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Auto Repair Shop Profit Margin: What Shops Really Make

Gross vs net profit for an auto repair shop, what the average shop brings in, an example P&L built from 2026 benchmarks, and the levers that move the margin.

Ijharul Islam October 21, 2026 9 min read

Your auto repair shop profit margin depends on which profit you mean. Gross profit is what's left after parts and technician labor; net profit is what's left after rent, the front office, insurance, card fees and everything else. Mix them up and you'll compare your shop with numbers that were never measuring the same thing.

More on this topic: Pricing and shop numbers, every guide in one place.

This guide gives the definitions, what the average shop brings in according to public data, an example profit and loss statement built from Tekmetric's 2026 shop averages, what that means for owner pay, and the four levers that move the result.

The short answer

Auto repair shop profit margin, in short: gross margin is sales minus parts and technician cost (about 64% in our example); net margin is what remains after overhead and owner pay. Our example shop at Tekmetric's 2026 averages (118 cars, $704.25 ARO, 58% parts margin) nets about 15%; the same costs at median volume break even.

Key takeaways

Gross profit pays for the building and the front office; net profit is what's left for the owner after a fair salary.
Census and BLS data put revenue at about $736,000 per general repair establishment in 2022; Tekmetric's 2026 averages work out to about $1 million a year.
Overhead barely changes with volume, so a few cars a week decide whether a shop makes 15% or nothing.
No government source publishes shop owner pay. Count your salary as an expense before you calculate net profit.
The four levers: car count, parts margin, effective labor rate and average repair order.

Disclosure: we make BayRobin, an AI receptionist and front office for independent repair shops, and show where it fits. Everything here works without it. Figures from other companies come from their public pages, checked in October 2026 and linked at the end.

What is the difference between gross profit and net profit in auto repair?

Gross profit is sales minus the direct cost of doing the work: what you paid for parts and what you paid technicians (wages plus payroll taxes) to do the jobs. Net profit is gross profit minus every other cost of running the shop, including a salary for you.

Measure	Formula	What it tells you
Parts gross margin	(Parts sales − parts cost) ÷ parts sales	Whether your parts pricing is consistent
Labor gross margin	(Labor sales − technician cost) ÷ labor sales	Whether your labor rate covers what you pay techs
Total gross margin	(Total sales − parts cost − technician cost) ÷ total sales	How much each dollar of sales leaves to pay overhead
Net margin	(Gross profit − overhead − owner salary) ÷ total sales	What the business earns beyond paying everyone, you included

Two habits make comparisons meaningless: leaving technician wages out of gross profit (they're a direct cost, not overhead), and calculating net profit with no salary for the owner. A shop that "makes 20%" because the owner works 60 hours unpaid is really paying the owner that 20%. For a single job, the free repair order gross profit calculator does the same split line by line, for labor, parts, sublet and fees.

How much do auto repair shops make in revenue?

Public data gives a rough average. The Census Bureau's Service Annual Survey puts total 2022 revenue for general automotive repair employer firms at $62.63 billion. BLS's QCEW counted 85,072 private general repair establishments that year, averaging about 4.4 employees each. Dividing one by the other gives roughly $736,000 of revenue per establishment. The two surveys count slightly differently, so treat it as a ballpark.

Tekmetric's Shop Index (more than 10,000 shops on its software, data through June 2026) gives the inputs to do the math for your own shop:

Tekmetric Shop Index	Monthly car count	Average repair order	Monthly sales (cars × ARO)	Yearly
Median shop	97	$649.88	about $63,000	about $756,000
National average	118	$704.25	about $83,100	about $997,000
Top 25%	180	$879.38	about $158,300	about $1.9 million

Shops that pay for management software skew larger than the whole industry, which is why the Tekmetric average sits above the Census figure. The median line is the more realistic comparison for a typical independent. To run the cars-times-ARO math with your own numbers and open days, use the free auto repair shop revenue calculator.

What does an auto repair shop P&L look like?

Here's an example monthly P&L. Car count, ARO, parts margin and effective labor rate come from Tekmetric's averages and medians; everything else is an assumption, labeled, so you can swap in your own numbers. The overhead is held the same in both columns on purpose.

Example monthly P&L	Average shop	Median shop
Cars × ARO (Tekmetric)	118 × $704.25	97 × $649.88
Total sales	$83,100	$63,000
Parts sales (assumed 45% of sales)	$37,400	$28,400
Parts cost (Tekmetric margin: 58% / 56%)	−$15,700	−$12,500
Labor sales	$45,700	$34,700
Billed hours (labor ÷ Tekmetric ELR $134.92 / $134.31)	339	258
Technician cost (assumed $42 per billed hour incl. payroll taxes)	−$14,200	−$10,800
Gross profit	$53,200 (64%)	$39,700 (63%)
Rent, insurance, utilities (example)	−$10,700	−$10,700
Service advisor and office wages incl. taxes (example)	−$9,000	−$9,000
Software, phones, marketing (example)	−$3,300	−$3,300
Equipment, tools, unbilled supplies, accounting (example)	−$5,100	−$5,100
Card fees (example 2.9% of sales)	−$2,400	−$1,800
Owner salary (example)	−$10,000	−$10,000
Net profit before income tax	$12,700 (15%)	about $0

The lesson isn't the 15%; it's the gap. Twenty-one fewer cars a month and a slightly smaller ticket took the median column from a healthy profit to break-even, because rent, the front office and insurance don't shrink when the bays are quieter. Gross margin barely moved (64% to 63%). Net margin is mostly a volume story.

