One of the most profitable small-to-medium-sized businesses is the auto repair industry. The types of vehicles that need repair are vast, including buses, trucks, motorcycles, SUVs, and sedans. The average repair job costs about $80. The best part about this industry is the margins: you can keep up to 95 percent of your profits, if you maintain good customer service and use a good marketing strategy.
The highest-margin auto repair services don’t necessarily require the most labor hours. They are also profitable because they often require selling the majority of merchandise for retail prices. Most oil changes can be profitable if you have a large volume of customers who will purchase additional parts. Adding time to the repair order will allow technicians to thoroughly examine the vehicle and present the findings to the customer. By incorporating these steps into your service, you can increase customer satisfaction, which in turn will lead to repeat business and lower marketing costs.
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Besides the repair of vehicles, auto body shops have other expenses as well. The biggest expense is labor. This accounts for approximately 36 to 44 percent of the repair cost. Adding labor profit margins to these expenses will generate a 50 to 65 percent profit margin. But, how do you know if a labor job will bring you profit? The profit margins of different services will vary, but the profit margins for each will depend on the accuracy of the estimate.
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