo wrote:
> I’m with you on that Tom. Not all dealers sell parts by MSRP, some make up their own matrix and then discount to us indy’s. For example, a local GM dealer suggests a bottle of AutoTrac II smurf oil cost 9, list 12,an out of town dealer will sell at 6, list at 9. Some dealers discount 15% off list, some give 30. I have argued with insurance companys and won on charging more than MSRP on OE parts from dealerships. I noted that if the dealership did the job, they get paid and make 50% on parts plus their inflated labor rate; I only need 40% on parts with a lower labor rate. I have never had a customer say “I can get this at the dealership for less!” although we have heard that about the local parts store.
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> Parts is parts, and they all get marked up regardless of MSRP.
>
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> Tom Lund wrote:
> > Why does “list price” at a dealer make any difference to how you price your part? Why do you let some other company dictate what you need to charge to run your business? Ignore list price. Ignore it from dealers and ignore it from any aftermarket supplier. Use and trust your own price matrix. You will not get very many objections from customers. Don’t be scared.
We are hearing “the dealer is less on parts”. VW and Audi dealers are using OEM parts from worldpac. I find it hard that VW and Audi are letting the dealers get away with it.. The invoice just has a xx at the end of the part # and in small print on the back of the invoice it states parts ending with xx are OEM like most custmers even understand OEM.
So if we quote at MSRP we can be higher than the dealer if the job does not have a lot of labor in it.
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So far this year we are 45.26% profit margin.
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55 to 60% for all. I’m not understanding the issue with dealer parts, we too use a lot of them. Set your parts sale price based off of cost and move on.
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I know that some of the GM dealers around here use the ACDelco all makes/economy parts which can be substantially less than OE. Since they say ACDelco, I really doubt that customers realize they are often not getting OE GM parts,
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We specialize in transmissions and transmission related repair only. Our gross profit margin is normally 66% (parts cost X 3) however, that’s not always the case on all parts.
What we really look at is total cost of parts as a percent of sales which should be 20%. Some ROs have parts much less than 20% while on others, there’s no way in the world we can keep parts any where near 30%. As long as our overall batting average is 20%, we’re on target.
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Using matrix, on the low end 15% tires 25% batteries, with most parts 50-75%
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since you only do transmission work, have you been able to get a enough
of it to stay busy/profitable? I ask because many trans shops have
taken on general repair too, and some wind up doing more general than
trans these days.
What has been you experience with that?
How many techs/builders do you have in the shop?
Thanks.
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Yes, we stay busy. We have 2 builders and 3 R&R techs. We cross the $1M in sales last week. While that may not sound like much to most people, what’s amazing to me is that we did it all out of 4-bay 3K sq. ft. shop in only our 3rd year of business.
The reason transmission shops go into GR work is that they are poorly marketed. They don’t have enough qualified leads, including the larger chains. They simply don’t know how to make the phone ring or get people to come in the door. Often they make the mistake of hiring an “expert” that knows less about the automotive business than they do.
Personally, I don’t like GR work because it’s too many small tickets that has everybody in the business running around like a bunch of chickens with their heads cut off. 25 or more tickets a day is normal for them whereas 20-25 tickets a WEEK is normal for us.
It’s a more sane pace and easier to keep track of everything and what’s going on. Less stuff falls through the cracks. I’d rather have one $3K ticket than 10 $300 ticket.
Check out our website and YouTube channel when you get a chance.
P. F. Infante wrote:
> since you only do transmission work, have you been able to get a enough
> of it to stay busy/profitable? I ask because many trans shops have
> taken on general repair too, and some wind up doing more general than
> trans these days.
>
> What has been you experience with that?
> How many techs/builders do you have in the shop?
>
> Thanks.
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That is great, and I hear ya about the GR work….What is your average
RO on a trans rebuild?
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$1444 labor, plus parts for most. About $3200. Some more, some less. Dodge diesels $5-$6K. Chev P/U $2500. Prices are really all over the map. Transfer cases are around $1K.
You have to remember that out of those 25 or so tickets a week, half of those are minor stuff where the transmission never comes out of the vehicle. Solenoids, sensors, electrical, fluid & filter changes, leaks, and stuff like that.
Some weeks, it’s like EVERYTHING is minor. 30 tickets and only 1 rebuild. Other weeks, only 19 tickets and 18 of them are major rebuilds. It’s no different than GR: Feast or famine.
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Do you sell base price (labor and soft parts), then sell hard parts once
the unit is opened? Or, do you do a complete price right up front?
And, what type of warranty do you provide 12/12 or 3/36 ?
Thanks.
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We sell off the RDI method. Check out our website at http://www.CertifiedTrans.com and under our FAQ page it answers the question “What’s A RDI?”. Click on the link to our YouTube channel and you’ll see RDIs in process.
We shoot a Show-N-Tell video of every transmission we do. I’ve been giving a 5yr./50K warranty since ’85. No big deal unless you’re trying to sell transmissions and everybody in the neighborhood is giving their work away. That’s way it always is. It’s no different here. That’s why our competition is starving to death. They give their stuff away and wonder why they run out of money at the end of the month before they run out of bills.
We give shop tours, no negative signs like (Employees Only) on the shop door. We’re a destination for school field trips and the like. We run a very transparent operation and simply sell the work just like general repair has for a century: labor plus parts.
It’s when you comoditize what you do like rebuilding starters, alternators, and engines, (or price off your competition) is where you run into trouble. Thing about it is, the transmission is the ‘last frontier’ with automotive engineering and that’s the only place left to get any big gains in MPG. The engineers don’t know what they are doing; they are just making their best guess with 6,7,8, and 9 speed transmissions. Making it up as they go along.
And like always, us transmission guys will always be there to fix them for what has always been the VERY FIRST BIG TICKET REPAIR on any vehicle, bar none.
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I agree selling from an RDI is the only honest way to do it. Let me
ask, how much of the price does the customer have/know before they give
authorization for the pull and RDI ?
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It depends on how much they ask. Most either don’t ask because they are told that’s the purpose of the RDI, to write an estimate,-or- they’ve already called around.
We had a guy last week that was a hard nose that wouldn’t take anything unless it was a firm written estimate with the transmission still in his truck. So we shot the estimate with the maximum possible hard parts, electronics, and bored & sleeved case and it end up at $4K for a Ford Ranger. Of course we never saw the guy again, but that’s OK, for every one we lose there’s 4 we get.
It’s never peaches and cream at any shop but I think we have it better than most. We have a good market area and a good economy. I Can’t complain a bit.
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