On the $42 technician cost: BLS's Occupational Outlook Handbook puts the median technician wage at $24.34 an hour (May 2025). At that wage, a tech who bills three hours for every four on the clock costs about $32 per billed hour in wages alone, before payroll taxes, benefits and any flat-rate premium. Use your own payroll.

How much does an auto repair shop owner make?

No government source publishes it. BLS wage data cover employees; QCEW's 2022 average pay at general repair establishments was $52,588, but that's the staff, not the owner, and the Occupational Outlook Handbook covers technicians. Anyone quoting a precise national figure for owner income is estimating.

What you can calculate is your own: owner earnings = owner salary + net profit (plus any personal costs run through the business, which your accountant will want to see separately). In the example, the average shop's owner earns $10,000 + $12,700 = $22,700 a month before income tax; the median shop's owner earns the $10,000 salary and nothing more. Check whether your salary is enough to replace you if you hired a manager; if it isn't, your real profit is lower than your books say.

Which levers move an auto repair shop's profit the most?

Using the average shop above, here's roughly what each change adds to monthly profit, holding everything else steady (illustrative):

Lever	Change	Approx. extra profit a month	Where to start
Car count	+1 car a day (about 22 a month) with spare bay capacity	about $9,400	How to increase car count
Average repair order	+$25 per order	about $1,800	Average repair order
Effective labor rate	+$5 per billed hour	about $1,650	Effective labor rate
Parts margin	58% to 61%	about $1,100	Parts markup matrix

Car count wins by a mile when you have empty bay hours, because each extra car brings gross profit without new rent. That's why the phone matters: Marchex found large auto service operators leaving up to 21% of calls unanswered, dropped or mishandled, and calls a missed-call rate of 10% or less healthy. If your shop is already full, the pricing levers matter more: check your labor rate against what you need, and make sure your parts pricing is consistent.

How do you track profit margin month to month?

Close the month: every repair order finished, every invoice posted.
Pull parts sales and parts cost, and labor sales and billed hours, from your repair orders.
Pull technician payroll (wages plus payroll taxes) from payroll, not an estimate.
Calculate parts margin, labor margin and total gross margin with the formulas above.
Subtract overhead and your salary for net profit.
Compare with the last three months, not one month in isolation. One big engine job can swing a small shop's month.

Put gross margin, parts margin and effective labor rate on your monthly row of shop KPIs, next to the weekly car count and ARO.

Frequently asked questions

What is a good profit margin for an auto repair shop?

It depends which margin. In our example built from Tekmetric's 2026 averages, gross margin (after parts and technician cost) is about 64%. Net margin after overhead and a fair owner salary varies far more, from a loss to well into double digits, mostly with car count.

How much revenue does an average auto repair shop make?

About $736,000 a year per general repair establishment in 2022, dividing Census Service Annual Survey revenue by the BLS count of establishments. Tekmetric's 2026 averages for shops on its software (118 cars a month at $704.25) work out to about $1 million.

How much does an auto repair shop owner make a year?

There's no official figure; BLS doesn't publish owner pay. Calculate yours as owner salary plus net profit. A shop at Tekmetric's national averages could support well over $200,000 a year in our example, while one at median volume with the same costs supports only a salary.

Should technician wages be in cost of goods sold?

Yes, for gross profit. Technician wages and payroll taxes are the direct cost of labor sales, just as parts cost is the direct cost of parts sales. Service advisor and office wages are overhead.

Is parts or labor more profitable for a repair shop?

Labor usually has the higher gross margin percentage, since a technician costs far less per billed hour than the posted rate. Parts still add real dollars: Tekmetric's average parts margin is 58%, and the top 25% of shops reach 65%.

Where BayRobin fits

BayRobin won't calculate your profit: it has no job costing or profit reports. Its reports cover jobs the receptionist booked, calls answered, money collected and owed, estimates won, jobs by type and technician, which helps on the car count side of the equation, alongside the AI receptionist that answers the calls you'd otherwise miss. BayRobin is free until your first 10 booked jobs, no card up front. Start free or see pricing.

Sources

Competitor details in this post were checked against these public pages in October 2026. Products and prices change, so confirm with each vendor before you decide.

#shop finances #pricing #kpis #shop management