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• The Four key Numbers You Need To Watch (Sample Tip from the Premium Members Area)

Posted by on March 9, 2015 at 2:17 pm

The Four Key Numbers You Need To Watch

Watch them closely and work on them in the following order to make sure your business is profitable.

1: Total expense percentage.

2: Total gross profit percentage.

3: Car count.

4: Average RO dollars.

Too often shops work on these in a reversed order and constantly have a hard time showing a decent profit. All the sales in the world won’t do much good if the expenses and GP are off.

replied 7 years ago 5 Members · 5 Replies
• 5 Replies
• zuccato

Member
March 17, 2015 at 1:23 pm

I am new to the forum and new to being a shop owner. I am wondering what total expense percentage is and how do I calculate it? I really need all the help I can get on these maters because the shop I worked for 15 years I took over about 2 years ago and I have found out the hard way was not run professionaly at all and I’m trying to figure this stuff out on my own. Thank you for any help you can give.
Jame Bond
(no that’s not a joke that is my real name)

• Tom Ham

Member
March 17, 2015 at 4:37 pm

Here are the super simplified numbers guidelines:

Total cost of all parts 20% (percent of total sales of all types not including sales tax)
Total cost of all payroll 25%
Total expenses (everything except the first two above) 30%
That leaves you with 25%
Plus or minus 2-3% for each number.
Before you get into a lot of other numbers, work with these first to see where you are.
• dezertrunner

Member
March 18, 2015 at 3:26 am

Question about the parts percentage. Are you saying that a part that costs 60.00 should retail for 300? After all 60/300 is 20 percent. Our margin is closer to 30-40 percent but that means our parts cost closer to 60-70 percent of retail. That means a part that costs us 60.00 retails for 85-100.00 dollars.

• Tom Ham

Member
March 18, 2015 at 5:23 am

Those are percentages of total sales.

If grand total of all sales (parts, labor, tires, sublet) at a shop is \$100,000 for the month, parts purchases should be roughly \$20,000
The number you are referring to would be parts only GP%
For most independent shops that should be 50-60% in order to comfortably pay the bills and turn a reasonable profit.
If part cost is \$60.00, it should sell for \$120.00 to \$150.00 on average, sometimes more, sometimes less.
*Your mileage may vary, tax and title extra, see dealer for details, etc. etc. 😉
• chriskeiner

Member
June 29, 2015 at 4:07 am