Shop Profit Check
Five numbers every repair shop owner should know — with a formula and an example for each.
A free guide for repair shop owners. Enter your email below and I will send it to you — or download the printable PDF directly. Either way, you get the same five numbers.
1. Profit on labor vs. parts
Formula: Labor profit = labor sales − technician labor cost. Parts profit = parts sales − parts cost.
Example: $10,000 in labor sales − $6,500 in labor cost = $3,500 (35%). $8,000 in parts sales − $5,600 in parts cost = $2,400 (30%). If your books lump them together as “Sales,” you cannot see which side is carrying the shop.
2. Effective labor rate
Formula: Total labor sales ÷ total billed labor hours.
Example: $10,000 ÷ 100 billed hours = $100 per hour. Compare this to your posted rate — the gap is discounts, unbilled time, and write-offs.
3. Technician efficiency
Formula: Billed hours ÷ actual hours worked × 100.
Example: 100 billed hours ÷ 110 hours worked × 100 = 91%. Below 100% is normal; a sharp drop usually means workflow, parts delays, or time that is not being captured.
4. Average repair order
Formula: Total sales ÷ number of repair orders.
Example: $18,000 ÷ 60 repair orders = $300 per order. Watch this over months, not days — a rising average can mean bigger jobs, better inspections, or both.
5. Lost cores
Formula: (Cores eligible for return − cores actually returned) × value per core.
Example: 20 cores × $25 = $500 in uncollected credits in a single month. Cores sitting on a shelf are cash sitting on a shelf.
What to do with these numbers
Run them monthly, from books that separate labor, parts, and sublet. If one number moves sharply, ask why before the month ends — that is when you can still change it.
Examples on this page are illustrative only, not tax or financial advice.
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