- October 28, 2010 at 6:32 pm#63917nyr1mess1Participant
I’m trying to get a idea of what the average mark-up would be on tires. do most shop go by a percentage mark-up or stright amount market. I usually try to make at least $30 on a tire but sometimes I price myself out of the market. I have 2 tire shops in my area that I compete with. Anyone have any ideas
VinceNovember 2, 2010 at 7:20 pm#71538gcautoMember
Our average margin is 19.87% and we do have trouble selling tires at that percentage because customers state they can find the tires cheaper elsewhere.November 2, 2010 at 8:55 pm#71542joycemitchMember
I find that $25 a tire is enough to keep us in the market with everyone else.November 2, 2010 at 9:07 pm#71543danrsautoMember
WE ARE SELLING AT COST PLUS OUR INSTALL AND ROAD PROTECTION PACKAGE .
THE ISSUE IS THAT YOU NEED TOP FRT & REAR STAFF TO UPSELL THE ITEMS NEEDED – ALIGNMENT – SHOCKS STRUTS , BRAKES , EVEN FILTERS UPGRADE TO A PROFITABLE INVOICE.
MY QUESTIONS TO THE SHOPS THAT WANT TO MAINTAIN A NICE PROFIT WHAT DOES IT COST YOU TO ADVERTISE AND NOT BRING IN CLIENTS DUE TO UNREALISTIC PRICING .
I WOULD RATHER CUT MY PROFIT ON TIRES WITH UPSALES THEN DO THE CHEAP OIL CHANGES THAT BRING IN THE WRONG CLIENTS.November 3, 2010 at 2:37 am#71545GChilds57Member
We mark up tires at $18.00 each over cost no mather what the size or brand plus charge mount and balance for $84.00 for 4 tires includes valves, wieghts and hazards fee’s etc. Thats brings in gross profit around $140.00 for 4 tires. Plus any up sales. Works good. I don’t try to compete with the low cost tire stores.November 3, 2010 at 12:54 pm#71546jtaylor8751Member
we add 16 dollars to the cost of most tires unless they are low profile or high dollar tires then we add 25 to the cost, plus mount and balance of 15 5 per tire. i have found that makes us competetive in this area. we try to maintain a 110.. dollar profit on 4 tires, and make upsells. there is no money in tires unless you sell hundreds a month. i think the idea is to upsell, alignments front end parts brakes ect.November 4, 2010 at 12:45 am#71551WistechMember
We have been adding a straight 38 per tire (mount, balance, disposal) for the last three years.
We have had two discount tire stores and a W-Mart move in within the last 6 year, all three are less than 2 miles away. Our tire sales have stayed steady and are up this year.
I have beat the big store prices and I have been beat.
If you determine your work is not worth much don’t charge much, if you determine that your work is worth somethnig than charge for it.
My father always said don’t give work away, you work to hard for it.
Customer service will pay off in the long run.August 10, 2014 at 9:47 am#73657Site Administrator / Forum ModeratorKeymaster
The vast majority of shops go on a margin percentage. The range is wide depending on the type of shop and what their purpose is in selling tires. Some use tires as nearly a loss leader settling for as little as 10-15%. Other shops have the ability to move a fair number of tires consistently above the 30% mark. Low to mid 20’s seems to be the most common giving the shop some profit and the ability to be full service.
An approach that can help with margin is using a matrix that is reversed from the normal parts matrix. Low margin on bargain tires, high on the best ones. This allows the shop to compete with pretty much anyone when it is necessary, and make decent money when price shopping is not part of the equation.
One of the biggest keys to selling tires that many shops miss is having the computer capability to come up with pricing for multiple options in a matter of seconds. When you can do this, the advisors are far more likely to estimate and sell tires.
616-340-2380August 16, 2014 at 4:49 pm#73676scottwMember
Interesting how many replied that they use a cost plus formula.
Our goal is 20 to 35% GPM on tires. High end, high priced tires are typically the 20% and entry level we can often make more than 30% GPM.
Overall our tires usually come in close to an average of 30%.
Our volume is low and we don’t try to compete with the mass merchandisers and tire stores, but we will price match for our clients if given the opportunity to do so.
Last month we sold a little over $10K in tires (rubber only) and an addition $1,700 in tire labor. We ended up at 27% GPM on the rubber That works out to almost $4K in gross profit dollars on tire sales.August 20, 2014 at 8:17 am#73681IsaacsGarageMember
We also do a flat markup which we base on the size/profile of the tire (which ultimately corresponds with the time it takes to install for the most part.) Our markup includes disposal etc. so there are no additional hidden/BS fees involved (we do have our default supply charge that gets added on to all invoices.) Customers seem to appreciate the fact that we make the same amount whether we sell them Kuhmo’s or Michelin’s-i.e. there is no up-sell other than for the brand/quality of the tire (which we try to determine based on the customers driving habits etc.) Seems to work pretty good for us!August 20, 2014 at 9:49 am#73682
Isaac’s – Very cool logo, what’s the story behind it?
