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Labor Percentage of Gross Sales


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Does anyone know what a good labor percentage of gross sales should be for an auto repair facility? We currently pay hourly for all of our techs as well as our CSA's and would like to get an idea of what an optimal labor percentage should be for our auto repair profit center. We are a 5 bay garage with 3 full time techs, 1 GS/helper and 2 CSA's. We are averaging around 17 cars a day. Any assistance would be greatly appreciated!

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Does anyone know what a good labor percentage of gross sales should be for an auto repair facility? We currently pay hourly for all of our techs as well as our CSA's and would like to get an idea of what an optimal labor percentage should be for our auto repair profit center. We are a 5 bay garage with 3 full time techs, 1 GS/helper and 2 CSA's. We are averaging around 17 cars a day. Any assistance would be greatly appreciated!

 

You should know your shop productivity,do a labor rate analysis by technician-there income+use 11.5% X hour rate [fica,futa,suta]

Workers comp. 6% X hour rate plus other cost. uniforms,vacation pay,holiday pay,training,insurance-health,life.plus any other misc.cost.

Add this together to a hourly amount this is your loaded technician cost per hour. most times it is $12 -$37 per hour

divide 40%=60%gross profit adjust for shop productivity by tech 60% to 100%

This will give you needed labor rate $50.-$90 per hour

This may not be what you need but in these hard times we should be in the 60% PROFIT MARGIN- GROSS PROFIT

Parts and Labor. Shops around mine are down some as low as 35% some have closed the doors. Parts mark-up 2.5% avg. to keep you at that 60%

I hope this helps.

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That's a great question, and I call tell you from my experience, every shop is different with respect to breakeven and sales and labor. You can have two 5 bay shops with 3 techs and both do 20,000 in sales per week. Shop one has no mortgage and low taxes. Shop two has a mortgage, a truck payment, high taxes, a new aligmemnt lift note each month.

 

The two may do the same in sales but the profit at the bottom line is quite different. For my shop, I don't like labor cost to exceed 30% of sales, but again, that's my number and my cost of doing business is different from the shop down the block. Just keep this in mind when you do your calculations.

 

I hope this helps, sometimes I can too analytical, but I am a numbers guy....

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