Tom - Shop Owner since 1978August 21, 2014 at 8:02 am#73683IsaacsGarageMember
Isaac’s – Very cool logo, what’s the story behind it?
Thanks! Our shop was originally an old gas station before it became strictly repair and we wanted a retro/”Chevron” type look for the logo. Helps to also have a family member that owns an ad agency with lots of talented graphic designers!September 2, 2014 at 4:55 pm#73707Joseph Van syocParticipant
Ive never found a good answer for your question, but try to keep my tire margins at 18-22%. Used to work in a service station that always wanted 30, but never seemed to sell any. Im a one man rural shop and sell maybe 2-3 sets per month. HTHSeptember 4, 2014 at 8:41 am#73712dbeersMember
I keep my GP% on any tire we sell at 35% plus M&B, doesn’t matter what brand or size. I don’t do a large volume-15-20 a month. I’ve got 3 tire stores within a half mile of me so I don’t even try to compete. I offer it more as a service to the customer. When I do get the price shopper customer on tires I send them to Costco.September 29, 2014 at 3:56 pm#73733DougFentimanMember
Tom Ham said: Some use tires as nearly a loss leader
Does anyone track sales (profit) RESULTING from tire sales? If you are using tires as a loss leader this would be the key number. Any management software that does that? Would allow shop owner to reward SA for sales that produce profits.
1) A loss leader is a form of marketing and results should be tracked to measure if the strategy is working… if not, stop doing it! Just finished reading Marcus Buckingham’s book “The One Thing You Need To Know”, and 289 pages can be rendered down to one statement: success results from having the ability to see what is obvious, then ACT on it. If you can’t see a true benefit from selling tires, stop selling them, and focus on selling something that does. Biggest problem I see with shop management is a resistance to change.
2) businesses need to focus on margins and profits. Total sales numbers are not the key number. Many busy shops go broke or don’t even make wages for shop owner. You should know the end result margin/profit of every service/sale in your business.October 7, 2014 at 3:44 pm#73735JASchmidtMember
Sad to say, most “small” independent shops have enough work trying to care for customers, vehicles, government and bookkeeping matters. Some companies trying to sell you marketing and business tools ignore the hit to owner wages from the costs of these programs…Regarding tire sales, the order of business priority should be: owner income, customer satisfaction, employee satisfaction. If the owner wants to stay in business, he is naturally inclined to pay somewhat close attention to the day-to-day operations and details, including profitability and losses. Most do not think in terms of “loss leaders” which is a concept for bigger operations. We pay attention to what our local market will bear in terms of cost of parts and availability to our customer. In other words, what must we offer, and at what price, to both satisfy and retain our customers. Also, paying attention to how our satisfied customers refer others to us out of established trust and loyalty.Only a fool would sell a product if it costs you money, no matter what “goodwill” you think will come of it. You will go broke quickly if you are not a company of substantial size that can support the lost revenue by emptying the customers pocket with other high margin goods. That said, I have faith that any entrepreneur worth his salt would intuitively know where he stands in his local market, based on feed back and experience. He would price his goods and services such that he makes a reasonable profit, beyond his operating expenses and cost of wages.We do not sell tires at a loss. we do not warehouse them either. We buy from a local distributor and price at $20 over cost per tire, plus charge for mount and balance, tire stems, disposal, and alignment. Tech is tire and alignment trained, lower wage than a seasoned tech. Overall the jobs are profitable enough to cover tech wages, parts and contribute to overhead expenses. In the end, what matters is that our customers are satisfied that we can handle their needs and rotate their tires for them as part of their LOF’s. When we sell tires we are looking for suspension repairs and any other service that would be of benefit to our customers.October 7, 2014 at 9:11 pm#73738
Sad to say, most “small” independent shops have enough work trying to care for customers, vehicles, government and bookkeeping matters.
Well said, JoAnn.How in the h— did we get to the place where one of the main things we have to care for is government?
Tom - Shop Owner since 1978February 8, 2015 at 5:13 pm#73893lee1965Member
To have a min or max mark up on tires is difficult these days.Believe me the big chains are making a lot of money on tires , and now with there new replace all four be cause of trans problems or traction related problems a lot more are getting sold . Do some research , shop them and you might be surprised that you may be selling to cheap . And of course sell yourself your shop , there’s to many robot sales people these days .February 15, 2015 at 9:38 am#73911Alan Ollie Gelfand Pres.Participant
Does anyone think that they loose brake work or any other needed items .I see people cheating LOL on us who always get sold brakes when we said they had 8mm or 60% left a few months ago.The dealer has a nap for selling tires cheap so they keep the car count up and avg ticket high.If we miss a visit we might not see the car for 15-24 months,I do not sell tires but i plan on doing it soon. We spend 600 – 800 a month on outside alignments so it just makes sense.February 15, 2015 at 11:22 am#73912
For us tire sales were way up both last year and the year before that. In the first 6 weeks this year tires sales are up over 60% vs. 2014.There are a lot of factors involved, but it seems like tires are getting a bit easier to sell. The old mindset of going to the tire store for tires appears to be decreasing.Margins are decent, too.
Tom - Shop Owner since 1978
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